CA Shubham Gupta
Detention, seizure and release of goods and conveyances in transit under GST
Section 129 - is a penal section under GST Act, which empowers proper office to detain and seize goods and/or conveyance under transport in case they are transported in contravention of the provisions of the said Acts.
The proper officer detaining and seizing the goods and/ or conveyance has to provide proper opportunity to the transporter or such other person to explain his case by issuing a show cause notice to him. After hearing the transporter, the officer shall pass an appropriate order.
A) In case of default, where the owner of the goods comes forward for the payment of tax,
1) When the goods are taxable and the owner comes forward to pay the tax and penalty - then the amount payable would be equal to:
Tax + Penalty equal to 200% of tax.
For example, if the taxable goods valued at Rs.100,000/- (tax rate 12%) is being transported without documents and subject to detention, then if the owner of goods comes forward to pay tax and penalty, the amount payable would be equal to:
Tax Rs. 12,000/- + Penalty Rs. 24,000/- = Rs.36,000/-. Please note that the taxes paid under this provision would not be eligible to be claimed as input taxes by the recipient - refer section 17(5).
AMENDMENT AS PER BUDGET 2021
Penalty increased from 100% to 200%
2) When the goods are exempt and the owner comes forward to pay the penalty - then the amount payable would be equal to:
Penalty at 2% of value of goods or Rs. 25,000/-, whichever is lower.
For example, if the exempt goods valued at Rs. 1,00,000/- is being transported without documents and subject to detention, then if the owner of goods comes forward to pay the penalty the amount payable would be equal to: Rs. 2,000/- or Rs. 25,000/- whichever is lower, in this case it is Rs. 2,000/-.
B) In case where owner of the goods does not come forward for payment of tax,
1) When the goods are taxable and the owner does not comes forward to pay the tax and penalty - then the amount payable would be equal to:
Amount of tax and penalty equal to 50% of the value of goods Or 200% of tax payable on such goods , Whichever is higher.
For example, if the taxable goods valued at Rs. 100,000/- (tax rate 12%) is being transported without documents and subject to detention, then if the owner of goods does not comes forward to pay tax and penalty, the amount payable would be equal to:
Tax Rs. 12,000/- + Penalty Rs. 50,000/(50% of the value of goods ) or Penalty Rs. 24000/-(200% of tax payable on such goods) (Higher of above two)
Penalty would be Rs. 50000 higher of the two
Tax Rs. 12000/- + Penalty Rs. 50000/-= Rs. 62000 ,
Please note that the taxes paid under this provision would not be eligible to be claimed as input taxes by the recipient - refer section 17(5).
2) When the goods are exempt and the owner does not come forward to pay the penalty - then the amount payable would be equal to:
Penalty at 5% of the value of goods or Rs. 25,000/-, whichever is lower
AMENDMENT AS PER BUDGET 2021
Penalty increased
Penalty equal to 50% of value of goods; or 200% of tax payable on such goods , Whichever is higher.
Important point to be noted for Section 129, is Penalty under section 129 is an ‘penalty in action’, that is, penalty cannot be imposed after completion of movement in case goods are NOT intercepted during movement and found to be deficient on the prescribed documents. If subsequent evidence is collected that clearly proves that goods have been moved without issuing EWB, even then penalty under section 129 CANNOT be imposed if such investigation is conducted after movement has ended.
Important Judgments
The Kerala High Court has held that mere suspicion of mis-classification of goods cannot be the basis for a detention of goods under Section 129 of the Central Goods and Services Tax Act 2017.
The Court said that it a detention under Section 129 can be justified only if there is "contravention of the provisions of the Act in relation to transportation of goods or their storage while in transit".
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