In a common judgment disposing of a batch of roughly 90 connected writ petitions, the Gujarat High Court has revisited the relationship between the detention/seizure provisions and the confiscation provisions of the CGST Act, both before and after their amendment by the Finance Act, 2021, and laid down a detailed framework for when goods detained in transit can be confiscated.

Facts of the Case

The lead petitioner, M/s Panchhi Traders, through its authorised signatory, along with petitioners in around 90 connected Special Civil Applications, challenged action taken by GST authorities confiscating goods that had been intercepted and detained in transit. In each case, upon interception of the conveyance and examination of e-way bills and supporting documents, the Proper Officer issued notices in FORM GST MOV-10 proposing confiscation under Section 130 of the CGST Act, 2017, instead of, or without completing, the detention/release procedure under Section 129 of the CGST Act. The petitioners contended that this practice, which intensified after the amendments to Sections 129 and 130 introduced with effect from 01.01.2022 by the Finance Act, 2021, was without jurisdiction. The matters were heard together as they raised common questions on the interplay of Sections 129 and 130, in light of the earlier Division Bench decision in Synergy Fertichem Pvt. Ltd. v. State of Gujarat.

Issues Involved

  1. Whether, after the 01.01.2022 amendment removing the non-obstante clause from Section 130 while retaining it in Section 129, the authorities must complete the entire Section 129 detention/release procedure before invoking Section 130 for confiscation.
  2. Whether Section 130 can be invoked directly, at the threshold of interception, without an established "intention to evade tax," and if so, on what standard and within what timeline such intention must be formed.

Petitioner's Arguments

  • Section 129 is now a self-contained code with its own recovery mechanism (auction under amended Section 129(6)), removing any statutory necessity to invoke Section 130 once Section 129 proceedings are initiated.
  • The removal of the non-obstante clause from Section 130, while retaining it in Section 129, shows the two provisions were deliberately de-linked, with Section 129 prevailing in cases of detention and seizure in transit.
  • Section 130 requires an established "intent to evade tax," which cannot be presumed from a mere e-way bill or documentation defect and can only be discovered through search and seizure under Section 67; the intercepting officer is not competent to reach such a conclusion.
  • Once goods are seized under Section 129 up to the stage of FORM GST MOV-07, authorities cannot prematurely invoke Section 130 and issue FORM GST MOV-10.

Respondent's Arguments

  • The learned Advocate General relied on the Division Bench decision in Synergy Fertichem Pvt. Ltd., which had already held that Section 130 is not dependent on Section 129(6) and that the two provisions are mutually exclusive and independent of each other.
  • There is no statutory bar on invoking Section 130 for confiscation of goods that were initially detained under Section 129, where the Proper Officer forms an opinion of gross evasion of tax and issues notice in FORM MOV-10.
  • A non-obstante clause has effect only where there is an actual conflict between provisions; since Sections 129 and 130 operate in different spheres, the deletion of the clause from Section 130 has no bearing on the department's power to invoke it.

Court Order / Findings

  • The Court reaffirmed the ratio of Synergy Fertichem that Sections 129 and 130 of the CGST Act are mutually exclusive and independent provisions, and that Section 130 is not contingent upon completion of, or failure under, Section 129 proceedings; the amendments to the non-obstante clauses did not alter this position.
  • Confiscation under Section 130 requires the Proper Officer to form an opinion of "intention to evade tax" based on concrete material and attendant circumstances — not mere suspicion — and is reserved for contraventions of the highest degree (fake/forged documents, absence of dealer details, fake registration, etc.), not minor or clerical errors covered by CBIC Circular dated 14.09.2018.
  • Such opinion of intent to evade tax must ordinarily be formed within the timelines prescribed under Rule 138C of the CGST Rules for inspection reports (24 hours/three days, extendable), failing which goods must be released under Section 129.
  • Even where goods are released on payment of tax and penalty under Section 129, confiscation proceedings under Section 130 can still be initiated later if incriminating material of a serious nature subsequently comes to light.
  • Without examining the merits of individual confiscation notices, the Court remanded all the matters, directing that FORM MOV-10 notices/FORM MOV-11 orders be re-examined in light of its observations, be withdrawn where contrary to them, with orders to be passed within 12 weeks, a two-week window before any imminent confiscation to allow petitioners to approach the Court again, and warned that officers acting in defiance of the observations would be liable for contempt.

Important Clarification

  • Sections 129 and 130 of the CGST Act operate independently; the department is not obliged to exhaust the Section 129 detention/release procedure before invoking Section 130, provided a genuine, material-based opinion of intent to evade tax is formed.
  • Confiscation at the threshold is an extreme measure reserved for blatant contraventions with a definite intent to evade tax, and cannot be triggered by minor or curable documentation errors of the kind listed in CBIC's clarificatory circulars.
  • The opinion of intent to evade tax for goods in transit must be formed within the time frame for inspection reports under Rule 138C; absent timely formation of such opinion, release must follow under Section 129, without prejudice to later confiscation proceedings if fresh incriminating material surfaces.

Sections Involved

  • Section 129, CGST Act, 2017 — detention, seizure and release of goods and conveyances in transit.
  • Section 130, CGST Act, 2017 — confiscation of goods or conveyance and levy of tax, penalty and fine where there is intent to evade tax.
  • Section 67, CGST Act, 2017 — power of inspection, search and seizure, including provisional release under sub-section (6).
  • Rule 138C, CGST Rules, 2017 — timelines for inspection and verification reports on goods in transit (FORM GST EWB-04).

Decision – In Favour of

The batch of writ petitions was disposed of with detailed directions and remand, rather than a finding on individual merits — partly in favour of the Assessees, in that the Court laid down strict conditions and timelines curbing indiscriminate resort to Section 130, while upholding the department's power to invoke Section 130 independently of Section 129 where genuine evasion is established.

Case Details

  • Court: High Court of Gujarat at Ahmedabad
  • Case No.: R/Special Civil Application No. 9250 of 2020, with approximately 90 connected Special Civil Applications
  • Coram: Hon'ble Mr. Justice A.S. Supehia and Hon'ble Mr. Justice Pranav Trivedi
  • Date of Judgment: 11 December 2025 (Reserved on 28 November 2025)
  • Parties (lead matter): M/s Panchhi Traders vs State of Gujarat, through Deputy Commissioner (Enforcement) & Another

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