Section 129 vs. Section 130 under GST: From Procedural Safeguards to Substantive Confiscation Powers

Panchhi Traders Vs State of Gujarat (Gujarat High Court)

Introduction:

The law on detention, seizure, and confiscation of goods in transit under GST has witnessed a decisive shift after the Finance Act, 2021 (effective 01.01.2022).

While earlier jurisprudence leaned towards procedural protection of taxpayers, the recent judgment of the Gujarat High Court in Panchhi Traders vs State of Gujarat (11.12.2025) has clearly recalibrated the balance in favour of revenue powers.

This article examines how Panchhi Traders redefines the relationship between Sections 129 and 130, and how it distinguishes or limits the principles laid down in ASP Traders (Supreme Court) and Dhanlaxmi Metals (Gujarat High Court).

The Statutory Background:

• Section 129 → Detention, seizure, and release of goods in transit
• Section 130 → Confiscation of goods/conveyance with intent to evade tax.

Prior to 01.01.2022, these provisions were interlinked, particularly through Section 129(6) and Section 67(6).

Post-amendment, Parliament consciously delinked both provisions, intending them to operate in distinct spheres.

Panchhi Traders (Gujarat High Court, 2025): The Turning Point.

In Panchhi Traders, a large batch of petitions challenged the direct invocation of Section 130 (MOV-10) during transit interception under Section 129.

The Hon’ble High Court of Gujarat held:

Confiscation proceedings under Section 130 do not depend on completion or failure of Section 129 proceedings.