Understanding Section 129 of the GST Act: Detention, Seizure, and Release of Goods and Conveyances

Understanding Section 129 of the GST Act: Detention, Seizure, and Release of Goods and Conveyances

Introduction

Indian GST is based on a regime of transparency in compliance regarding the movement of goods. Authorities are empowered to detain or seize goods along with vehicles, under Section 129 of the Central Goods and Services Tax Act, 2017, in case of non-compliance with the GST provisions during the transit of goods.

What Section 129 Deals With

Section 129 of the GST Act lays down the procedure for detention, seizure and release of goods and conveyances in transit when they are found to be moved in contravention of GST rules—such as missing or invalid e-way bills, incorrect invoices, or underreporting of goods.

The main aim of this section is to prevent tax evasion and to ensure that the movement of goods is properly documented and accounted for.

Key Provisions under Section 129

1. Seizure or Detention of Goods and Conveyance
   Goods transported or stored in contravention of GST rules may be detained or seized by the proper officer along with the vehicle that transports them.
   • Only such detention or seizure can be carried out provided the officer has a reason to believe that there has been a contravention of GST laws.
2. Release of Goods and Conveyance
   The goods and vehicle may be released upon payment of the applicable tax and penalty as follows:
   • In case the owner comes forward: Payment of tax and penalty equal to 200% of the tax payable on such goods.
   • When the owner does not come forward: Payment of tax and penalty equal to 50% of the value of goods or 200% of the tax payable, whichever is higher.
3. Show Cause Notice and Adjudication
   A show cause notice (SCN) is to be issued to the concerned person within 7 days of detention or seizure.
   • The final order must be passed within 14 days of the issuance of the SCN.
   • On payment of the penalty within the specified period, the proceedings are completed by releasing the goods and conveyance.
4. Failure to Pay Penalty
   If the penalty is not paid within 15 days from the receipt of the order, further proceedings under Section 130 for confiscation of goods and conveyances can be initiated.
5. Opportunity to be Heard
   The law ensures that the concerned person is given a reasonable opportunity of being heard before the final order is passed.

Amendments and Clarifications

Several amendments have refined the provisions of Section 129 in order to smoothen the process and not cause undue hardship to taxpayers. To illustrate, the Finance Act, 2021 separated detention under Section 129 from confiscation under Section 130, making the law more transparent and structured.

Purpose of Section 129

Section 129 acts as a deterrent against tax evasion and ensures that genuine businesspeople comply with the transport and documentation prerequisites under GST. It helps in maintaining accountability and having proper tax collection on the movement of goods.

Conclusion

Section 129 of the GST Act proves quite important as an enforcement mechanism to ensure compliance with the rules on the movement of goods under GST. The said section, while giving sufficient powers to the tax authorities to deal with the offenders, has also incorporated various safeguards for protecting the genuine taxpayer from undue hardship. Thus, it is imperative that the transporters and the businesses involved in transportation maintain proper documentation—e-way bills, invoices, and so on—and accurate particulars of the consignment under GST.