GST

Seizure, Detention and Confiscation – For Goods in Transit

Seizure, Detention and Confiscation

It is important to understand that the goods, while kept in transit, shall be accompanied by proper documents. If proper documents are not found, or any discrepancy is discovered, the goods may be detained and confiscated.

The detention, seizure, and Confiscation of commodities and conveyances in transit are all clearly outlined under the Goods and Services Tax Act. While Section 130 allows for the Confiscation of the commodities or conveyances and the assessment of penalties, Section 129 permits the detention, seizure, and release of goods and conveyances in transit.

Inspection of goods in transit

The first stage is to check goods in transit before seizing and confiscating them. The authorised official has the authority to examine the products while they are in transit. Therefore, the person in responsibility must have the necessary documentation, including a receipt and an e-Way bill.

Understanding Seizure, Detention and Confiscation

Detention

Detention is the Act of denying the owner of the goods access according to a court order or notification. However, in case of detention, the real owner remains the legal owner of his goods. The next step of detention is a seizure.

Seizure

Seizure means taking the goods away from the physical custody of the owner. A seizure will take place once it is properly determined that the goods are now eligible for Confiscation.

Confiscation

Confiscation of goods is the last stage after the detention of the goods in transit. The goods belong to the original owner only till the time of detention. After that, the goods are controlled and owned by the government authority.

Difference between Seizure, Detention and Confiscation

Seizure, detention and Confiscation are three different stages. When the owner of the items is prohibited from accessing the commodities, this is known as detention. However, it should be remembered that the owner of the detained items still retains ownership of the goods. The government issues the detention order when there is a reasonable suspicion that the commodities will be seized. Seizure contrasts confinement; when things are seized, the department takes control of them. But the goods can be seized only after a thorough inspection of the products, during which the department has determined that the inspected commodities should be confiscated. After detention and seizure, the final Act is the Confiscation of the items. When goods are seized, the government agency takes away the ownership of the items.

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Section 129 of CGST Act, 2017 – Detention, seizure and release of goods and conveyances in transit

When someone transports any goods or stores any goods while they are in transit in violation of the Act or the rules thereunder, all such goods and conveyance that are being used as a means of transport for the said goods, as well as documents relating to such goods and conveyance, shall be subject to detention or seizure.

Required Documents

When transporting goods by road, the person in charge of the vehicle must also have a copy of the e-way bill, either in physical or electronic form. Moreover, the in charge of the conveyance shall have the invoice, bill of supply, or delivery challan. The CGST Rules, 2017’s Rule 138 to Rule 138D, set forth the specific regulations pertaining to E-way bills.

Process for seizing Goods while in transit

Only after providing an order of detention to an individual conveying the goods the goods and vehicles will be seized or detained. The tax officer will issue a notice outlining the tax due and issue an order for the payment of tax and penalty during the detention of the goods.

The owner of the goods whose goods are detained will get a proper chance of being heard. Such goods will be released after proper payment of the tax and penalty. The owner has seven days to pay, after which the goods will be seized. In the event of perishable or dangerous commodities, the seven-day period will be reduced.

Penalty for seized goods

The penalty for seized goods is mentioned under Section 129(1) (a) and (b) of the CGST Act, 2017.

Section 129(1) (a)

  • If the owner of the steps of the good forward for payment of such tax and penalty – payment of the penalty will be equal to 200 per cent of the tax payable on such goods.
  • In the case of exempted goods – payment of an amount equal to 2 per cent of the value of the goods or Rs 25,000, whichever is less.

Section 129(1)(b)

  • If the owner of the goods does not come forward for payment of the penalty – payment of a sum equal to 5% of the value of the goods.
  • In the case of exempt goods – A penalty of 50% of the value of the goods or Rs 25,000, whichever is less.
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Section 130 of CGST Act, 2017 – Confiscation of goods or conveyances and levy of penalty

Section 1301 specifies the provisions of the Confiscation of goods and conveyances along with the penalty that shall be levied on the owner of goods or conveyances.

Section 130(1) – Confiscation of Goods and Conveyances

Any person –

  • who, with the aim to avoid paying taxes, provides or receives any products in violation of any of the provisions of this Act or the rules adopted thereunder.
  • Does not account for any commodities for which he is required by this Act to pay tax.
  • Without first submitting an application for registration, supplies any commodities subject to tax under this Act.
  • Violates any of the restrictions established by this Act or its provisions with the goal of avoiding paying taxes.
  • Employs any conveyance as a mode of transportation for the purpose of transporting goods in violation of this Act or the rules made thereunder, the owner of the conveyance has to establish that it was used for that purpose without the knowledge or consent of the owner, his agent, if any, and the person in charge of the conveyance, in which case all such goods or conveyances are subject to Confiscation, and the person is subject to punishment under section.

Section 130(4) of the CGST Act also states that Without providing the individual with a chance to be heard, no order for the imposition of a fine or the Confiscation of a conveyance or goods may be made.

Penalty after Confiscation

If the owner himself steps forward to pay the penalty, the minimum penalty will be 100% of the calculated tax. If the owner does not step forward himself, then the penalty payable shall be 50% of the value of the products. The maximum penalties will be equal to the pre-tax market worth of the items. The owner of the conveyance is given the option of paying a fee that shall be equal to the due tax amount on the vehicle that is confiscated. If a fine is paid as opposed to Confiscation, the other related penalties are not abated. Additional taxes, fees, and fines must be paid after the fine in lieu of Confiscation.

Before the seizure of any goods, a proper shall be given along with the opportunity of being heard. The items will become government property after they have been seized. The commodities will be auctioned after a period of three months. During that period, the confiscation fine must be paid. Other penalties, such as fines and prosecutions, would not be affected by Confiscation; they will still apply. 

Frequently Asked Questions

  1. What is detention and seizure of goods?

    Detention is the Act of denying the owner of the goods access according to a court order or notification. However, the real owner still remains the legal owner of the goods detained. When it is believed that the commodities are subject to seizure, a notice is issued, and an opportunity to be heard is given. Seizure refers to the Act of taking the physical custody of the goods from its legal owner.

  2. What does seizing goods mean?

    Seizure means that the department takes possession of the items physically. A seizure can only be carried out if it has been determined that the commodities are liable to Confiscation.

  3. What is the seizure of goods under the Customs Act?

    According to Section 110 of the Act, the appropriate official may take items if he has grounds to think they are subject to Confiscation under the said Act.

  4. What is customs detention?

    In the case of legal action against the accused infringer, customs detention is a mechanism that enables the rights holder to mobilise the items in question and gather proof of the infringement. Only the papers presented by the parties to a dispute are binding on the court.

  5. What does customs seize mean?

    When there is a good basis to believe that the items are forfeit, Customs will seize them. When commodities that have been forfeited are seized, the Crown acquires ownership of the items.

  6. What is the seizure of goods in transit?

    It is issued when it is believed that the commodities are subject to seizure. Seizure means taking the goods away from the physical custody of the owner. A seizure can only be carried out if it has been determined that the commodities are liable to Confiscation.

  7. What to do if customs seize goods?

    The goods must be restored to the person from whose possession they were taken, and if they have been sold, the sale profits must be given to him if the final judgement of the adjudicating authority or appellate authority is in his favour.

  8. What is the penalty for goods transit?

    The owner must pay a penalty equivalent to 50% of the worth of the items before tax if the owner refuses to come forward willingly.

  9. How do I release seized goods in GST?

    Anyone who wants to release the confiscated items temporarily may do so by filling out Form GST INS-04 with a bond for the value of the goods and a bank guarantee as security for the amount of relevant tax, interest, and penalty that must be paid.

  10. Can confiscated goods be released?

    According to the explicit directive of Section 110-A of the 1962 Customs Act, commodities may only be discharged in an owner's interest, and the respondent failed to prove this during the proceedings.

  11. Whether the goods seized can be released on a provisional basis?

    After execution of a bond for the value of the seized items in Form GST INS-04 and presentation of security in the form of a bank guarantee equal to the amount of relevant tax, interest, and penalty payable, the confiscated goods may be released on a temporary basis.

  12. What is the penalty for Section 129 of GST?

    Whichever is higher – 200% of the tax due or 50% of the value of the items.

  13. What is the case law on Section 129 of the GST Act?

    Ratan Stone Export v. Union of India: In this case, the Rajasthan High Court ruled that if the person conveying the products shows the required paperwork and pays the tax and penalty, in such case, the detention of goods under Section 129 of the CGST Act, 2017 is not justifiable.

  14. What is the penalty for non-compliance with GST?

    If you don't pay your taxes on time or you pay them late, you must pay a penalty of 10% of the unpaid tax, with a minimum of Rs. 10,000.

  15. What is Section 129 of the E-Way Bill?

    The person who carries the products or keeps them in transit in violation of the law, such as by carrying goods without tax invoice or bill of supply, will be detained or seized before the items and the mode of transportation are subject to detention as a result of the appropriate tax and penalty.

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References

  1. https://ipindia.gov.in/writereaddata/Portal/ev/sections/ps130.html

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