In this article we will carry out detailed analysis of Provisions of Section-129 & 130 along with related Rules & Circulars thereof related to Detention and Confiscation of Goods & Conveyance during transit.
Topics covered in the Article
Difference between Detention, Seizure & Confiscation
Detention: In detention, Generally, Goods are detained for further inspection of the goods. In detention, though physically goods are in the custody of the Taxpayer, but he can not access them.
Like Department can order the Taxpayer to park the vehicle and goods on specified place for further inspection.
Seizure: In seizure, physical possession of the Goods & Conveyance has been taken by the Department generally after inspection. In this case, though physical possession of the Goods or Conveyance is with the Department, however, ownership still lies with the Taxpayer.
Confiscation: In confiscation, along with physical possession ownership also lies with the Government.
List of Documents to be carried along with Conveyance
As per Rule 138A, The person in charge of a conveyance shall carry:
(a) the invoice or bill of supply (for situations prescribed in Rule 49) or delivery challan (for situations prescribed in Rule 55), as the case may be
(b) a copy of the e-waybill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be Notified by the Commissioner:
Provided that nothing contained in clause (b) of this sub-rule shall apply in case of movement of goods by rail or by air or vessel:
(Note: Though Person of In-charge of conveyance is not required to carry E-way bill in case of air, rail & vessel but is it does not mean that in this case E-way bills are not required, please read Rule on E-Way Bill)
(c) In case of imported goods, the person in charge of a conveyance shall also carry a copy of the bill of entry filed by the importer of such goods and shall indicate the number and date of the bill of entry in Part A of FORM GST EWB-01.
(d) In case, invoice is issued in the manner prescribed under sub-rule (4) of rule 48 (E-Invoice) ,the Quick Response (QR)code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for verification by the proper officer in lieu of the physical copy of such tax invoice.
Section under which inspection is being carried out
Inspection of Goods in Movement is authorised by Section 68 read with Rule 138B & 138C of the CGST Act.
Key Features of Section 68
Government can prescribe documents to be carried along with conveyance. (as discussed in above section)
The details of said documents will be validated as per Rule 138B.
On interception of the conveyance by the Proper Officer at any place, In-charge of the conveyance is liable to produce the documents and devices for verification and allow the inspection of the Goods.
Key Features of Rule 138B (Verification of Documents & Conveyance)
The proper officer duly authorised can intercept any conveyance to verify the e-way bill in physical or electronic form for all inter-State and intra-State movement of goods. He can also do physical verification of the Conveyance.
Radio Frequency Identification Device readers will be installed at places where the verification of movement of goods is required to be carried out and verification of movement of vehicles shall be done through such device readers where the e-way bill has been mapped with the said device. (From 15.02.2021, all motor vehicles (four wheeler) are mandatorily required to have RFID based Fast Tag. Further, this system has been linked with E-way Bill System).
Key Features of Rule 138C (Inspection and verification of Goods)
A summary report of every inspection of goods in transit shall be recorded online by the proper officer in Part A of FORM GST EWB-03 within twenty four hours of inspection (not detention) and the final report in Part B of FORM GST EWB-03 shall be recorded within three days of such inspection. (Commissioner may give extension for further period of three days in exceptional circumstances).
Where inspection of any conveyance has been done at any place in a State/UT or in other State/UT, it will not be inspected again in any State/UT.
Where a vehicle has been intercepted and detained for a period exceeding thirty minutes, the transporter may upload the said information in FORM GST EWB-04 on the common portal. (Rule 138D, it is to save Transporters for unauthorised detention).
Now, we will discuss in next section, what will be the consequences if Proper Office observed deficiency in documents. Consequences have been prescribed in Section 129 & 130 respectively.
Basic Provisions of Section 129
On inspection, if there is deficiency in documents, there are penalty proceedings defined in the Section 129 & 130 respectively. In this Section, we will discuss about Section-129.
Where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder,
all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released only after:
Nature of Goods | Situation | Penalty |
Taxable | Where Owner comes forward to pay penalty | 200% of the Tax Payable on such Goods |
Taxable | Where Owner does not come forward to pay penalty | 200% of the Tax Payable on such Goods or 50% of the Value of Goods whichever is higher |
Exempted | Where Owner comes forward to pay penalty | 2% of the Value of Goods or Rs. 25,000 whichever if lower. |
Exempted | Where Owner does not come forward to pay penalty | 5% of the Value of Goods or Rs. 25,000 whichever if lower. |
Note:
This only talks about Penalty, in addition to this, Correct Tax is also needs to be paid for which recovery proceedings will be carried out under Section-73/74 if required .(Our Opinion, not mentioned in Section-129)
In lieu of payment of penalty, Taxpayer can also deposit Security equivalent to penalty amount as explained above (Rule:140, Form GST INS-04).
No such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (Here it must be noted that order should not be issued without giving opportunity of being heard).
The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty as explained above. Further, no penalty should be determined without giving opportunity of being heard.
On payment of Penalty, all proceedings in respect of the above notice shall be deemed to be concluded.
In case person transporting any goods or the owner of such goods fails to pay the amount of penalty within fifteen days from the date of receipt of the copy of the order for penalty, the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, to recover the penalty. (Rule 144A). (15 days timelines will not be applicable for goods of Perishable or Hazardous in Nature.
However, where Order of Penalty has been appealed by the Taxpayer, Proceedings for Sale of such Goods/Conveyance will be automatically stayed unless goods are of Perishable or Hazardous in Nature. (Rule 144A(8).
Further, the conveyance shall be released on payment by the transporter of penalty as explained above or one lakh rupees, whichever is less.
Basic Provisions of Section 130
(Confiscation of goods or conveyances and levy of penalty)
From the language of Section 130, it appears that for similar contravention, Department has power to confiscate the Goods &/or Conveyance. However, in our opinion, in case of Section-130, intent to evade the tax must be there as a differential factor from Section-129.
As per Section-130:
Key Points
1. Where any person uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122 .
2. However, Fine as determined by the Proper Officer can be paid in lieu of confiscation of the Goods. Such Fine can not exceed the Market Value of the Goods less Tax chargeable there on.
Accordingly, He needs to Pay {Tax(under Section 73/74) + Fine} + Penalty (U/s 122). Therefore, maximum amount payable is Market Value of Goods+ Penalty u/s 122.
In Section-129, there was no concept of Fine, however penalty was 200% of Tax Payable.
Further, minimum amount payable is Tax + (Fine & Penalty), where Fine + Penalty is not less than 100% of Tax Payable. Accordingly, minimum amount payable is 200% of Tax Payable.
Here, it is less than Section 129, where amount payable is 300% of Tax Payable. (Tax+ 200% of Tax).
3. The owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.
4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (Though the order order of confiscation may be challenged by the Taxpayer in the appeal).
The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (i.e. during Adjudication Process, he takes the possession of Goods & Conveyance, it is not seizure under Section 129).
The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.
Key Points of Various Circulars issued in this regard
Circular No. 41/15/2018, 49/23/2018, 64/38/2018, 76/50/2018, 160/16/2021
An e-way bill number may be available with the person in charge of the conveyance or in the form of a printout, SMS or it may be written on an invoice. All these forms of having an e-way bill are valid.
In case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations:
a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;
b) Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;
c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;
d) Error in one or two digits of the document number mentioned in the e-way bill;
e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;
f) Error in one or two digits/characters of the vehicle number.
In this case penalty u/s 125 of Rs. 500 (CGST) & Rs. 500 (SGST) for each lapse will be imposed.
Various GST Forms (GST MOV-01 to MOV-11) were prescribed through Circular (generally Forms are prescribed through Notification).
Demand of any tax, penalty, fine or other charges shall be added in the electronic liability ledger of the person concerned. Where no electronic liability ledger is available in case of an unregistered person, a temporary ID shall be created by the proper officer on the common portal and the liability shall be created therein. He shall also credit the payments made towards such demands of tax, penalty or fine and other charges by debiting the electronic cash ledger of the concerned person.
It is clarified that only such goods and/or conveyances should be detained/confiscated in respect of which there is a violation of the provisions of the GST Acts or the rules made thereunder. (For instance, in a conveyance, there are goods of twenty Suppliers, if discrepancy is there in case of one supplier, only goods related to that Supplier will be detained/confiscated.
It may be noted that the non-furnishing of information in Part B of FORM GST EWB-01Â amounts to the e-way bill becoming not a valid document for the movement of goods by road as per Explanation (2) to rule 138(3) of the CGST Rules, except in the case where the goods are transported for a distance of up to fifty kilometres within the State or Union territory to or from the place of business of the transporter to the place of business of the consignor or the consignee, as the case may be.
Who will be considered as the „owner of the goods‟ for the purposes of section 129(1) of the CGST Act?
It is hereby clarified that if the invoice or any other specified document is accompanying the consignment of goods, then either the consignor or the consignee should be deemed to be the owner. If the invoice or any other specified document is not accompanying the consignment of goods, then in such cases, the proper officer should determine who should be declared as the owner of the goods.
It is clarified that there is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules and production of the Quick Response (QR) code having an embedded Invoice Reference Number (IRN) electronically, for verification by the proper officer, would suffice.
Various Forms used in the Process
Form Name | Description of the Form |
GST MOV-01 | Statement of the Owner/Driver/Person in charge of the Goods and conveyance |
MOV-02 | Order for physical verification/inspection of the conveyance, goods and documents. |
MOV-03 | Order of extension of time for inspection beyond three working days |
MOV-04 | Physical Verification report |
MOV-05 | Release Order |
MOV-06 | Order of detention under Section 129(1) |
MOV-07 | Notice under Section 129(3) |
MOV-08 | Bond for provisional release of the Goods and Conveyance. |
MOV-09 | Order of Demand of Tax and Penalty |
MOV-10 | Notice for confiscation of goods and conveyance and levy of penalty u/s Section 130 |
MOV-11 | Order of confiscation of goods and conveyance and demand of Tax, Fine and Penalty. |
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Disclaimer: We have taken due care to the best of our knowledge while explaining the provisions surrounding the issue purely for informational/academic purpose. It should not be considered as professional advice or consultancy to be relied upon. While due care has been taken by Fab Gyan in preparing this article, certain mistakes and omissions may creep in. The Fab Gyan or its Author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.