Invalidity of Bypassing Detention Proceedings for Premature Confiscation (Section 130)

Facts

The Interception: The Petitioner, a registered dealer in metal scrap, was transporting goods that were intercepted in transit at Aslali by the State Tax Officer.
The Procedure: The Department initiated proceedings under Section 129 (Detention, seizure, and release of goods and conveyances in transit) and issued the physical verification report in Form GST MOV-04.
The Deviation: Instead of concluding the Section 129 proceedings (which typically involve payment of penalty for release of goods), the Department directly jumped to Section 130 (Confiscation of goods or conveyances and levy of penalty) by issuing a notice in Form GST MOV-10.
The Challenge: The Petitioner filed a writ petition challenging the validity of the MOV-10 notice, arguing that the Department could not bypass the logical conclusion of the detention process to initiate confiscation prematurely.

Decision

The Court ruled in favor of the Assessee, quashing the confiscation notice based on the following legal reasoning:

Distinct Statutory Contours: Sections 129 and 130 operate in different spheres. Section 129 is a remedial power to stop transit violations, whereas Section 130 is a “drastic” and “penal” power leading to the transfer of ownership of the goods to the Government.
Requirement of “Intent to Evade”: The Court emphasized that Section 130 can only be invoked if there is a specific and proven intent to evade payment of tax. The Department cannot use Section 130 as a shortcut simply because they intercepted goods under Section 129.
Sequential Logic: Once the authorities start an action under Section 129, that process must reach its logical end (either release of goods on payment of penalty or a finding of a serious violation). Bypassing this stage to directly confiscate goods without establishing the specific ingredients of tax evasion is legally unsustainable.
Final Verdict: The impugned MOV-10 notice and all subsequent confiscation proceedings were quashed as they were issued without following the proper statutory sequence and without fulfilling the prerequisites of Section 130.

Key Takeaways

Detention vs. Confiscation: Tax officers often confuse the two. While Section 129 deals with “procedural lapses” (like e-way bill errors), Section 130 requires “mens rea” or a guilty mind intended to cheat the exchequer.
Strategic Defense: If a taxpayer receives an MOV-10 (Confiscation Notice) immediately after an interception without being given the option to pay the 200% penalty under Section 129, the notice is likely a “jurisdictional error” and can be challenged in a Writ Court.
Procedural Sanctity: The Department must complete the “MOV-01 to MOV-09” cycle under Section 129 before jumping to the “MOV-10 and MOV-11” cycle of Section 130, unless they have independent and overwhelming evidence of a planned tax heist at the very outset.
Burden of Proof: Under Section 130, the burden lies heavily on the Revenue to prove that the discrepancy in the transit was not just a clerical error but a deliberate attempt to evade tax.

HIGH COURT OF GUJARAT

Krishna Industries

State Tax Officer^*

A.S. Supehia and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPLICATION NO. 20238 of 2023

JANUARY 29, 2026

Maulik Nanavati, Adv. for the Petitioner. Ms. Nimisha Parekh, Assistant Government Pleader for the Respondent.

JUDGMENT

A. S. Supehia, J.- Rule returnable forthwith. Ms. Nimisha Parekh, learned Assistant Government Pleader waives service of notice of rule.

2. Since it is submitted by learned advocates appearing for the respective parties that the issue is squarely covered by the decision of this Court Panchhi Traders v. State of Gujarat [2026] 113 GST 318/104 GSTL 289 (Gujarat), dated 11.12.2025 passed in Special Civil Application No. 9250 of 2025 and allied matters, the present writ petition may be disposed of in terms of the said order.

3. In the present writ petition, the petitioner has prayed for the following reliefs:

“6 (a) To issue a writ of mandamus or a writ, order or direction in the nature of writ of mandamus declaring the action of 1st respondent in detaining truck bearing registration number GJ 27 HT 2658 lawfully transporting goods from Ahmedabad to Sarkhej accompanied by all requisite documents together with the goods being transported therein, in purported exercise of power under Section 129 of the Goods and Services Tax Act, 2017 to be illegal, and forthwith order release of the goods and conveyance;

“aa) To issue a writ of mandamus or a writ, order or direction in the nature of mandamus declaring the notice dated 02.12.2023 issued under Section 130 of the Central Goods and Services Tax Act, 2017 – for confiscation of goods by the State Tax Officer, Central Mobile Squad, Ahmedabad as being without jurisdiction, illegal and contrary to provisions of the Act, and therefore bad in law;”

“bb) To pass an ex parte ad interim order staying the operation of notice dated 02.12.2023 issued in Form MOV-10 under Section 110 of the Central Goods and Services Tax Act, 2017 and further proceedings pursuant to or under the said notice for confiscation of goods and conveyance by the State Tax Officer, Central Mobile Squad, Ahmedabad pending the hearing and final disposal of the present petition;”

4. Thus, after the initial Prayer-6(a) was made in the petition, subsequently the respondents had passed an order under MOV-10 of the Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the Act’ for short), which has been assailed by the petitioner by amending its prayer.

5. Brief facts leading to filing of the present writ petition are as under:

5.1 The petitioner company is engaged in the business of sale of metal scrap. The company has obtained registration under the provisions of the Goods and Services Tax Act, 2017 on 13.02.2019 and has thereafter commenced business of sale of metal scrap.

5.2 On 22.11.2023 at around 6:11 AM the truck transporting the goods was intercepted at Aslali, Ahmedabad by the State Tax Officer (2), Mobile Squad, Ahmedabad.

5.3 It appears that thereafter the concerned Officer passed an order for physical verification in Form GST MOV-04 and ultimately during the pendency of the writ petition, notice under MOV-10 has been passed on 02.12.2023. It is the case of the petitioner that such notice has been issued abandoning the proceeding under Section 129 of the Act and hence invocation of power under Section 130 of the Act for confiscating the goods, which has been detained in exercise of power under Section 129 of the Act, are illegal more particularly in view of the decision of this Court dated 11.12.2025.

6. Learned Assistant Government Pleader Ms. Nimisha Parekh is unable to dispute the action of the respondents as it appears that after initiating the action under Section 129 of the Act, which emanated from the interception of the conveyance on 22.11.2023, the respondents have directly jumped on the provisions under Section 130 of the Act, proposing to confiscate the goods and conveyance in Form GST MOV- 10 on 02.12.2023.

7. This issue has already been answered by this Court in the decision dated 11.12.2025. The relevant paragraphs are as under:

“51. On the deletion of the sub-section(2) of Section 129, vide Finance Act, 2021, the provisional release of goods as provided under Section 67(6) for the goods seized and detained under Section 129 will no longer will be available. The provision of sub-section(2) which connected the provisional release of goods and conveyance with Section 67(6) of the CGST Act appears to have be precisely snapped, since the provision of Section 67(6) of the CGST Act, does not refer to the release of “conveyance” seized during transit. Section 67(6) of the CGST Act, only uses the word “goods”, whereas Section 129 of the CGST Act, refers to both, i.e. goods and conveyance, which are seized during transit. Hence, it is hard to comprehend that for seizure of goods, the provisional release is available, but for the conveyance from which the goods are seized, the proper officer is required to follow the procedure prescribed in the amended Section 129 of the CGST Act. Hence, once the goods and conveyance are seized, no remedy of provisional release of the same is available under Section 67(6) of the CGST Act after the amendment, and only remedy is the one prescribed under Section 129 of the CGST Act.

52. Having held as above, we may delve in to the provision of Section 130 of the CGST Act. The provisions of Section 130 of the CGST Act, has the caption “confiscation of goods or conveyances and levy of penalty”. Thus, Section 129 of the CGST Act provides for seizure and detention of goods and conveyance during transit, whereas Section 130 directs confiscation of goods or conveyances. The provision of Section 130, if read in juxtaposition with Section 67 of the CGST Act, it is borne out that, the ‘goods’ which are seized during the inspection and search on the premises/warehouses under Section 67 of the CGST Act, and are liable to be confiscated, can be confiscated under Section 130 and the person, who supplies, receives, or stores good, having intention to evade tax then the goods can be confiscated and such person shall be liable to penalty under Section 122 of the CGST Act, and also fine. The seizure and confiscation of ‘goods’ under Sections 67 and 130 of the CGST Act, is interlinked with the expression “intention of evasion of tax”. Thus, after such “seizure” of goods, if the goods are not confiscated, they can be provisionally released under the Section 67(6). The confiscation of the goods or conveyance, and their release/disposal is embedded in Section 130 of the Act, and not under Section 129.

53. So far as the seizure of ‘conveyance’ is concerned, the same can be resorted during transit under Section 129 of the CGST Act and for confiscation under Section 130 of the CGST Act. The word “conveyance” is missing in Section 67 of the Act, and can only be found in Sections 129 and 130 of the CGST Act. “Conveyance” is distinctly defined in Section 2(34) of the Act, whereas “Goods” has been defined in Section 2(52), which means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Thus, “conveyance” has been kept out of scope and ambit of definition of “goods”, hence the same are differently used in the provisions of Sections 129 and 130 of the CGST Act. However, the ‘conveyance’ used by any person for transporting goods with an intent to evade payment of tax is liable to be confiscated, as the conveyance/vehicle would be an integral and intrinsic part of goods, which are transported with an intention to evade tax.

54. The intention of the parliament to delink provisions of sections 129 and 130 is apparent from the statement and object of Finance Act. Both the sections provide different approach to be adopted by the authorities and also specify different penalties. Section 130 of the Act, has the grave consequences as the goods or conveyance, after confiscation vests in the government. Both the Sections operate within their contour, unless they are bridged by the element of “intention to evade tax”. It does not mean that the goods or conveyance seized during transit cannot be subjected to confiscation. It will be a hostility to the provisions of both Sections 129 and 130 of the CGST Act, if they are viewed with myopic vision. The petitioners have asserted that by retaining the non-obstante clause in Section 129, the same becomes a complete code in itself and has overriding effect on Section 130 of the Act, and hence the authorities have to complete the entire process envisaged under Section 129 of the Act and are precluded from resorting confiscation under Section 130 midway. However, we do not subscribe to the interpretation as advanced. It is true, that the provision of Section 129 has retained the non-obstante clause which mentions about the overriding effect on the provisions of the entire Act. The effect of non-obstante clause is that the entire procedure prescribed under Section 129 of the CGST Act has to be followed, and the action of seizure of goods and conveyance is required to be brought to its logical end as per the provisions of Section 129 of the CGST Act only. However, the only caveat is that the goods and conveyance which are seized can be confiscated under Section 130 of the CGST Act, if they involve an element of “intention to evade payment of tax”. The legislature cannot be attributed the intention of absolute ignoring the provision of Section 130 of the CGST Act, even if there is blatant evasion of payment of tax, which is apparent, when a conveyance is intercepted during transit. When a authorized officer intercepts the vehicle carrying goods, and on the non-presentation or presentation of the forged documents, the ambiguous description of the goods, the wrong declaration of place from where the goods are loaded and the destination, the route adopted in transit, etc, if he finds that such methodology is adopted, with an intention to evade the payment of tax, he/she can resort to the process of confiscation of the goods and conveyance, after seizure, as provided in the Circular dated 13.04.2018 read with Rule 138B.”

8. The petition is accordingly allowed. The impugned notice dated 02.12.2023 and the subsequent proceedings, if any, are hereby quashed and set-aside. Rule is made absolute.