Prakhar Softech Services Ltd.
Article Dated 30th May, 2023


(1) Notwithstanding anything contained in this Act, 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, -

(a) on payment of penalty equal to two 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 penalty;

(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, 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 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:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

(3) 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 under clause (a) or clause (b) of sub-section (1).

(4) No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.

(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.

(6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3):

Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less:

Provided further that 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 fifteen days may be reduced by the proper officer.

Analysis of this Section:

This section provides GST departments the power to Detain, Seize and Release goods that are being transported and/or stored in contravention of this Act. Also, the conveyance can be detained, seized, or released if it is used in the transportation of goods mentioned above. For example, when goods are transported without an e-way bill or proper invoicing. These goods or conveyances can be released on payment of certain penalties.

Penalties for the release of goods or conveyance:

  1. Detained or seized goods can be released on payment of the following penalties by the owner of the goods:

When owner comes forward

In case of Taxable Goods 200% of Tax Payable

In case of Exempted goods

  • 2% of Value of goods or, 

  • Rs.25,000 

Whichever is lower

When owner doesn’t come forward

In case of Taxable Goods

  • 50% of value of goods or, 

  • 200% of Tax Payable 

Whichever is Higher

In case of Exempted goods

  • 5% of Value of goods or, 

  • Rs.25,000 

Whichever is lower

  • The Value of goods for the purpose of calculation of penalty as aforementioned above shall be exclusive of GST.

  • This Penalties pertain to the CGST Act, similar amount/percentage of penalties are leviable for SGST Act(s).

  • Abovementioned penalties for interstate supplies shall be charged in accordance with 4th proviso of Section 20 of IGST act.

Implications of these penalties can be understood by the following example:


When owner comes forward

When owner doesn’t come forward

Value of goods



GST @ 12%



Penalty (CGST)



Penalty (SGST)



  1. The transporter can also get his conveyance released on payment of following liability:
    • Penalty as prescribed for goods above or,

    • Rs.1,00,000
      whichever is lower.

Procedure for detention, seizure, and release:

  • Proper officer shall issue a notice specifying the amount of penalty, to the concerned person within 7 days of detention or seizure

  • Thereafter, within 7 days of service of notice, issue an order for payment of such penalty.

However, if the concerned person makes payment of penalty within 7 days of service of notice and communicates the same to the proper officer, the proper officer shall issue an order concluding the proceedings.

  • If such concerned person doesn’t make payment of the penalty within 15 days from date of receipt of such order, the detained or seized goods are liable to be sold for recovery of penalty.

However, in case the goods are of perishable or hazardous in nature, the abovementioned period of 15 days may be reduced by the proper officer.

[“Concerned person” in above 3 points means Owner of the goods or the transporter]

Recovery of Penalty by Sale of Goods or Conveyance after Detention or Seizure [Rule 144A]:

  • Rule 144A of the Central Goods and Services Tax (GST) Rules enables the recovery of penalties through the sale of detained or seized goods or conveyance in transit.

  • If the penalty is not paid within fifteen days, the proper officer can proceed with the sale of the goods or conveyance.

  • The sale is conducted through an auction process, including e-auction.

  • A notice (FORM GST DRC-10) is issued to inform about the goods or conveyance to be sold and the purpose of the sale.

  • The auction date is set at least fifteen days from the date of the notice, although it can be reduced for perishable, hazardous, or depreciating goods.

  • Bidders may be required to provide a pre-bid deposit, which can be returned to unsuccessful bidders or forfeited if the successful bidder fails to make the full payment.

  • The successful bidder is issued a notice (FORM GST DRC-11) and must make the payment within fifteen days from the auction date.

  • Upon full payment, the possession and ownership of the goods or conveyance are transferred to the successful bidder, and a certificate (FORM GST DRC-12) is issued.

  • In case of no bids or non-competitive auctions, the proper officer can cancel the process and proceed with re-auction.

  • If an appeal has been filed, the recovery proceedings are stayed, except for perishable or hazardous goods.

Related Circulars:

Who will be considered 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 would 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 would determine who should be declared as the owner of the goods.

Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release, and confiscation of such goods and conveyances

In case a consignment of goods is accompanied by 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.

In the above cases, penalty to the tune of Rs.500 each under section 125 of CGST act as well as in the respective State GST act (Rs.1000 in case of IGST act) is applicable.

Designation of Proper Officer: The Commissioner or an authorized officer designates a specific officer or a team of officers as the "proper officer(s)". This officer(s) is responsible for conducting interception and inspection activities within a specified jurisdictional area.

Interception and Inspection: The designated proper officer has the authority to intercept any conveyance (vehicle) for the purpose of verifying documents and inspecting goods. When a conveyance is intercepted, the person in charge of the conveyance must produce the necessary documents related to the goods and the conveyance. The proper officer examines and verifies the provided documents. If no discrepancies are found, the conveyance is allowed to proceed further. An e-way bill number may be provided in various formats (printout, SMS, or written on an invoice), and all these forms are considered valid. Electronic verification of the e-way bill can be done through the official portal, mobile app, or via SMS.

Recording Statements and Issuing Orders: If the person in charge of the conveyance fails to produce the required documents or if the proper officer intends to conduct an inspection, a statement is recorded from the person in charge using Form GST MOV-01.

Additionally, the proper officer issues an order for the physical verification/inspection of the conveyance, goods, and documents using Form GST MOV-02.

The order specifies the location where the conveyance should be stationed for inspection.

Conclusion of Inspection Proceedings: The proper officer must conclude the inspection proceedings within three working days from the date of issuing the order in Form GST MOV-02.

In case additional time is needed, written permission in Form GST MOV-03 must be obtained from the Commissioner or an authorized officer.

After the physical verification/inspection, the proper officer prepares a report in Part A of Form GST EWB-03 within 24 hours and uploads it on the common portal.

Release, Detention, and Payment: If no discrepancies are found during the inspection of goods and conveyance, the proper officer issues a release order (Form GST MOV-05) allowing the conveyance to continue its movement.

If the proper officer believes that the goods and conveyance need to be detained under section 129 of the CGST Act, an order of detention (Form GST MOV-06) and a notice (Form GST MOV-07) specifying the tax and penalty payable are issued.

In case of detention, the person in charge of the conveyance is served with the notice.

Confiscation of Goods and Conveyance: If the owner of the goods or an authorized person comes forward and pays the applicable tax and penalty, the proper officer releases the goods and conveyance through an order in Form GST MOV-05.

In case the owner of the goods does not come forward to make the payment, the proper officer may initiate confiscation proceedings.

A notice proposing confiscation (Form GST MOV-10) is issued, specifying the tax and penalty leviable under section 130 of the CGST Act.

The notice may also propose a fine in lieu of confiscation for the conveyance owner.

No order for confiscation or penalty can be issued without giving the person an opportunity to be heard.

Auction and Disposal: If neither the owner of the goods nor any other person comes forward to make the payment within the specified time, the proper officer may auction the goods and/or conveyance through a public auction.

The sale proceeds from the auction are remitted to the Central Government.

CA Pranay Jain is a young and aspiring Chartered Accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.

He is also socially active on LinkedIn at

CA Pranay Jain
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