INTERCEPTION, INSPECTION, DETENTION, SEIZURE OR CONFISCATION UNDER GST
In-transit inspection plays a
critical role in law enforcement under any Indirect tax system. Interception,
detention and seizure provisions of the GST Law perform the function of administrating
law on a real time basis to check tax evasion during movement of goods.
Each term represents a different
stage in a proceeding and the rigours increase as the stage progresses. Rights
and obligations of the officer and the tax payer are different at each level of
the proceeding and hence one needs to be mindful of the stage of the
proceedings while addressing the questions of the officer. Majority of such
cases fails on jurisdictional & procedural issues.
Let us understand the detailed
provisions relating to every aspect:
68(1) read with Rule 138 to 138D stipulates the person in charge of conveyance
to carry documents as may be prescribed.
68(2) &(3) provides powers to proper officers to inspect the conveyance an
requiring person in charge to produce the documents for verification.
Where the person in charge of
conveyance fails to produce documents, then the following course of action can
be initiated by proper officer –
| Form|| Time Limit|| Purpose of
| GST MOV-01|| NA|| Record a Statement of Person in Charge|
| GST MOV-02|| NA|| Requiring the person in charge to station the
conveyance at the place mentioned in such order|
| Part A of GST EWB-03|| Within 24 hours of issuing GST MOV-02|| Prepare an initial report of inspection|
| GST MOV-03|| NA|| Obtaining approval from commissioner for
extending time period of 3 days|
| GST MOV-04|| Within 3 days of Physical verification|| Prepare a report of physical verification|
| Part A of GST EWB-03|| Within 3 days of Physical verification|| Prepare a Final report of inspection|
| GST MOV-05|| NA|| Where no discrepancies are found after the
inspection, proper officer shall allow the conveyance to move further|
Detention & Seizure
129 of CGST Act gives powers to proper officers to detain the goods/conveyance
if he found some discrepancies at the time of inspection and following course
of action can be initiated by him –
| Form|| Time Limit|| Purpose of
| GST MOV-06|| NA|| Where proper officer is of the opinion that goods
needs to be detained, he shall issue an order of detention|
| GST MOV-07|| NA|| Notice for detention of goods/conveyance
specifying the tax and penalty payable|
| GST MOV-08|| NA|| Obtaining a bond in terms of 129(1)(C) of CGST
| GST MOV-09|| NA|| Demand Order|
- Penalty – Detention/ seizure of
goods and conveyance used for transport of goods. Can be released on
- Payment of tax and penalty(100% of tax) where
owner comes forward OR
- In all other cases, Payment of tax and penalty
(50% of value of goods less any tax already
The fine legal
difference between detention and confiscation is that detention is invoked only
on suspicion over tax evasion whereas confiscation require reasons beyond doubt
that the goods are a result of tax evasion. (Kerala High court in Indus Towers vs. Asst. State Tax Officer 2018)
130 of CGST Act lists outs five circumstances where goods will be liable for
- Supplies or receives goods in contravention of the
provisions of act with intention of tax evasion
- Does not account for goods liable for paying tax
- Supplies goods without obtaining a registration
- Contravenes any provisions of act with intention
of tax evasion
- Uses any conveyance as means of transport for
than above, proper officer can also order for confiscation if demand ordered
during detention is not paid within 7 days.
The following course of action
can be initiated by him –
| Form|| Time Limit|| Purpose of
| GST MOV-10||Within 7 days from the order of detention in MOV-06||Notice for taking |
action under section
130 for confiscation of goods
| GST MOV-11|| || Order of confiscation allowing time to make payment of tax & |
penalty within 3
| GST DRC-07|| ||Summary of every |
order of GST MOV-09
and GST MOV-11.
Also for imposing
nominal penalty of Rs. 500 in each Act under various situations as mentioned below of
No order of confiscation shall be issued without giving the person an
opportunity of being heard.
- Consequences of GST Mov-11 –
- Title of such conveyance shall stand transferred
to the Central Government
- In case neither the owner of goods nor any
person other than the owner of goods comes forward to make the payment of tax, penalty
and gets the goods release in time(3 months), the proper officer shall auction
the goods and/or conveyance by a public auction and remit the sale proceeds to
the account of the Central Government.
such goods and/ or conveyance shall be liable to confiscation and the person
shall be liable to penalty under section 122
- Option to pay fine in lieu of confiscation
- Shall not exceed
Market value- tax on such goods;
- Shall not be less than penalty u/s 129
Important Points to Consider
to be provided in time limit for issuing notices/order in case of perishable or
an order passed under CGST act, a corresponding order shall be passed by him
under SGST/UTGST Act.
of tax, penalty, fine shall be uploaded in GST portal. Where no GST portal,
Temporary ID shall be created by the proper officer.
per Rule 138C(2), where physical verification of goods has been done during
transit at one place within a State or UT or in any other State or UT, no
further physical verification of the said conveyance shall be carried out again
in the State or UT unless a specific information relating to tax evasion is
made available subsequently. Till the forms are available online, hard copies
of the notices/orders issued by specified authority may be shown as proof of
initiation of action as and when required.
such goods/conveyance can be detained in respect of which there is a violation
of provisions of this Act.
following cases proceedings under Section 129(Detention/Seizure) may not be
- Spelling mistakes in the name of consignor or
the consignee but the GSTIN is correct.
- Error in the Pin Code but address of the
consignor and consignee is correct.
- Error in the address of consignee to the extent
the locality and other details of the consignee are correct.
- Error in one or two digits of the document
number mentioned in the eway bill.
- Error in 4 or 6 digit level of HSN where the
first 2 digits of HSN are correct and the tax rate is correct.
- Error in one/two digits/character of the vehicle
In the above mentioned cases, penalty to the tune of Rs 500 in each
Act can be imposed in Form GST DRC-07.
- Proper officer as mentioned everywhere in this
article shall be the following –
- For Inspection/Interception – Inspector of
Central Tax and his superiors
- For Detention/Seizure, Confiscation –
Assistant/Deputy Commissioner of Central Tax
In addition to the above
penalties for the non-compliances discussed, there will also be prosecution as
per provision of Section 132 of CGST Act which may extent to 5 years depending
upon the severity of violation under GST Act.
Authored by CA Sanjay Kumar Agrawal and can be reached email@example.com
Anything written in this document is the personal understanding of the author. The author shall not be responsible for any of the decision made based on the contents of this document.
Dated: 8th April 2019