Facts of the Case

In a batch of over 80 connected writ petitions led by M/S Panchhi Traders, the Gujarat High Court examined the scope of Sections 129 and 130 of the CGST Act, 2017 as amended by the Finance Act, 2021 with effect from 01.01.2022. In each case, goods being transported were intercepted, and the Proper Officer, after issuing detention notices under Section 129 (Forms GST MOV-06/07), directly jumped to issuing confiscation notices under Section 130 in Form GST MOV-10, without completing the Section 129 procedure. The petitioners argued this was impermissible after the amendment delinked the two provisions, while the State relied on an earlier Division Bench ruling in Synergy Fertichem Private Limited v. State of Gujarat (2019), which had held the two sections mutually exclusive and independent even in their pre-amended form.

Issues Involved

  1. Whether, after the Finance Act, 2021 amendment retaining the non-obstante clause in Section 129 but deleting it from Section 130, confiscation proceedings can still be initiated directly via Form MOV-10 without first completing the Section 129 procedure.
  2. Whether goods and conveyances can be released under Section 67(6) once confiscation proceedings under Section 130 have been initiated, given the deletion of the cross-reference to Section 67(6) from Section 129.
  3. What standard of 'intent to evade tax' must be satisfied before confiscation under Section 130 can be invoked at the threshold of interception.

Petitioner's Arguments

  • Post-amendment, Section 129 retains its non-obstante clause and is now a self-contained code with its own auction mechanism under Section 129(6), while Section 130's non-obstante clause has been deleted, delinking the two provisions; hence the Proper Officer must complete Section 129 procedure rather than jump straight to Section 130.
  • Confiscation under Section 130 requires an established intent to evade tax, which cannot be presumed from a mere e-way bill defect or portal data discrepancy and can only genuinely be established through search and seizure under Section 67 of the Act, relying on M/s ASP Traders v. State of U.P. and Shiv Enterprises v. State of Punjab.
  • Even where Section 130 is invoked, goods should still be releasable under Section 67(6), as the definition of 'goods'/'things' would extend to conveyances, and Rule 144A's insertion post-amendment reinforces the independence of the two provisions' recovery mechanisms.

Respondent's Arguments

  • The Advocate General for the State relied heavily on Synergy Fertichem Private Limited v. State of Gujarat (2019), a Division Bench ruling that had already held Sections 129 and 130 to be mutually exclusive and independent, arguing this position was unaffected by the Finance Act, 2021 amendment.
  • It was submitted that once the Proper Officer finds gross evasion of tax at the interception stage, Section 130 can be invoked directly via Form MOV-10, without first exhausting Section 129, and that a non-obstante clause only overrides in case of actual conflict, which does not arise here.

Court Order / Findings

  • Tracing the legislative history through the 39th GST Council Meeting minutes and the Finance Bill, 2021 memorandum, the Court found Parliament's clear intent was to delink detention/seizure proceedings under Section 129 from confiscation proceedings under Section 130.
  • The Court held that at the interception stage, the Proper Officer must form an opinion of 'intent to evade tax' based on genuine scrutiny of documents; confiscation under Section 130 cannot be resorted to on mere suspicion or ipse dixit, but only for blatant, high-degree contraventions such as fake or forged documents, absent registration or complete mismatch of goods — first-degree or minor documentary errors (as clarified in CBIC Circular dated 14.09.2018) cannot justify even a Section 129 detention.
  • The Court clarified that Rule 138C requires the opinion of tax evasion to be formed within the prescribed inspection timeline (up to six days), failing which goods must be released under Section 129; however, if incriminating material surfaces later during inquiry even after release, confiscation proceedings can still be initiated under Section 130, per Synergy Fertichem.
  • All matters were remanded: MOV-10/MOV-11 notices/orders were directed to be re-examined against these observations and withdrawn if they failed to meet the threshold; officers acting in defiance of the Court's observations were warned they would be liable for contempt.

Important Clarification

  • Post the Finance Act, 2021 amendment (effective 01.01.2022), Sections 129 and 130 of the CGST Act remain independent and mutually exclusive, but confiscation at the threshold of interception demands cogent, contemporaneous evidence of a definite intent to evade tax — not mere suspicion or discrepancies traceable to a supplier's supplier.
  • Minor, first-degree documentation errors listed in CBIC's clarificatory circulars (spelling mistakes, PIN code errors, minor digit errors) cannot justify even Section 129 detention, let alone Section 130 confiscation.
  • The window for the Proper Officer to form an opinion on tax-evasion intent for goods in transit is time-bound by Rule 138C (broadly six days); beyond that, absent such opinion, release under Section 129 is mandatory, though later-discovered incriminating material can still trigger confiscation.

Sections Involved

  • Section 129, CGST Act, 2017 – detention, seizure and release of goods and conveyances in transit (self-contained post-2022 amendment).
  • Section 130, CGST Act, 2017 – confiscation of goods or conveyances and levy of penalty, delinked from Section 129 post-amendment.
  • Section 67(6), CGST Act, 2017 – provisional release of seized goods on bond/security or payment.
  • Rule 138C and Rule 144A, CGST Rules, 2017 – inspection report timelines and sale mechanism for goods detained under Section 129.

Decision – In Favour of

The decision is disposed of with directions, without a clean win for either side — the Court did not examine the merits of individual confiscation notices but laid down the governing legal framework and remanded every matter for fresh examination against it.

Case Details

High Court of Gujarat at Ahmedabad – R/Special Civil Application No. 9250 of 2020 with over 80 connected matters – Coram: Hon'ble Justice A.S. Supehia and Hon'ble Justice Pranav Trivedi – Common CAV Judgment dated 11.12.2025.

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