GST : Detention, Seizure And Release Of Goods & Conveyances In Transit Under Section 129 Of CGST Act

Section 129 of the Central Goods and Services Tax Act, 2017 ("CGST Act") gives power of detention and seizure to the officers if a person transports any goods or stores any goods while they are in transit in contravention of the provisions of the Act or the rules. [1] The various stages of interception, detention and release of goods and conveyances under Section 129 are as follows[2]: 1.Interception Upon interception of a conveyance, if the transporter fails to provide the documents asked for in verification, the proper officer shall: a.record statement of the person in charge of conveyance where the person in charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection.[3] b.issue an order for physical verification and inspection of goods, conveyance or documents requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of the goods.[4] The inspection proceedings are to be completed within 3 working days from the date of issue of the order.c.obtain written permission[5], if more than three days is required for inspection.d.prepare a physical verification report[6] upon completion of proceedings and serve copy to person in charge of conveyance. 2.Release: If no discrepancies are found during the inspection and verification process, an order[7] shall be passed releasing the vehicle and goods. 3.Order of Detention and Issuance of Notice: However, if discrepancy is found, the officer may pass an order of detention[8] and issue a notice[9] as per Section 129 (3) and (4) specifying the tax and penalty payable after giving the person concerned an opportunity of being heard. 4.Provisional Release: As per Section 129(2), the provisions of section 67(6) shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. Section 67(6) states that the goods seized under shall be released, on a provisional basis, upon execution of a bond[10] and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. Regarding release of goods, Section 129(1) states, the detained goods and conveyance shall be released, - (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty. (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed. 5.Order for Payment: After hearing the party concerned, the officer is to pass a speaking order[11] quantifying the tax and penalty payable under clause (a) or clause (b) or clause (c) of Section 129. On payment of amount determined, all proceedings in respect of the notice is deemed to be concluded. 6.Initiation of Section 130[12] Proceedings: However, if there is failure to pay the amount of tax and penalty within fourteen days[13] of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130 such as issuance of notice[14] and order[15] for confiscation of goods and conveyance.[16] Where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer. A.Constitutionality of Section 129 Unlike the erstwhile state sales tax laws which permitted detention in cases of attempted evasion of tax or omission of the subject transaction from the regular books of accounts, section 129 empowers the officers to detain goods and conveyance for acting in 'contravention of the provisions' of the Act or rules which means even procedural lapses can lead to detention. Further, under section 129 of the GST Acts the authorities need not establish intention to evade payment of tax which is a prerequisite for Section 130 of the GST Act. Suppose, A who is the owner of the goods was transporting certain goods worth Rs. 1,00,000, was intercepted under Section 129 for not having e-way bill. There can be various scenarios by which A can obtain release of...

GST : Detention, Seizure And Release Of Goods & Conveyances In Transit Under Section 129 Of CGST Act

Ammu Charles

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