Confiscation: Section 130

Detention under section 129 ends with a penalty and the goods going back to their owner. Confiscation is of a different order. Once goods or a conveyance are confiscated, their title passes to the Government. The owner gets them back only by paying a fine in lieu of confiscation, as well as a penalty, within the time the order allows. The practical question for a consignment stopped in transit is which of the two provisions is in play, and on what material an officer moves from one to the other.

This guide covers section 130 as amended from 1 January 2022, the MOV-10 and MOV-11 procedure, and how the courts have read the section for goods intercepted on the road. Interception, detention and the section 129 penalty are in the previous guide. The guide describes the power and the safeguards as the provisions and instructions state them.

When goods or a conveyance are liable

Section 130(1) lists five situations. Where any person:

(i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for registration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,

then “all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122”.

Two of the five clauses, (i) and (iv), turn on “intent to evade payment of tax”. Clause (v) reaches the vehicle, but the vehicle’s owner has a defence: he can prove the conveyance was used without his knowledge or connivance, or that of his agent and the person in charge.

The penalty is under section 122, not section 129. Which limb applies depends on the facts. Section 122(1)(xiv), for a taxable person who “transports any taxable goods without the cover of documents”, carries Rs 10,000 or the tax evaded, whichever is higher. Section 122(3)(b) reaches any person who deals with goods “which he knows or has reasons to believe are liable to confiscation”, with a penalty of up to Rs 25,000.

What changed on 1 January 2022

The Finance Act, 2021, in force from 1 January 2022 under Notification No. 39/2021-Central Tax, amended both sections:

• section 130(1) used to open “Notwithstanding anything contained in this Act”. It now opens “Where any person”. Section 129 kept its non obstante clause.
• section 129(6) used to send unpaid detention cases to “further proceedings … in accordance with the provisions of section 130”. It now provides for sale of the goods or conveyance to recover the section 129 penalty.
• section 129(2), which applied section 67(6) to provisional release, was omitted
• section 130(3), which made the owner “in addition, … liable to any tax, penalty and charges payable”, was omitted
• the floor in the second proviso to section 130(2) changed. It was the penalty leviable under section 129(1). It is now a “penalty equal to hundred per cent. of the tax payable on such goods”.

The Memorandum to the Finance Bill, 2021, as quoted by the Gujarat High Court, said section 130 was amended “to delink the proceedings under that section … from the proceedings under Section 129”. Explanation 1 to section 74, which used to name sections 129 and 130 among the proceedings concluded with the main demand, now names only sections 122 and 125.

The fine in lieu of confiscation, and its limits

Section 130(2) requires the adjudicating officer to give the owner of the goods “an option to pay in lieu of confiscation, such fine as the said officer thinks fit”. This is often called a redemption fine. Three provisos bound it:

1. Ceiling. The fine “shall not exceed the market value of the goods confiscated, less the tax chargeable thereon”.
2. Floor. The fine and the penalty together “shall not be less than the penalty equal to hundred per cent. of the tax payable on such goods”.
3. Hired conveyances. Where the conveyance carries goods or passengers for hire, its owner may pay, in lieu of confiscation of the conveyance, “a fine equal to the tax payable on the goods being transported thereon”.

The rest of the section deals with the consequences:

• under section 130(4), no order of confiscation or penalty issues “without giving the person an opportunity of being heard”
• under section 130(5), on confiscation “the title of such goods or conveyance shall thereupon vest in the Government”
• under section 130(6), the officer takes possession, and the police assist on requisition
• under section 130(7), the officer may dispose of the goods or conveyance and deposit the proceeds. He may do so only after satisfying himself that they are not needed in other proceedings, and after “giving reasonable time not exceeding three months to pay fine in lieu of confiscation”.

The procedure: MOV-10 and MOV-11

The forms are in CBIC’s Circular No. 41/15/2018-GST. For central tax, Circular No. 3/3/2017-GST assigns section 130(6) and (7) to the Deputy or Assistant Commissioner. State officers are designated by their own Commissioners.

Notice, in MOV-10. Paragraph 2(l) of Circular 41 allows the officer to “directly invoke section 130” by a MOV-10 notice. He may do this where he “is of the opinion that such movement of goods is being effected to evade payment of tax”. The notice specifies the tax and penalty proposed under section 130 read with section 122, and the fine in lieu of confiscation. Where the conveyance is hired, a separate notice goes to its owner under the third proviso. The form:

• recites the interception, the MOV-01 statement and the discrepancies found
• calls for a reply “within seven days from the receipt of this notice”
• fixes a date for a personal hearing
• states that the case may be decided ex parte if there is no reply or appearance

Order, in MOV-11. Under paragraphs 2(n) to 2(p) of the circular, the order is passed “after taking into consideration the objections filed”. It is served on the person concerned, and goods and conveyance may be dealt with in one common order. The order:

• transfers title in the goods or conveyance to the Government
• offers “a suitable time not exceeding three months” to pay the fine and penalty and obtain release in MOV-05
• is uploaded on the common portal, with its demand added to the electronic liability register
• has its summary uploaded in DRC-07, as rule 142(5) also requires

When MOV-11 is passed, any earlier MOV-09 for the same goods is withdrawn. If no one pays within the time allowed, paragraph 2(q) provides for public auction.

The section 129 route to a sale, under rule 144A, recovers a section 129 penalty and applies only to goods detained under that section. A confiscation ends under section 130(7) instead.

Parts of the circular that predate the amendment

Paragraph 2(k) of Circular 41 provides for a MOV-10 notice where the section 129 amount is unpaid. It was amended by Circular No. 88/07/2019-GST to fourteen days. MOV-10 and MOV-11 still offer this as their first ground: “neither the owner of the goods nor the person in charge of the conveyance came forward to make the payment”. That link was the old section 129(6). Since 2022 non-payment leads to sale under section 129(6) instead. CBIC’s list of circulars, up to Circular No. 256/02/2026-GST, shows no revision of Circular 41 after the amendment.

The alternative ground in MOV-10 reads: “As the goods were transported without any valid documents, it is presumed that the goods were being transported for the purposes of evading the taxes”. How far such a presumption can stand is the point the courts have addressed.

No provisional release under section 67(6)

Goods seized in a search under section 67 may be provisionally released on a bond and security under section 67(6). This is explained in Seizure and Provisional Release. Before 2022, section 129(2) applied that provision to goods detained in transit. The Gujarat High Court has held that, with section 129(2) omitted, “no remedy of provisional release of the same is available under Section 67(6) of the CGST Act after the amendment, and only remedy is the one prescribed under Section 129”. This was in Panchhi Traders, discussed below.

How the courts have read section 130 for goods in transit

Synergy Fertichem (2019). In Synergy Fertichem Pvt Ltd v State of Gujarat (Gujarat High Court, 23 December 2019, Special Civil Application No. 4730 of 2019 and connected cases), an importer had paid IGST of Rs 7,09,789 on ceramic pigment ink at Ahmedabad airport. Its agent moved the ink by truck towards Vadodara without waiting for an e-way bill. The truck was detained for want of one. According to the petition, the officers insisted on tax and penalty under section 129 and a fine equal to the value of the goods under section 130.

The Division Bench held, under the law as it then stood, that the two sections are “mutually exclusive and independent of each other”. It said “intent to evade” means “something more” than failure to pay tax: “The assessee must deliberately avoid the payment of tax”. It also said “the element of mens rea cannot be read into Section 130”. It went on:

• to invoke section 130 at the threshold, “the authorities need to make out a very strong case. Mere suspicion may not be sufficient”
• the reasons must be recorded in writing and “looked into by the superior authority”
• confiscation proceedings may begin later, even after release under section 129, if something incriminating is found

It did not decide the individual notices and sent them back for hearing.

Rajeev Traders (2023). In Union of India v Rajeev Traders (Karnataka High Court, Division Bench, 25 September 2023, WA No. 100403 of 2022), seven trucks of arecanut were intercepted on 13 September 2021. A MOV-06 detention order issued on 28 September and a MOV-10 confiscation notice the next day. Confiscation was ordered in November 2021. The Division Bench upheld the single judge’s quashing of the confiscation. Under the pre-2022 section, the procedure and fourteen-day period of section 129 were “a mandatory requirement / sine qua non” before a MOV-10 could issue. The record did not show “formation of any opinion” that the movement was to evade tax. The bench said it was “unable to agree” with Synergy Fertichem. It added that its findings “stand restricted only to the period prior to 01.01.2022”. The case is on gst.bharattax.net.

Panchhi Traders (2025). In Panchhi Traders v State of Gujarat (Gujarat High Court, Division Bench, 11 December 2025, Special Civil Application No. 9250 of 2020 and some 115 connected petitions), the court considered the amended sections. In each case goods were intercepted, detained, and then made the subject of a MOV-10 notice, often within days of the MOV-06. The petitioners argued that section 129, which kept its non obstante clause, had to run its course first. The court disagreed. It followed Synergy Fertichem, holding that “there is no bar in invoking the provision of Section 130 of the act for confiscation at threshold”. This applies “if on the seizure of goods and conveyance it is found that the entire transaction reveals the intention to evade the tax”. It placed limits on that power:

• Not on suspicion. Confiscation “cannot be resorted to only on suspicion, bereft of any concrete material, and on ipse dixit”. The officer must examine “the genuineness of the documents, invoices, e-way bills, consignment note, registration particulars” produced at interception.
• Not on third parties’ conduct. Intent cannot be founded on the act of “a person, who is not proximately or directly linked” to the dealer. The officer also “cannot venture into the assessment and valuation of goods at the time of interception”, nor dig into “entries in portal” about third parties.
• Three degrees. Minor errors of the kind in Circular 64/38/2018-GST do not justify seizure. Contraventions without intent are dealt with by the section 129 penalty. Confiscation is for infringement “of the highest degree, such as absence of documents or fake or forged documents … forged e-way bills, a complete deceptive/divergence/mismatch of goods, fake registration”.
• A time limit. The opinion on intent must be formed within the rule 138C period: three days for the final report, extendable by three. “If no opinion is formed, the goods and conveyance are required to be released by resorting to the provisions of Section 129”. Confiscation may still follow later if “something incriminating which is serious in nature” is found.
• The right officer. A MOV-10 or MOV-11 issued by an officer other than the jurisdictional officer assigned section 130 functions “will be without authority and illegal”.

The court remanded every matter for re-examination of the notices and orders within twelve weeks. It directed that notices contrary to the judgment be withdrawn. It also held that the Supreme Court’s decision in ASP Traders concerned only the duty to pass an order under section 129(3), and did not bear on section 130.

The Karnataka and Gujarat decisions are not directly in conflict. Rajeev Traders confined itself to the law before 2022, and Panchhi Traders applied the law after it. On the amended sections, Panchhi Traders is the fuller treatment found in preparing this guide. This guide did not trace any appeal to the Supreme Court against Synergy Fertichem, Rajeev Traders or Panchhi Traders.

Appeal

An order of confiscation in MOV-11 is appealable under section 107. The GST portal’s appeal FAQ lists orders of confiscation under section 130 among the enforcement orders that may be appealed, using APL-01 with “Enforcement Order” as the order type. The pre-deposit is ten per cent of the tax in dispute. For “any order demanding penalty without involving demand of any tax”, it is ten per cent of the penalty, under the proviso to section 107(6) in force from 1 October 2025. The proviso does not mention a fine in lieu of confiscation. Pre-Deposit, and the Stay of Recovery covers the rules and the transitional cases.

Confiscation, in order

1. Goods or a conveyance are liable to confiscation in the five situations in section 130(1). Two of them require intent to evade tax, and the owner of a conveyance has a defence of no knowledge or connivance.
2. Since 1 January 2022, section 130 stands apart from section 129. Unpaid detention penalties lead to sale under section 129(6), not to confiscation.
3. The notice is MOV-10. It sets out the discrepancies, the proposed tax, penalty under section 122 and fine, and gives seven days to reply and a hearing date.
4. No order issues without a hearing (section 130(4)). The order, in MOV-11, deals with the objections, vests title in the Government and allows up to three months to pay.
5. The fine in lieu is capped at market value less tax. Fine and penalty together are at least 100 per cent of the tax. The owner of a hired conveyance may pay a fine equal to the tax on the goods carried.
6. On payment, the goods and conveyance are released in MOV-05. Otherwise they are disposed of after the time allowed.
7. In the Gujarat High Court’s reading of the amended law, confiscation of goods in transit needs concrete material showing intent. The opinion must be formed within the rule 138C period, by the officer with jurisdiction.
8. An appeal lies under section 107, with the pre-deposit set by section 107(6).

The next guide covers the blocking of e-way bill generation under rule 138E for return defaults, and how a blocked taxpayer applies for unblocking in EWB-05.