CGST Act | Gujarat High Court Upholds Power To Confiscate Goods During Transit For Tax Evasion, Clarifies Scope Of S.129 & 130

The Gujarat High Court has upheld the power of GST authorities to confiscate goods and conveyances during transit where there is a clear intent to evade tax, and has clarified the scope and interplay of Sections 129 and 130 of the Central Goods and Services Tax (CGST) Act, 2017. A Division Bench of Justice A.S. Supehia and Justice Pranav Trivedi, while deciding a large batch of writ petitions, held that Sections 129 (detention and seizure of goods in transit) and 130 (confiscation of goods and conveyances) operate independently and are not inter-dependent, even after the amendments. The Bench observed: “The Division Bench has emphatically held that Section 130 of the CGST Act, which provides for confiscation of the goods or conveyance is not, in any manner, dependent or subject to Section 129 of the CGST Act, and they are independent of each other and are mutually exclusive. It is held that even if the goods or the conveyance is released upon payment of the tax and penalty under Section 129 of the CGST Act, later, if the authorities find something incriminating against the owner of the goods in the course of the inquiry, then it would be permissible to them to initiate the confiscation proceedings under Section 130 of the CGST Act.” The assesses goods were intercepted during transit by GST authorities. The authorities issued notices proposing confiscation under Section 130 after detaining the goods under Section 129, alleging tax evasion. The assesses argued that once proceedings under Section 129 are initiated, the authorities must first complete that process and cannot directly jump to confiscation under Section 130, especially after the 2022 amendments. The High Court held that Section 129 and Section 130 serve different purposes. Section 129 deals with summary proceedings for detention and release of goods during transit, while Section 130 deals with confiscation in serious cases involving intent to evade tax. That the Confiscation can be initiated at the transit stage itself if the authorities form a bona fide opinion that the movement of goods was with the intent to evade tax. The Bench notes that the removal of the non-obstante clause from Section 130 does not restrict the power of confiscation. Both provisions continue to operate in separate fields. The Bench reaffirmed its earlier ruling in Synergy Fertichem Pvt. Ltd. (2019) 12 TMI 1213 (HC-Guj.) and held that authorities must record reasons and exercise confiscation powers cautiously, as it is a harsh measure. The Bench also clarified that after the 2022 amendment, provisional release under Section 67(6) is no longer available for goods detained under Section 129. Release of goods is now governed strictly by the mechanism provided in Section 129 itself. In view of the above, the Bench dismissed the writ petitions, holding that the GST authorities acted within their statutory powers and that no blanket prohibition exists on invoking Section 130 after detention under Section 129, provided the action is backed by material indicating tax evasion . Case Title: M/S Panchhi Traders Through its Authorized Signatory Narendra Danabhai Daki Vs State of Gujarat Through Deputy Commissioner (Enforcement) & Anr. Case No.: R/Special Civil Application No. 9250 of 2020 and connected matters Appearance For Petitioner: MR TUSHAR HEMANI SR. ADVOCATE WITH MS. VAIBHAVI PARIKH, MR.AVINASH PODDAR – IN SCA NO.9250/2020, MR JATIN HARJAI FOR SUJAY ADESHRA - IN SCA NO.3929/25, MR CHETAN K. PANDYA - IN SCA NO.864/24, MR MONAL S. CHAGLANI - IN SCA 20732/2022), MR UCHIT N. SHETH - IN SCA NO.4409/24 AND MR HARDIK P. MODH - IN SCA NOS.13334/23 & 14028/23 Appearance For Respondents: MR KAMAL TRIVEDI, ADVOCATE GENERAL WITH MR VINAY BAIRAGRA, MR HARSHVARDHAN SHARMA, MR UTKARSH SHARMA, MS. SHRUNJAL SHAH & MS NIMISHA PAREKH ASSISTANT GOVERNMENT PLEADERS Click Here To Read/Download Order

CGST Act | Gujarat High Court Upholds Power To Confiscate Goods During Transit For Tax Evasion, Clarifies Scope Of S.129 & 130

Rajnandini Dutta

Tags