Officer Must Choose: Conclude Detention (S. 129) or Initiate Confiscation (S. 130).

Issue

Can a GST officer initiate confiscation proceedings under Section 130 of the CGST Act while detention proceedings under Section 129 for the same goods are still active, or must the officer first conclude the detention proceedings before escalating the matter to confiscation?

Facts

The petitioner, a trader in palm nuts, was transporting goods from Kerala to Nagpur.
The goods were intercepted in transit and detained under Section 129 for a mismatch with the accompanying documents.
Following the detention, the tax officer issued a notice for confiscation under Section 130.
The petitioner filed a writ petition, arguing that the officer could not invoke confiscation (Section 130) without first concluding the detention proceedings (Section 129), as the petitioner was being denied the right to get the goods released on payment of the lesser penalty under the detention provisions.

Decision

The High Court ruled in favour of the assessee, remanding the matter with clear directions.
It held that an officer has to make an election: they can either proceed under the detention regime (Section 129) or the confiscation regime (Section 130), but not both simultaneously in a way that leaves the taxpayer in limbo.
The court clarified that the payment of tax and penalty under Section 129 concludes the detention proceedings.
Therefore, the officer must first close the detention proceedings (either by accepting the penalty or by formally dropping them) before they can initiate separate proceedings for confiscation under Section 130.
The authority was directed to intimate the petitioner within two days which path they would pursue:
1. Continue the detention under Section 129 (allowing the petitioner to pay the penalty and release the goods).
2. Close the detention proceeding and formally initiate confiscation under Section 130.

Key Takeaways

Sequential, Not Parallel, Proceedings: Section 129 (Detention) and Section 130 (Confiscation) are distinct and generally sequential, not parallel, proceedings.
Detention vs. Confiscation:
- Section 129 (Detention): A temporary measure for any contravention of GST law during transit. It is concluded upon payment of a specified penalty.
- Section 130 (Confiscation): A much harsher, quasi-criminal proceeding that deprives the owner of the goods. It requires a higher burden of proof, specifically an “intent to evade tax.”
Officer Must Elect: An officer cannot “convert” a detention into a confiscation. They must formally close the detention proceeding before they can begin a new proceeding for confiscation.
Taxpayer’s Right: This judgment protects the taxpayer’s statutory right under Section 129 to get their goods released by paying the applicable (and often lower) penalty, without being preemptively forced into the more severe confiscation process.

HIGH COURT OF ANDHRA PRADESH

PVM Traders

State of Andhra Pradesh*

R RAGHUNANDAN RAO and T.C.D. Sekhar, JJ.

WRIT PETITION NO. 26670 OF 2025

SEPTEMBER 26, 2025

P Hemachandra for the Petitioner.

ORDER

1. The petitioner, who deals in Palm nuts was transporting them from Kerala to Nagapur, Maharashtra on 19.08.2025. The vehicle carrying these goods was intercepted by the 3^rd respondent, on 20.08.2025, at Gooty. The 3^rd respondent detained these goods by issuing MOV-01, dated 20.08.2025, to the driver of the lorry carrying these goods. Thereafter, notices MOV-2 and MOV-4 and MOV-6 were issued. Under the proceedings of MOV-6, dated 23.08.2025, the Palm nuts were detained on the ground that the commodity does not match with the documents accompanying the said goods. Thereafter, proceedings were initiated under Section 130 of the CGST Act, by way of issuance of Form GST MOV-10. Being aggrieved by the initiation of proceedings under Section 130 of GST Act, as well as the inaction of the 3^rd respondent in not releasing the goods on payment of penalty that is to be fixed under Section 129 of the CGST Act, the petitioner, has approached this Court, by way of this Writ Petition.

2. Sri Amal Darshan, learned counsel for the petitioner contends that the 3^rd respondent having initiated action under Section 129 of the CGST Act could not have initiated action under Section 130 without completing the proceedings under Section 129 of the CGST Act. He relies upon the judgment of the High Court of Karnataka as well as the judgment of a Division Bench of this Court in Arhaan Ferrous and Non-Ferrous Solutions (P.) Ltd. v. Deputy Assistant Commissioner-1(ST) GST 437/77 GSTL 46 (Andhra Pradesh)/W.P.No.15481 of 2023, dated 03.08.2023 and batch.

3. The learned Government Pleader, on the other hand, contends on the basis of the judgment of a Division Bench of this Court in Cluster Enterprises v. Deputy Assistant Commissioner (ST)-2 m GSTL 179/105 GST 738 (Andhra Pradesh)/W.P.No.13375 and 14045 of 2025, dated 24.07.2024, that Section 129 and Section 130 are separate provisions and process could be initiated under both the provisions separately.

4. The present Writ Petition is filed against the show cause notice issued under Section 130, on the ground that the said show cause notice is without jurisdiction inasmuch as such a notice could not have been issued, under Section 130, without completing all the proceedings under Section 129 of the CGST Act.

5. The learned counsel for the petitioner would further contend that the notice under Section 130 of the CGST Act has not been served on the petitioner and has been served only on the driver of the vehicle due to which the petitioner does not have an opportunity of hearing.

6. As the petitioner is now in possession of the notice issued by the 3^rd respondent, proposing confiscation of the goods, it would only be appropriate to permit the petitioner to file his objections to the said show cause notice at the earliest and to direct the 3^rd respondent to take appropriate steps at the earliest. The learned counsel for the petitioner would also contend that the goods in question are perishable in nature and it would not be in the interests of either the petitioner or the revenue, for the 3^rd respondent to retain the palm nuts. Learned counsel for the petitioner would also point out to Section 129(3) which would require the Detaining Officer to issue a notice specifying the penalty payable and permitting the person transporting the goods or the owner of the said goods, to pay the penalty.

7. As held by this Court, the Detaining Officer can either initiate action under Section 129 or under Section 130 of the CGST Act. Having initiated action under Section 129 of the CGST Act, the 3^rd respondent would still have an option of either continuing the proceedings under Section 129 or to give up proceedings under Section 129 and proceed with proceedings under Section 130. In the present case, the 3^rd respondent without completing the proceedings under Section 129 has now opted to initiate action under Section 130. In such circumstances, the 3^rd respondent would have to take a decision as to whether he will continue under the provisions of Section 129 or take up proceedings under Section 130 by closing the proceedings under Section 129. This view is taken in the light of Section 129(5) of the CGST Act which states that payment of penalty would conclude the proceedings in respect of the goods which are being seized under Section 129.

8. In the circumstances, this Writ Petition is disposed of with a direction to the 3^rd respondent to indicate to the petitioner within two days, whether the 3^rd respondent intends to continue with the proceedings under Section 129 or is proposing to take up proceedings under Section 130 by closing the proceedings under Section 129 of the CGST Act.

9. Upon such intimation, it would be open to the petitioner to make his representation which shall be considered within three days of the representation being made to the 3^rd respondent. There shall be no order as to costs.

As a sequel, miscellaneous petitions, pending if any, shall stand closed.