| Authored by R & D Law Chambers LLP | Practice led by Ravish Bhatt. Dual-qualified lawyer (India and England & Wales) | Bar Council of Gujarat, Enrolment G/504/2008 | SRA (non-practising) Registration No. 492 477 | ADIT, Chartered Institute of Taxation, London
Published: 3 October 2026 | Last reviewed: 3 October 2026 |
| This article states the position under sections 129, 130 and 107 of the Central Goods and Services Tax Act, 2017 (the CGST Act) as amended by sections 116 to 118 of the Finance Act, 2021, in force from 1 January 2022, as at 3 October 2026. Detentions before that date were governed by the earlier text and are not covered. |
| Short answer. Yes. Since 1 January 2022, goods detained under section 129 of the CGST Act are released on payment of a penalty, not tax: 200 per cent of the tax if the owner comes forward, and the higher of 50 per cent of the value or 200 per cent of the tax if not. Notice must issue within seven days and the order within seven more. Confiscation under section 130 is now separate. |
Index of Topics
- What Changed on 1 January 2022
- Whether the Owner Comes Forward Can Change the Penalty Fivefold
- The Clock: Seven Days, Seven Days, Fifteen Days
- Release Without Paying: Security Under Section 129(1)(c)
- Minor Discrepancies: Circular No. 64/38/2018-GST
- Confiscation Under Section 130 Is a Separate Proceeding
- Frequently Asked Questions
- How R & D Law Chambers Works on These Matters
1. What Changed on 1 January 2022
| Short answer. The Finance Act, 2021 rewrote section 129. Release is now on payment of penalty alone; the earlier tax-plus-penalty formula went. Sub-section (2), which imported provisional release on bond from section 67(6), was omitted. Sections 129 and 130 were also delinked, so confiscation no longer follows automatically from non-payment. |
Section 117 of the Finance Act, 2021 substituted clauses (a) and (b) of section 129(1), omitted sub-section (2), substituted sub-sections (3) and (6), and changed sub-section (4) from “No tax, interest or penalty” to “No penalty”. Section 118 amended section 130 and omitted its sub-section (3). Section 116 added a proviso to section 107(6) requiring 25 per cent of the penalty as pre-deposit for an appeal against an order under section 129(3). The amendments came into force on 1 January 2022.
The practical result is a shorter, costlier procedure. The penalty is set by formula, the timetable is fixed in days, and unpaid goods can be sold. Much of the earlier case law on section 129 was decided on the old text and should be read with that in mind.
2. Whether the Owner Comes Forward Can Change the Penalty Fivefold
| Short answer. Under section 129(1)(a), if the owner of the goods comes forward, the penalty is 200 per cent of the tax payable. Under section 129(1)(b), if the owner does not, it is the higher of 50 per cent of the value or 200 per cent of the tax. For low-rate goods the gap is large. |
Take goods valued at ten lakh rupees attracting tax at five per cent, so tax of fifty thousand rupees. If the owner comes forward, the penalty is one lakh rupees. If not, it is the higher of five lakh rupees (half the value) and one lakh rupees (twice the tax): five lakh rupees. For exempted goods the figures are two per cent of value or twenty-five thousand rupees, whichever is less, if the owner comes forward, and five per cent or twenty-five thousand rupees, whichever is less, if not.
The statute does not define coming forward. The safe course is for the owner, not only the transporter, to appear in writing at once, identify itself with its invoice and GSTIN, and say it is coming forward for payment of penalty under clause (a), while reserving its right to contest the detention.
3. The Clock: Seven Days, Seven Days, Fifteen Days
| Short answer. Section 129(3) requires the officer to issue a notice specifying the penalty within seven days of detention and pass an order within seven days of serving it. Section 129(4) bars any penalty without an opportunity of being heard. If the penalty is not paid within fifteen days of the order, section 129(6) makes the goods or conveyance liable to sale. |
The first proviso to section 129(6) releases the conveyance on the transporter paying the penalty or one lakh rupees, whichever is less, so the vehicle need not wait for the goods. The second proviso lets the officer shorten the fifteen days for perishable or hazardous goods or goods likely to depreciate. Under section 129(5), payment of the penalty concludes all proceedings on the notice.
These limits are stated in the Act, so a notice or order outside them is open to objection on dates alone. The reply to the notice, and the hearing under section 129(4), are where the documents answering the alleged contravention must go in.
4. Release Without Paying: Security Under Section 129(1)(c)
| Short answer. Clause (c) of section 129(1) allows release on furnishing a security equivalent to the amount payable under clause (a) or (b). It survived the 2021 amendment. What did not survive is sub-section (2), so release on a bond under section 67(6) is no longer the route for goods detained in transit. |
Security, typically a bank guarantee, gets the goods moving while the dispute continues. It does not reduce the amount: it must equal the penalty under clause (a) or (b), so the coming-forward decision still sets the figure. Section 129(5) deems the proceedings on the notice concluded on payment of the amount referred to in sub-section (1), so a business that intends to contest the detention should record its objection in writing before it pays or furnishes security.
5. Minor Discrepancies: Circular No. 64/38/2018-GST
| Short answer. The CBIC’s Circular No. 64/38/2018-GST says that where goods carry an invoice and an e-way bill, section 129 proceedings may not be initiated for listed minor errors, such as a misspelt name with a correct GSTIN or an error in one or two digits of the vehicle or document number. A penalty of 500 rupees under section 125 applies instead. |
The circular, issued on 14 September 2018 under section 168, lists six situations: spelling mistakes in the consignor’s or consignee’s name where the GSTIN is correct; a PIN code error that does not extend the e-way bill’s validity; an address error where the locality is correct; an error in one or two digits of the document number; an HSN error at the four or six digit level where the first two digits and the rate are correct; and an error in one or two characters of the vehicle number (paragraph 5). It also confirms that goods moving with an invoice but no e-way bill may be detained (paragraph 4).
The circular is addressed to officers of central tax. It was issued before the 2021 amendments and refers to the procedure then in force. A detention by State tax officers should be met with the circular and with the facts showing the error had no bearing on tax, not with the circular alone.
6. Confiscation Under Section 130 Is a Separate Proceeding
| Short answer. Section 130 makes goods or conveyances liable to confiscation where, among other things, goods are supplied or received in contravention of the law with intent to evade tax, or are not accounted for. Since 2022 it stands apart from section 129. Where the notice alleges evasion, the Supreme Court has held it is for the authority to decide first. |
The 2021 amendments removed the old link under which unpaid section 129 amounts led to section 130 proceedings, and omitted section 130(3). Section 130(1) now operates on its own grounds, several of which turn on intent to evade payment of tax, and section 130(2) gives the owner an option to pay a fine in lieu of confiscation.
In State of Punjab v Shiv Enterprises (Civil Appeal No. 359 of 2023) the High Court had quashed a notice under section 130. The Supreme Court held that the notice carried a specific allegation of evasion which the authority had yet to consider, and that the High Court had materially erred in entertaining the writ petition against it. A business facing a section 130 notice should expect to answer it before the authority.
7. Frequently Asked Questions
Can GST officers detain goods for an e-way bill error?
Yes, if the goods move in contravention of the Act or rules, for example without an e-way bill. For listed minor errors where an invoice and e-way bill are both carried, Circular No. 64/38/2018-GST says section 129 proceedings may not be initiated and a 500 rupee penalty under section 125 applies instead.
How much must be paid to release detained goods?
Since 1 January 2022, a penalty only. If the owner comes forward, 200 per cent of the tax payable; if not, the higher of 50 per cent of the value or 200 per cent of the tax. Exempted goods carry lower fixed amounts. Security of the same amount can be furnished instead of payment.
How quickly must the officer act after detaining goods?
Section 129(3) requires a notice within seven days of detention and an order within seven days of serving the notice. If the penalty is not paid within fifteen days of the order, the goods or conveyance become liable to sale, and that period can be shortened for perishable goods.
Can the vehicle be released before the goods?
Yes. The first proviso to section 129(6) of the CGST Act releases the conveyance on the transporter paying the penalty or one lakh rupees, whichever is less. The goods remain detained and subject to the proceedings against their owner, including sale if the penalty is not paid.
What does an appeal against a detention order require?
An appeal lies under section 107 within three months. The proviso to section 107(6), added by the Finance Act, 2021, requires 25 per cent of the penalty to be paid before an appeal against an order under section 129(3) is filed.
8. How R & D Law Chambers Works on These Matters
R & D Law Chambers LLP is an Ahmedabad law firm. The practice advises businesses and transporters on detention and confiscation of goods and conveyances under sections 129 and 130 of the CGST Act, on replies and hearings, on appeals under section 107, and on petitions before the Gujarat High Court.
The practice advises on the penalty consequences of coming forward, on release against security, and on separating section 129 proceedings from confiscation.
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| General information on Indian law as at 3 October 2026, not advice on any facts. Decisions on section 129 given before 1 January 2022 construe a materially different text. |