GST

Detention, Seizure and Release of Goods in Transit

In this article we shall discuss Detention, seizure and release of goods in transit but let’s first try and understand the basic difference between confiscation of goods and detention of goods under CGST Act, 2017^[1].

Difference between Confiscation and Detention of goods

As we have already discussed in one of our previous article, confiscation of goods mean that the ownership of the goods or conveyance is transferred to the government, which the owner of such goods or conveyance can take back after paying the specified fine as per the Act within 3 months of such confiscation.

However, on the other hand, detention does not entail the transfer of ownership like confiscation of goods. If it is suspected that any goods or conveyance are liable to be confiscation, then a legal order or notice is issued for detention or seizure of such goods in transit. In this case, the owner is not allowed to access their goods irrespective of the fact that they still have the title of such goods.

Detention Provisions

Section 129 deals with the provisions relating to detention, seizure, and release of goods in transit. This section clearly states that if any goods are transported or are stored while in transit in contravention of the provisions of the Act or any rules made thereunder then;

• Such goods;
• Any conveyance used for the transport of such goods and
• Documents relating to such goods or conveyance.

Are liable to be detained or seized by the authorities. However, such detention of goods or conveyance can only be done after serving an order for such detention of goods and seizure to the person transporting such goods.

Release Provisions for Detained Goods

These detained or seized goods can be released after making a payment as per the provisions provided under the law. These provisions haves specified two different situations, first is when the owner of goods comes forward on his own and second is when the owner of goods does not come forward on his own. Let’s discuss them in detail now.

When owner (taxpayer registered under GST) comes forward on his own-

If the goods are taxable in nature the amount will include the-

• Amount of tax applicable on such detained goods and
• Penalty equal to 100% of such applicable tax

If the goods are exempted in nature the amount will be higher of the two-

• 2% of the value of such goods or
• 25,000 Rupees (whichever is less)

When owner does not come forward on his own-

If the goods are taxable in nature the amount will include the

• Amount of tax applicable on such detained goods and
• A penalty equal to 50% of a value of such goods, reduced by the tax paid on such goods.

If the goods are exempted in nature the amount will be higher of the two;

• 5% of the value of such goods or
• 25,000 Rupees (whichever is less)

Conditions relating to Detention, Seizure and Release of Goods

Following conditions are specified relating to detention, seizure, and release of goods and conveyance:

• Such detained or seized goods or conveyance can be released, on a provisional basis, upon execution of a bond and furnishing of a security. The amount of such security shall be equal to the amount specified which is to be paid for the release of such detained goods.
• A notice is to be issued by the proper officer stating the amount of applicable tax along with the penalty to be paid by the owner of goods to be detained, and then pass an order requiring the payment of such aggregate amount.
• The owner of such goods and conveyance must be given an opportunity of being heard before passing such order.
• Once the concerned person makes payment of such amount specified including tax and penalty within 14 days, all proceedings will be deemed to be concluded and the goods will be released.
• If such payment is not made within 14 days then the proceeding relating to confiscation stated in Section 130 of the Act will be started.
• If the goods are of perishable or hazardous in nature then this period of 14 days can be reduced by the proper officer.

Conclusion

It may be noted that confiscation of goods will not affect other punishments under GST provisions which means that other penalties and prosecutions shall still apply. For more understanding on laws relating to Detention, seizure and release of goods in transit, consider our blogs.

Read our article: Power of Tax Authorities to conduct Special Audit under GST Act