Goods in Transit: Inspection, Detention and Release

A truck stopped on the highway has a short clock. The goods may be perishable, the buyer is waiting, and the vehicle earns nothing while it stands. The person in charge is usually a driver who did not prepare the documents. Whether the vehicle moves on in minutes, is held for inspection, or is released only on payment of a penalty depends on the documents, on what the officer records, and on a set of forms and time limits spread across the Act, the rules and CBIC circulars.

This guide covers inspection under section 68, detention and release under section 129 as substituted from 1 January 2022, and the MOV forms. It describes the powers and the safeguards as the provisions and instructions state them. Confiscation under section 130 is in the next guide. Seizure during a search of premises is a different power, covered in Seizure and Provisional Release.

What the person in charge must carry

Section 68(1) lets the Government require the person in charge of a conveyance to carry prescribed documents and devices. Section 68(3) allows the proper officer to intercept the conveyance and require their production, and the person “shall be liable to produce the documents and devices and also allow the inspection of goods”.

Rule 138A prescribes what is carried:

• the invoice, bill of supply or delivery challan, as the case may be
• a copy of the e-way bill in physical form, or its number in electronic form, or mapped to an RFID device on the conveyance. This is not required for movement by rail, air or vessel.
• for imported goods, a copy of the bill of entry, whose number and date are shown in Part A of the e-way bill

Where the invoice has been reported to the invoice registration portal under rule 48(4), rule 138A(2) allows the QR code carrying the IRN to be produced electronically in place of a physical copy. When an e-way bill is needed at all, and its validity, are covered in E-Way Bills: When One Is Needed and Generating, Extending and Cancelling an E-Way Bill.

Who may stop a vehicle, and how often

Under rule 138B, the Commissioner or an officer empowered by him may authorise the proper officer to intercept any conveyance to verify the e-way bill. Physical verification is done by the officer so authorised. On “specific information on evasion of tax”, any other officer may verify a specific conveyance with the approval of the Commissioner or an officer he authorises.

For central tax, CBIC’s Circular No. 3/3/2017-GST assigns section 68(3) to the Inspector, and section 129(3) to the Deputy or Assistant Commissioner. State tax officers are designated by their own Commissioners’ orders.

Circular No. 41/15/2018-GST (13 April 2018) sets out the field procedure. Where documents are produced and “prima facie, no discrepancies are found, the conveyance shall be allowed to move further”. An e-way bill may be shown as a number, a printout, an SMS or written on the invoice, and “All these forms of having an e-way bill are valid.”

Two limits apply. Under rule 138C(2), once a conveyance has been physically verified at one place in any State or Union territory, it is not verified again “unless a specific information relating to evasion of tax is made available subsequently”. Circular No. 49/23/2018-GST adds that hard copies of the MOV forms may be shown to another tax authority as proof that action has already been taken. It also says only the consignments in breach are detained. In its example, a truck carries twenty-five consignments and documents are missing for five; only those five, and the conveyance, may be detained.

From interception to the inspection report

Circular 41, as modified by Circular 49, lays down the sequence:

1. MOV-01, statement. Where the person in charge fails to produce a prescribed document, or the officer intends to inspect, the officer records his statement in FORM GST MOV-01. The form records his personal and vehicle details and the documents he produced, and he signs it.
2. MOV-02, order for physical verification. The officer directs the person to station the conveyance at a named place “at your own risk and responsibility”, to allow inspection, and not to move it until further orders. The form gives tick-box reasons, such as no documents, defective documents, or no e-way bill.
3. EWB-03 Part A within twenty-four hours. Rule 138C(1) requires a summary report “within twenty four hours of inspection”.
4. Inspection concluded within three days. Circular 41 originally said “three working days”; Circular 49 replaced this with “three days”. An extension needs a written order in MOV-03 from the Commissioner or an officer he authorises, served on the person in charge.
5. MOV-04, physical verification report. The report records, item by item, the description and quantity in the documents against what was found. A copy is served on the person in charge, who signs it and acknowledges receipt.
6. EWB-03 Part B within three days. Rule 138C(1) requires the final report “within three days of such inspection”. Its proviso allows the Commissioner to extend this “for a further period not exceeding three days” on sufficient cause. The periods run “from the midnight of the date on which the vehicle was intercepted”.
7. MOV-05, release. Where nothing is wrong, the officer “shall issue forthwith a release order in FORM GST MOV-05”.

Rule 138D gives the transporter a facility of its own. Where a vehicle “has been intercepted and detained for a period exceeding thirty minutes”, the transporter may upload this in FORM GST EWB-04. The e-way bill portal’s user manual (version 1.7, June 2025) places this under a Grievance menu as “Detention Form [04]”. The portal’s FAQ says the report goes to a senior officer “to redress the grievance”.

Minor discrepancies: Rs 1,000, not detention

Circular No. 64/38/2018-GST (14 September 2018) was issued because section 129 proceedings were “being initiated for every mistake in the documents”. It distinguishes two situations.

If goods move with an invoice but no e-way bill, section 129 proceedings “may be initiated”. If they move with both, section 129 proceedings “may not be initiated, inter alia” for:

• spelling mistakes in the consignor’s or consignee’s name, where the GSTIN is correct
• an error in the PIN code where the address is correct, provided the error does not increase the validity period of the e-way bill
• an error in the consignee’s address, where the locality and other details are correct
• an error in one or two digits of the document number
• an error at the 4- or 6-digit level of HSN, where the first two digits and the rate are correct
• an error in one or two digits or characters of the vehicle number

For these, a penalty of Rs 500 each under section 125 of the CGST Act and the State Act is imposed in FORM GST DRC-07 for every consignment, or Rs 1,000 under the IGST Act. The officer sends a weekly record of these cases to his controlling officer. Section 125 itself allows a penalty of up to Rs 25,000.

Detention, and the penalty since 1 January 2022

Section 129(1), as substituted by the Finance Act, 2021 from 1 January 2022 (Notification No. 39/2021-Central Tax), applies where any person “transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules”. The goods, the conveyance and the documents are “liable to detention or seizure”. After detention they “shall be released”:

Who pays	Taxable goods	Exempted goods
Owner comes forward (clause (a))	penalty of 200 per cent of the tax payable	2 per cent of value or Rs 25,000, whichever is less
Owner does not come forward (clause (b))	penalty of 50 per cent of the value or 200 per cent of the tax payable, whichever is higher	5 per cent of value or Rs 25,000, whichever is less
Either (clause ©)	security equal to the amount under (a) or (b)	same

Before 2022 the clauses read “applicable tax and penalty equal to one hundred per cent” and “fifty per cent of the value … reduced by the tax amount paid”. The substituted clauses speak only of penalty. They no longer make payment of tax a condition of release.

Circular No. 76/50/2018-GST says who is the owner. If the invoice or other specified document accompanies the goods, “either the consignor or the consignee should be deemed to be the owner”. If not, the proper officer determines it.

The proviso to section 129(1) is a safeguard: “no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods”. The order is MOV-06. It records the discrepancies found against the MOV-04 report and directs that the conveyance be kept at a named place until a release order issues.

Notice and order: seven days each

Section 129(3), as substituted, requires the proper officer to “issue a notice within seven days of such detention or seizure, specifying the penalty payable”. He must then “pass an order within a period of seven days from the date of service of such notice”. Section 129(4) adds that no penalty is determined “without giving the person concerned an opportunity of being heard”. The notice is MOV-07. It calls for a reply within seven days and fixes a date for a personal hearing. The order is MOV-09, which records any objections and gives a speaking order on them.

Payment ends the proceedings. Under section 129(5), “all proceedings in respect of the notice … shall be deemed to be concluded”. Rule 142(3) gives the mechanics. Where the amount is paid “within seven days of the notice … but before the issuance of order”, the person intimates the payment in DRC-03. The officer then issues DRC-05 concluding the proceedings.

The Supreme Court has held that payment does not always end the officer’s duty to pass an order. In ASP Traders v State of Uttar Pradesh (24 July 2025, Civil Appeal No. 9764 of 2025), a Karnataka dealer sent 17,850 kg of arecanut to Delhi. Seven of 255 bags went missing on transhipment, and the vehicle was detained at Jhansi on 17 January 2022. MOV-01, MOV-04, MOV-06 and a MOV-07 notice followed. The dealer filed a written reply, then paid Rs 7,20,440 through DRC-03 “in view of pressing business exigencies” and the goods were released in MOV-05. No order was passed. The department said the dealer’s representative had orally withdrawn the reply, and that section 129(5) ended the matter. The High Court agreed.

The Supreme Court allowed the appeal. “Conclusion” in section 129(5) “does not absolve the responsibility of the proper officer to pass an order concluding the proceedings”. Where objections are filed, or payment is made under protest, “adjudication is not optional”. The Court noted that DRC-03 has no way to record a protest, so a payment made to free the goods “may be erroneously construed as voluntary”. It directed a reasoned order in MOV-09 after a hearing, with its summary in DRC-07, within one month, so that the dealer could appeal. The judgment quotes section 129 in its pre-2022 wording, though the detention took place after 1 January 2022.

Release: payment, or security

On payment. The goods and conveyance are released in MOV-05. Under Circular 41, payment is credited to the electronic liability register by debit to the cash or credit ledger “in accordance with the provisions of section 49”. Section 49(4) allows the credit ledger to be used only “towards output tax”, so a penalty is paid from the cash ledger.

On security. Clause © of section 129(1) allows release “upon furnishing a security equivalent to the amount payable under clause (a) or clause (b)”. Circular 41 provides for a bond in MOV-08 with a bank guarantee for that amount, followed by a MOV-05 release. The proceedings are then “taken up on priority” and the security “may be adjusted against the demand”. A person other than the owner may also take this route.

The conveyance. Under the first proviso to section 129(6), “the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less”.

If the penalty is not paid

Section 129(6) provides that if the penalty is not paid “within fifteen days from the date of receipt of the copy of the order”, the goods or conveyance “shall be liable to be sold or disposed of otherwise”. For perishable or hazardous goods, or goods likely to lose value, the officer may shorten the fifteen days.

Rule 144A, in force from 1 January 2022, sets out the sale:

• the officer prepares an inventory and estimates market value
• a notice of auction, which may be an e-auction, is issued in DRC-10. The last date for bids is at least fifteen days later, though this may be shortened for perishable goods.
• if the penalty, with custody and handling expenses, is paid before that notice issues, “the proper officer shall cancel the process of auction and release such goods or conveyance”
• the successful bidder pays within fifteen days of a DRC-11 notice and receives a DRC-12 certificate

Under rule 144A(8), where an appeal has been filed under section 107, the sale “shall be deemed to be stayed”. This does not apply to perishable or hazardous goods.

Forms written for the earlier law

Circular 41 and its forms were issued in 2018 and modified by Circulars 49, 64 and 88/07/2019-GST. CBIC’s list of circulars, up to Circular No. 256/02/2026-GST, shows no revision after the 2022 amendment. Several passages still reflect the earlier section:

• MOV-07 and MOV-09 recite “the applicable tax and penalty equal to one hundred per cent”
• paragraph 2(k) of the circular, as amended by Circular 88, sends unpaid cases to confiscation under section 130 by a MOV-10 notice after fourteen days
• MOV-08 and MOV-09 refer to payment within that period “failing which action under section 130 … shall be initiated”

From 1 January 2022 the Act itself ties non-payment to sale under section 129(6) and rule 144A, not to section 130. In Panchhi Traders v State of Gujarat (11 December 2025), the Gujarat High Court held that the circular does not infringe the Act and remains the source of the MOV forms. That case is discussed in the next guide.

What the portals record

Several records are kept on the common portal:

• EWB-03 Parts A and B, uploaded by the officer (rule 138C)
• MOV-09 and MOV-11 orders, “uploaded on the common portal”, with a summary in DRC-07. Rule 142(5) requires the DRC-07 summary for orders under sections 129 and 130.
• the demand, in the electronic liability register

Where the person has no registration, Circular 41 has the officer create a temporary ID and the liability is recorded against it. The GST portal’s FAQ on suo moto registration describes how this is done at check posts. It also says a person issued a temporary ID through a driver may give his GSTIN at disposal and ask that the order be passed against it.

Where an amount demanded in MOV-09 or MOV-11 was paid through DRC-03 instead of against the demand, rule 142(2B) allows it to be linked in DRC-03A. This is not available where a DRC-05 has already closed the proceedings.

On the e-way bill side, the portal’s user manual records that an e-way bill “verified by any empowered officer … cannot be cancelled”.

Appeal, and the pre-deposit

An order under section 129(3) is appealable under section 107, within three months of communication. The GST portal’s manual on appeals against enforcement orders has the appellant choose “Enforcement Order” as the order type in APL-01. Its FAQ lists “Order of Demand of Tax and Penalty” and rectification orders in DRC-08 for MOV-09 or MOV-11 among the enforcement orders that may be appealed. The steps are in Filing a First Appeal: APL-01.

The pre-deposit for a section 129 order changed on 1 October 2025. The earlier proviso to section 107(6) applied only to orders under section 129(3) and required twenty-five per cent of the penalty. The Finance Act, 2025 replaced it with a general rule for “any order demanding penalty without involving demand of any tax”: ten per cent of the penalty. Which proviso governs proceedings begun before that date has been litigated. Pre-Deposit, and the Stay of Recovery sets out the decisions and the GST Council’s October 2026 recommendation on a cap. The rest of the ladder is in The Appeal Ladder.

Technical breaches and expired e-way bills in the courts

The section penalises transport “in contravention” of the Act or rules. Whether an intent to evade must also be shown has divided the courts.

Satyam Shivam Papers. In Assistant Commissioner (ST) v Satyam Shivam Papers Pvt Ltd (Supreme Court, 12 January 2022, SLP © No. 21132 of 2021), a paper dealer’s consignment, carried by auto trolley in Hyderabad, could not be delivered on Saturday 4 January 2020. An agitation had blocked traffic until the evening, and the next working day was Monday. The vehicle was stopped after the e-way bill had expired a day earlier. Tax and penalty of Rs 69,000 were collected, and the goods were kept for sixteen days at the house of the officer’s relative. The Telangana High Court set the levy aside. It found “no material … to come to the conclusion that there was evasion of tax … merely on account of lapsing of time mentioned in the e-way bill”. The Supreme Court dismissed the State’s petition. It said no question of law arose on those facts, raised the costs by Rs 59,000, and let the State recover them from the persons responsible. The case arose under the pre-2022 section.

Vardan Associates. In Vardan Associates Pvt Ltd v Assistant Commissioner of State Tax (Supreme Court, 31 October 2023), a contractor moved its own 68-tonne drilling machine from Uttar Pradesh to West Bengal. The e-way bill expired on 9 June 2019, and the vehicle was intercepted on 17 June. Tax and penalty of Rs 54 lakh each were confirmed. The Court said the appellant “cannot shirk from its responsibility” to generate a fresh e-way bill. It upheld the tax but halved the penalty, because an e-way bill had been generated and the machine was the contractor’s own. It made clear the order was passed under Article 142 “and shall not be treated as a precedent”.

Ashish Kumar Sharma. In Ashish Kr. Sharma v Deputy Commissioner, State Tax (Calcutta High Court, 25 April 2024, FMA 504 of 2024), the facts arose under the amended section. A trader’s consignment of coal tar from Odisha had an e-way bill valid until 5 September 2022. The vehicle broke down more than once, and was intercepted on 10 September. A 200 per cent penalty was imposed, computed on a value above the invoice. The Division Bench noted that the statute fixes the percentage “giving no room for any discretion”, and that the e-way bill could have been extended. But the order had not dealt with the reply, and there was no allegation of intent to evade. It reduced the penalty to Rs 1,00,000 and ordered the balance refunded without interest. The case is on gst.bharattax.net.

The other view. The Gujarat High Court reads the section differently. In Synergy Fertichem (2019) it held that for the sale of unpaid goods under section 129(6) “it would not be necessary for the department to establish any intention to evade payment of tax”. In Panchhi Traders (2025) it described section 129 as “stand alone” where no intent to evade is involved, and as the remedy for contraventions “where the element of intention of evasion to pay the tax is not involved”. On that reading, intent separates section 130 from section 129, not section 129 from no penalty at all. Both cases are discussed in the next guide. The Supreme Court has not decided the point as a question of law; in Satyam Shivam it expressly declined to.

Detention and release, in order

1. The person in charge carries the invoice, bill of supply or delivery challan, and the e-way bill in any accepted form (rule 138A).
2. If the documents are prima facie in order, the vehicle moves on. If not, his statement is recorded in MOV-01 and a MOV-02 order directs the vehicle to a place for inspection.
3. EWB-03 Part A is uploaded within twenty-four hours. Inspection ends within three days unless extended in MOV-03. The MOV-04 report is served, and EWB-03 Part B is uploaded within three days, extendable by three.
4. Minor discrepancies listed in Circular 64 attract Rs 500 under each of the CGST and SGST Acts (Rs 1,000 under the IGST Act) in DRC-07, not detention.
5. Otherwise a MOV-06 detention order is served. A MOV-07 notice follows within seven days, and a MOV-09 order within seven days of its service, after a hearing.
6. Release in MOV-05 follows payment of 200 per cent of tax (owner), or the higher of 50 per cent of value and 200 per cent of tax (others), or a MOV-08 bond with a bank guarantee. A conveyance is released on the lower of the penalty and Rs 1,00,000.
7. Payment before the order concludes the proceedings (DRC-03, DRC-05). Where objections were filed, a reasoned MOV-09 order is still required.
8. Unpaid penalty after fifteen days of the order makes the goods liable to auction under rule 144A. Payment before the DRC-10 notice cancels the sale, and an appeal stays it.
9. An appeal lies under section 107, with a pre-deposit of ten per cent of the penalty for orders after 1 October 2025.

The next guide covers confiscation under section 130: when goods or a conveyance may be confiscated, the fine in lieu, and the MOV-10 and MOV-11 procedure.