Section 130 of the Central Goods and Services Tax Act, 2017 deals with the confiscation of goods or conveyances and levy of penalty in specified circumstances. It is an important enforcement provision under the GST law because it can result in the goods or the conveyance used for transportation being confiscated and the person concerned becoming liable to penalty.
The provision applies to specified contraventions, particularly where there is an element of intent to evade payment of tax, non-accountal of taxable goods, supply of taxable goods without registration, or use of a conveyance in contravention of GST provisions. The current Section 130 also provides an option to pay a fine in lieu of confiscation, subject to the statutory limits and conditions.
Section 130 has undergone important changes over time. In particular, the Finance Act, 2021 amended the relationship between Sections 129 and 130 with effect from 1 January 2022, including omission of Section 130(3) and changes to Section 130(2). Therefore, older explanations of Section 130 should not be relied upon without checking the current statutory wording. The current consolidated CGST Act published by India Code is stated to be updated as on 11 June 2026 and incorporates the Finance Act, 2026.
What Is Section 130 of the CGST Act?
Section 130 is titled “Confiscation of goods or conveyances and levy of penalty.”
The provision identifies circumstances in which:
- goods may become liable to confiscation;
- a conveyance may become liable to confiscation;
- the person concerned may become liable to penalty under Section 122;
- the owner may be given an option to pay a fine instead of confiscation;
- the Government may obtain title to confiscated goods or conveyance; and
- the confiscated goods or conveyance may ultimately be disposed of if the statutory requirements are satisfied.
The provision is therefore considerably more serious than an ordinary procedural discrepancy relating to movement of goods.
Current Structure of Section 130
The current Section 130 broadly operates through the following provisions:
| Provision | Main subject |
|---|---|
| Section 130(1) | Circumstances in which goods/conveyances are liable to confiscation and penalty under Section 122 |
| Section 130(2) | Fine in lieu of confiscation |
| Section 130(3) | Omitted |
| Section 130(4) | Opportunity of hearing |
| Section 130(5) | Vesting of title in Government after confiscation |
| Section 130(6) | Taking and holding possession |
| Section 130(7) | Disposal of confiscated goods or conveyance |
Section 130(3) was omitted with effect from 1 January 2022. The current consolidated Act expressly shows the omission.
Section 130(1) – When Can Goods Be Confiscated?
Section 130(1) provides five principal situations in which goods or conveyances become liable to confiscation.
These are:
- Supply or receipt of goods in contravention of GST provisions with intent to evade tax.
- Failure to account for goods on which tax is payable.
- Supply of taxable goods without applying for registration.
- Contravention of GST provisions or rules with intent to evade tax.
- Use of a conveyance for transporting goods in contravention of GST provisions, subject to the statutory protection available to the owner of the conveyance where the owner proves absence of knowledge or connivance.
It is important to examine each condition separately.
Section 130(1)(i) – Supply or Receipt of Goods With Intent to Evade Tax
The first category applies where a person:
- supplies goods; or
- receives goods
in contravention of the CGST Act or Rules with intent to evade payment of tax.
The words “with intent to evade payment of tax” are important.
A mere technical or procedural mistake should not automatically be treated as satisfying this condition. The statutory requirement concerns a contravention accompanied by the specified intention.
Example
Suppose a person deliberately supplies taxable goods without proper tax documentation in a manner designed to conceal the transaction and avoid GST.
If the statutory requirements are established, Section 130(1)(i) may become relevant.
The authority would need to examine the facts, documents and circumstances before determining whether the conditions for confiscation are satisfied.
Section 130(1)(ii) – Goods Not Accounted For
The second category applies where a person does not account for goods on which the person is liable to pay tax under the CGST Act.
This provision is particularly relevant where taxable goods are found but the person cannot properly account for them in the records.
Example
Suppose a registered business maintains a warehouse containing substantial taxable stock.
During verification, certain taxable goods are found that are not properly reflected or accounted for in the books and records.
If the statutory conditions are established, Section 130(1)(ii) may be invoked.
The important issue is not simply whether stock physically exists, but whether the person has properly accounted for goods on which tax is payable.
Section 130(1)(iii) – Supply of Taxable Goods Without Registration
Section 130(1)(iii) applies where a person:
supplies goods liable to tax under the CGST Act without having applied for registration.
This provision therefore addresses taxable supply by a person who was required to be registered but had not applied for registration.
Example
A person carries on a taxable goods business and makes taxable supplies despite being liable to obtain GST registration.
If the statutory conditions are satisfied, Section 130(1)(iii) can become relevant in addition to other applicable provisions of the GST law.
Section 130(1)(iv) – Contravention With Intent to Evade Tax
The fourth category is broader.
It applies where a person contravenes any provision of the CGST Act or the Rules with intent to evade payment of tax.
This clause can therefore cover situations that do not fall neatly within the first three categories but involve a contravention of GST law accompanied by the specified intention.
The authority must nevertheless establish the circumstances contemplated by the statutory provision.
Section 130(1)(v) – Use of Conveyance in Contravention of GST Law
The fifth category concerns a conveyance used for transporting goods in contravention of the CGST Act or Rules.
A conveyance may include a:
- truck;
- tempo;
- van;
- container;
- other motor vehicle; or
- another means of transport covered by the relevant GST provisions.
The provision contains an important protection for the owner of the conveyance.
The conveyance is liable to confiscation unless the owner proves that it was used in the relevant contravention without the knowledge or connivance of:
- the owner himself;
- the owner’s agent, if any; and
- the person in charge of the conveyance.
Protection Available to the Owner of a Conveyance
The proviso in Section 130(1)(v) is important for vehicle owners.
A vehicle owner may not necessarily be the person who committed the underlying GST contravention.
For example, a transporter may own a truck but may not personally participate in an illegal movement of goods.
The statute specifically allows the owner to establish that the conveyance was used in the contravention without the relevant knowledge or connivance.
This makes the factual circumstances surrounding the transportation important.
Section 130(2) – Fine in Lieu of Confiscation
Where confiscation is authorised, Section 130(2) provides that the adjudicating officer must give the owner of the goods an option to pay a fine in lieu of confiscation.
This means that confiscation does not necessarily mean that the owner has no statutory mechanism to recover the goods.
Instead, the law provides an option involving payment of the prescribed fine, subject to the statutory limits.
Maximum Limit of Fine on Goods
The first proviso to Section 130(2) provides that the fine imposed in lieu of confiscation shall not exceed the market value of the goods confiscated, less the tax chargeable thereon.
Therefore, the statutory ceiling is connected with:
Market value of confiscated goods − tax chargeable on those goods
The fine cannot simply be fixed at an unlimited amount.
Minimum Aggregate of Fine and Penalty
The second proviso to Section 130(2) is also important.
It provides that the aggregate of:
- the fine in lieu of confiscation; and
- the penalty leviable
shall not be less than a penalty equal to 100% of the tax payable on such goods.
This current wording is important because older versions of Section 130 referred to the penalty under Section 129.
The Finance Act, 2021 substituted this reference with the present 100% of the tax payable on such goods formulation with effect from 1 January 2022.
Fine for Conveyance Used for Hire
Section 130(2) contains a separate provision for a conveyance used for carrying goods or passengers for hire.
The owner of such conveyance must be given an option to pay, in lieu of confiscation of the conveyance, a fine equal to the tax payable on the goods being transported on the conveyance.
Example
Suppose a truck is being used to transport taxable goods and the statutory conditions for confiscation of the conveyance are established.
If the truck is used for carriage for hire, the owner must be given the statutory option to pay the prescribed fine in lieu of confiscation.
Section 130(3) Has Been Omitted
An important current-law point is that Section 130(3) no longer operates.
The Finance Act, 2021 omitted Section 130(3) with effect from 1 January 2022.
Older GST articles sometimes reproduce Section 130(3) and explain it as though it were still part of the operative law.
That is outdated.
For current GST compliance, the post-2021 structure of Section 130 should be followed.
Section 130(4) – Opportunity of Being Heard
Section 130(4) provides an important procedural safeguard.
No order for:
- confiscation of goods;
- confiscation of conveyance; or
- imposition of penalty
can be issued without giving the person an opportunity of being heard.
This means that the affected person must be given an opportunity to respond before the confiscation order and penalty are finalised.
Why Is the Hearing Important?
A Section 130 proceeding can have serious financial consequences.
The affected person may have relevant evidence concerning:
- ownership of goods;
- ownership of conveyance;
- invoices;
- e-way bills;
- registration;
- accounting records;
- transportation arrangements;
- contractual documents;
- source of goods;
- tax payment; or
- absence of knowledge or connivance.
The opportunity of hearing allows such material to be presented and considered before a final order is passed.
Section 130(5) – Title Vests in Government
Section 130(5) provides that where goods or a conveyance are confiscated under the CGST Act, the title of those goods or conveyance thereupon vests in the Government.
This is a significant consequence.
Confiscation is therefore different from temporary detention or seizure.
Detention
The goods or conveyance remain subject to proceedings and may be released under the applicable mechanism.
Confiscation
The statutory consequence is much more serious because the title of the confiscated goods or conveyance vests in the Government.
Section 130(6) – Possession of Confiscated Goods
Section 130(6) provides that the proper officer adjudging confiscation shall take and hold possession of the confiscated goods or conveyance.
It also provides that a police officer shall assist the proper officer in taking and holding possession when requested by that officer.
This provision deals with the practical implementation of a confiscation order.
Section 130(7) – Disposal of Confiscated Goods
Section 130(7) provides a mechanism for disposal of confiscated goods or conveyance.
The proper officer may dispose of the confiscated goods or conveyance after:
- satisfying himself that they are not required in any other proceedings under the CGST Act; and
- giving a reasonable period, not exceeding three months, to pay the fine in lieu of confiscation.
The sale proceeds are then deposited with the Government.
This provision therefore creates a final stage after confiscation where the statutory conditions for disposal are satisfied.
Section 130 and Tax Liability
Confiscation and penalty do not mean that the underlying tax issue automatically disappears.
The Section 130 mechanism is concerned with confiscation and penalty, while the applicable GST provisions continue to govern tax liability.
The procedural forms used for confiscation proceedings also contemplate tax, fine and penalty components.
The proper officer must therefore examine the tax consequences separately within the framework of the CGST Act and Rules.
Section 130 and Section 122
Section 130(1) expressly states that where the specified circumstances exist, the person is liable to penalty under Section 122.
This is an important distinction.
Section 130 itself establishes the confiscation mechanism and links the person’s penalty liability to Section 122.
Therefore, when analysing a Section 130 proceeding, the relevant Section 122 offence or penalty provision should also be examined.
Section 130 and Section 129
Sections 129 and 130 are closely related because both can arise in situations involving goods in movement.
However, they should not be treated as identical provisions.
Section 129
Section 129 deals with:
detention, seizure and release of goods and conveyances in transit.
Section 130
Section 130 deals with:
confiscation of goods or conveyances and levy of penalty.
The legal consequences are different.
Section 129 primarily deals with detention and release of goods or conveyance in transit, while Section 130 deals with confiscation in the circumstances specified in Section 130(1).
Important Change in the Relationship Between Sections 129 and 130
The relationship between Sections 129 and 130 has changed over time.
Older versions of Section 129 contained a provision under which failure to pay the applicable amount within the prescribed period could lead to further proceedings under Section 130.
The Finance Act, 2021 substantially changed Section 129 with effect from 1 January 2022. The current Section 129(6) deals with sale or disposal of detained or seized goods or conveyance when the prescribed penalty is not paid within the specified period, rather than reproducing the old automatic reference to Section 130.
At the same time, the GST framework has recognised that Section 130 can be invoked directly in appropriate cases involving an apparent intent to evade tax. CBIC Circular No. 41/15/2018-GST specifically provided for direct invocation of Section 130 where the proper officer was of the opinion that movement of goods was being effected to evade tax.
Therefore, an article based solely on the old statement that “after 14 days under Section 129, Section 130 automatically applies” would not accurately describe the current statutory framework.
Direct Invocation of Section 130
In appropriate circumstances, Section 130 can be invoked directly.
CBIC Circular No. 41/15/2018-GST provided that where the proper officer is of the opinion that movement of goods is being effected to evade payment of tax, the officer may directly invoke Section 130 by issuing a notice in FORM GST MOV-10 proposing confiscation of the goods and conveyance and imposition of penalty.
The notice is required to specify the relevant tax, penalty and fine proposed under the applicable provisions.
Recent judicial proceedings have also continued to consider Section 130 proceedings involving FORM GST MOV-10 and MOV-11, showing that the mechanism remains operational.
FORM GST MOV-10
FORM GST MOV-10 is the notice used for proceedings concerning confiscation of goods or conveyances and levy of penalty under Section 130 in the prescribed movement-of-goods framework.
The form identifies matters such as:
- conveyance details;
- interception;
- inspection;
- discrepancies noticed;
- proposed confiscation;
- tax;
- penalty;
- fine in lieu of confiscation; and
- other relevant details.
The official GST forms compilation identifies MOV-10 as the notice for confiscation of goods or conveyances and levy of penalty under Section 130.
FORM GST MOV-11
After consideration of the objections and completion of the confiscation proceeding, FORM GST MOV-11 is used as the order of confiscation of goods and conveyance and demand of tax, fine and penalty.
The prescribed form records the confiscation and the amounts payable for release where the statutory option is exercised.
Section 130 and Rule 142
Section 130 should also be read with Rule 142 of the CGST Rules.
Rule 142 deals with notices and orders for amounts payable under the GST Act.
For a notice issued under Section 130, Rule 142(1) provides for an electronically uploaded summary in FORM GST DRC-01. The rule also provides for uploading a summary of the order in FORM GST DRC-07.
Thus, the Section 130 statutory proceeding and the electronic demand-record mechanism under Rule 142 operate together.
DRC-01 in Section 130 Proceedings
FORM GST DRC-01 is the electronic summary associated with the relevant notice under Rule 142.
Where a Section 130 notice is issued, the proper officer is required to follow the prescribed electronic procedure for the demand summary.
This allows the demand arising from the proceeding to be reflected electronically in the GST system.
DRC-07 in Section 130 Proceedings
A summary of an order under Section 130 is uploaded electronically in FORM GST DRC-07 under Rule 142.
The Supreme Court’s discussion of Rule 142 has also noted that the rule requires summaries of orders under Section 130 to be uploaded electronically in DRC-07, specifying the amounts payable.
👉 Read More → Section 130 – Confiscation of goods or conveyances and levy of penalty
Section 130 and E-Way Bill Compliance
Many Section 130 proceedings involving goods in transit begin with verification of transportation documents.
The relevant documents may include:
- tax invoice;
- bill of supply;
- delivery challan, where applicable;
- e-way bill;
- transport documents;
- registration details; and
- records relating to the goods.
However, an e-way bill discrepancy by itself should not automatically be equated with every ground under Section 130.
The officer must consider the specific statutory conditions and facts, particularly where Section 130(1)(i) or (iv) requires an intent to evade payment of tax.
Example – Fake Invoice and Goods in Transit
Suppose a truck is carrying taxable goods.
During inspection, the authorities find that the invoice is connected with a non-existent supplier and the surrounding evidence indicates that the transaction was structured to evade GST.
Depending on the facts and evidence, the proper officer may consider proceedings under Section 130.
If confiscation proceedings are initiated, the taxpayer/person in charge must be given the statutory opportunity to respond before the final confiscation order is issued.
Example – Unaccounted Goods
Suppose a registered dealer maintains a warehouse.
During an inspection, taxable goods are found that the dealer cannot properly account for.
If the goods are liable to tax and the conditions of Section 130(1)(ii) are established, confiscation proceedings may arise.
The taxpayer should produce:
- purchase invoices;
- stock register;
- accounting records;
- transport documents;
- payment records; and
- other evidence establishing the source and accounting of the goods.
Example – Unregistered Supply of Taxable Goods
Suppose a person carries on a taxable goods business but supplies taxable goods without applying for GST registration despite being liable to register.
Section 130(1)(iii) specifically covers supply of goods liable to tax without having applied for registration.
Other provisions concerning registration, tax determination and penalty may also become relevant depending on the facts.
Example – Transporter Unaware of Contravention
Suppose a transporter owns a truck and accepts a consignment for delivery.
Later, the goods are found to have been transported in contravention of GST law.
If confiscation of the conveyance is proposed, the owner may rely on the statutory protection in Section 130(1)(v) by establishing that the conveyance was used without the owner’s knowledge or connivance, as well as without the knowledge or connivance of the relevant persons specified in the provision.
The outcome depends on the evidence produced and the facts of the case.
Example – Fine Instead of Confiscation
Suppose goods have been held liable to confiscation under Section 130.
The adjudicating officer must give the owner the option to pay a fine in lieu of confiscation.
The amount of the fine is subject to the statutory ceiling and the minimum aggregate requirement relating to fine and penalty.
If the required amounts are paid within the applicable period, the goods may be released according to the statutory procedure.
Confiscation vs Detention
The distinction between detention and confiscation is important.
| Basis | Detention under Section 129 | Confiscation under Section 130 |
|---|---|---|
| Main purpose | Deal with goods/conveyance in transit | Deal with goods/conveyance liable to confiscation |
| Nature | Temporary restraint subject to release mechanism | Forfeiture-type statutory consequence |
| Relevant provision | Section 129 | Section 130 |
| Final consequence | Release on satisfaction of statutory conditions or further action under applicable law | Title of confiscated goods/conveyance vests in Government |
| Fine in lieu of confiscation | Not the principal mechanism | Specifically provided under Section 130(2) |
The current law should be examined carefully because the relationship between Sections 129 and 130 was amended with effect from 1 January 2022.
Confiscation vs Seizure
Seizure and confiscation are also different concepts.
Seizure
Seizure involves taking control or possession of goods or documents under the relevant statutory authority.
Confiscation
Confiscation results in the statutory vesting of title in the Government.
Section 130(5) expressly provides for vesting of title after confiscation.
Section 130 and Natural Justice
The opportunity of hearing under Section 130(4) is an important procedural safeguard.
A person facing confiscation should have an opportunity to present relevant evidence and explain the circumstances.
For example, the person may dispute:
- the alleged contravention;
- the ownership of goods;
- the tax calculation;
- the existence of intent to evade tax;
- the basis for confiscation;
- the valuation;
- the penalty;
- the proposed fine; or
- the proposed confiscation of a conveyance.
The authority must consider the response before passing the confiscation or penalty order.
What Documents Should Be Kept During Goods Movement?
Businesses and transporters should maintain appropriate transportation records, including, as applicable:
- tax invoice;
- bill of supply;
- delivery challan;
- e-way bill;
- purchase order;
- transport receipt;
- vehicle details;
- supplier information;
- recipient information;
- payment records; and
- supporting contractual documents.
Proper documentation can help establish the legitimate nature of the movement and the identity of the parties involved.
What Should a Transporter Check?
A transporter should verify the information supplied for the consignment to the extent required by applicable GST procedures.
Particular attention should be given to:
- invoice details;
- e-way bill details;
- vehicle number;
- consignor and consignee details;
- quantity of goods;
- destination;
- nature of goods; and
- required transport documents.
Where the owner of a conveyance later needs to establish absence of knowledge or connivance under Section 130(1)(v), appropriate records may be important evidence.
Section 130 and Intent to Evade Tax
The phrase “intent to evade payment of tax” appears expressly in Section 130(1)(i) and (iv).
This makes intent an important factual issue in proceedings based on those clauses.
The authority may consider the totality of circumstances and available evidence.
Relevant circumstances may include:
- nature of the documentation;
- actual movement of goods;
- identity of parties;
- accounting records;
- tax payment;
- inconsistencies in documents;
- statements of persons involved;
- transaction structure; and
- other evidence relevant to the alleged contravention.
The existence of a discrepancy should therefore be examined together with the precise statutory clause invoked.
Section 130 Is Different From Section 132
Section 130 deals with confiscation of goods or conveyances and penalty.
Section 132 deals with punishment for specified offences, including criminal prosecution in circumstances prescribed by that section.
A Section 130 proceeding is therefore not identical to a Section 132 prosecution.
The two provisions have different statutory purposes and consequences.
Section 130 and Section 131
Section 131 provides that confiscation or penalty under the CGST Act does not prevent the imposition of other punishments to which a person may be liable under the CGST Act or another law, subject to the applicable provisions.
Therefore, confiscation under Section 130 should not automatically be understood as eliminating other statutory consequences.
Section 130 and Section 75
Section 75 contains general provisions relating to determination of tax.
Section 130 is a specific confiscation and penalty provision.
Where tax determination and confiscation proceedings overlap, the applicable statutory provisions should be examined together.
The existence of a Section 130 proceeding does not by itself mean that every aspect of the underlying tax liability is governed exclusively by Section 130.
Important Changes Introduced From 1 January 2022
The Finance Act, 2021 made significant changes affecting Sections 129 and 130 from 1 January 2022.
For Section 130, important changes included:
- substitution of the opening words of Section 130(1);
- change in the minimum aggregate fine and penalty under Section 130(2);
- omission of Section 130(3).
The current consolidated Act records these amendments.
Therefore, older articles may contain references to provisions that are no longer operative.
Practical Compliance Checklist
If a business or transporter faces a Section 130 proceeding, the following records should be reviewed carefully:
1. Identify the Exact Clause
Check whether the notice relies on:
- Section 130(1)(i);
- Section 130(1)(ii);
- Section 130(1)(iii);
- Section 130(1)(iv); or
- Section 130(1)(v).
2. Review the Alleged Contravention
Identify the exact GST provision or rule allegedly violated.
3. Check the Evidence
Review the documents and facts relied upon by the department.
4. Examine Intent
Where the relevant clause requires intent to evade tax, examine the factual basis for that allegation.
5. Establish Ownership
Identify the owner of the goods and, where relevant, the owner of the conveyance.
6. Review Transportation Records
Check the invoice, e-way bill, delivery documents and other transport records.
7. Prepare the Response
Use the statutory opportunity of hearing to provide relevant facts and evidence.
8. Check Tax, Penalty and Fine
Verify the calculation of:
- tax;
- penalty;
- fine in lieu of confiscation; and
- other amounts, where applicable.
9. Check the Release Mechanism
If payment in lieu of confiscation is proposed, examine the statutory amount and time allowed.
10. Preserve Records
Keep copies of the notice, submissions, hearing records, order and payment documents.
Key Differences Between Sections 129 and 130
| Point | Section 129 | Section 130 |
|---|---|---|
| Subject | Detention, seizure and release | Confiscation and penalty |
| Goods | Goods in transit | Goods falling within specified confiscation grounds |
| Main consequence | Detention/seizure | Confiscation |
| Conveyance | Can be detained/seized | Can become liable to confiscation |
| Hearing | Provided under Section 129 | Expressly required under Section 130(4) |
| Fine in lieu of confiscation | Not the principal mechanism | Specifically provided under Section 130(2) |
| Title to goods | Does not itself transfer title to Government | Title vests in Government after confiscation |
| Relevant forms | MOV-06, MOV-07, MOV-08, MOV-09, etc. | MOV-10 and MOV-11 in the movement-of-goods framework |
Key Takeaways of Section 130
Section 130 can be remembered through the following points:
- Section 130 deals with confiscation of goods or conveyances and levy of penalty.
- It is part of Chapter XIX of the CGST Act.
- Section 130(1) contains five principal grounds for confiscation.
- Supply or receipt of goods in contravention with intent to evade tax can attract Section 130.
- Failure to account for taxable goods can attract Section 130.
- Supply of taxable goods without applying for registration can attract Section 130.
- Contravention of GST law with intent to evade tax can attract Section 130.
- A conveyance used in contravention of GST provisions can become liable to confiscation subject to the statutory protection for the owner.
- The person concerned is liable to penalty under Section 122 where Section 130(1) applies.
- Section 130(2) provides an option to pay a fine in lieu of confiscation.
- The fine on goods cannot exceed the market value of the confiscated goods less the tax chargeable thereon.
- The aggregate of fine and penalty cannot be less than 100% of the tax payable on the goods.
- A separate fine mechanism applies to a conveyance used for carriage for hire.
- Section 130(3) has been omitted with effect from 1 January 2022.
- No confiscation or penalty order can be passed without giving the person an opportunity of being heard.
- After confiscation, title to the goods or conveyance vests in the Government.
- The proper officer takes and holds possession of confiscated goods or conveyance.
- Confiscated goods or conveyance may be disposed of after the statutory conditions are satisfied.
- Rule 142 provides the electronic demand-summary framework, including DRC-01 and DRC-07.
- FORM GST MOV-10 is used for the notice of confiscation in the prescribed movement-of-goods procedure.
- FORM GST MOV-11 is used for the confiscation order and demand of tax, fine and penalty.
- Section 130 is different from Section 129, which deals with detention, seizure and release of goods and conveyances in transit.
- The relationship between Sections 129 and 130 changed significantly from 1 January 2022.
- Direct invocation of Section 130 can arise in appropriate cases involving an opinion that the movement of goods is being effected to evade tax.
- Section 130 is different from Section 132, which deals with punishment for specified offences.
Conclusion
Section 130 of the CGST Act is an important enforcement provision dealing with the confiscation of goods or conveyances and levy of penalty. It applies in specifically identified situations, including certain contraventions involving intent to evade tax, non-accountal of taxable goods, supply of taxable goods without registration and use of a conveyance in contravention of GST provisions.
The provision is particularly significant because confiscation has consequences beyond temporary detention. Once goods or a conveyance are confiscated under the Act, Section 130(5) provides that their title vests in the Government. The law nevertheless provides an option to pay a fine in lieu of confiscation, subject to the limits and conditions prescribed in Section 130(2).
The current law also makes it essential to distinguish Section 130 from older versions of the provision. Section 130(3) was omitted with effect from 1 January 2022, and the minimum aggregate requirement under Section 130(2) was changed to a penalty equal to 100% of the tax payable on the goods.
Another important point is the relationship between Sections 129 and 130. Section 129 deals with detention, seizure and release of goods and conveyances in transit, while Section 130 deals with confiscation. The statutory framework changed substantially from 1 January 2022, so older descriptions of Section 130 as an automatic next step after a fixed period under Section 129 should not be treated as the current law. CBIC has also recognised direct invocation of Section 130 in appropriate cases involving an opinion that movement of goods is intended to evade tax.
Finally, Section 130 contains an important safeguard through Section 130(4): no order of confiscation or penalty can be issued without giving the affected person an opportunity of being heard. Businesses and transporters should therefore carefully examine the exact statutory clause invoked, the evidence relied upon, the ownership of goods or conveyance, the transportation records, the tax and penalty calculations and the proposed fine before responding to a Section 130 proceeding.
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