Indirect Tax Laws · Offences and Penalties and Ethical Aspects under GST

Penalty for Detention and Confiscation of Goods (Sections 129 and 130 of CGST Act)

Updated 5 October 2026

Section 129 lets the proper officer detain or seize goods and conveyance in transit that travel in contravention of the GST law, and release them on payment of tax and penalty or security. Section 130 confiscates goods or conveyance where there is intent to evade tax. To solve, test intent, identify who comes forward, then compute.

Understand Penalty for Detention and Confiscation of Goods

Goods moving on the road must carry the right documents: a tax invoice or bill of supply, and an e-way bill where required. If they do not, the officer can stop the vehicle. Section 129 is the tool for this. It covers goods in transit, the conveyance used to carry them, and the related documents.

Section 129 is a release-on-payment provision. The officer detains or seizes the goods and conveyance. They are released when the person pays the tax and the penalty fixed by the section, or furnishes security for that amount. You do not need to prove intent to evade. A contravention of the Act or Rules while the goods are in transit is enough.

Section 130 is harsher. It applies where the contravention is tied to intent to evade tax. Examples are supplying or receiving goods in contravention of the law with that intent, not accounting for goods on which tax is payable, and supplying taxable goods without applying for registration. It also covers using a conveyance for carrying goods in contravention of the law. The goods and conveyance become liable to confiscation, and the person is also liable to penalty under section 122.

The link between the two: under section 129 the officer issues a notice specifying the tax and penalty (section 129(3)) and passes an order within seven days from the date of service of the notice. The person then has 15 days from the date of receipt of the order to pay. If the amount is not paid within those 15 days, the goods or conveyance are liable to be detained or confiscated under section 130 (section 129(6)). Under section 130 the owner can still avoid confiscation by paying a fine in lieu of confiscation. That fine is bounded above by the market value of the goods less the tax chargeable. It is bounded below by the penalty leviable under section 129(1), as applicable (clause (a) or (b)). Tax and other charges are payable in addition.

Both sections need a notice and a hearing before the order. Section 129(4) says no tax, interest or penalty is determined without giving the person concerned an opportunity of being heard. Section 129 has its own notice and order procedure (notice, then order within seven days from the date of service of the notice), so you do not go through sections 73 or 74 for it. An order of confiscation under section 130 also cannot be passed without a notice and an opportunity of being heard.

Key rules to remember

Section 129: owner comes forward (taxable goods): Amount to pay = Tax payable + Penalty equal to 200% of the tax payable (total = 3 × tax); This is clause (a): it applies where the owner of the goods comes forward to pay. The person in charge of the conveyance may also be involved in the transit and the proceedings. Tax and penalty follow the head of tax: IGST for inter-State, CGST plus SGST/UTGST for intra-State.
Section 129: owner comes forward (exempted goods): Amount to pay = lower of 2% of value of goods or ₹25,000; No tax is payable on exempted goods, so only this amount is paid.
Section 129: owner does not come forward (taxable goods): Amount to pay = Tax payable + Penalty, where Penalty = higher of (50% of value of goods) and (200% of tax payable); This is clause (b): it applies where the owner of the goods does not come forward. Compute both figures, take the higher as the penalty, and then add the tax. The tax is paid in addition to the penalty.
Section 129: owner does not come forward (exempted goods): Amount to pay = lower of 5% of value of goods or ₹25,000; Compare the two figures and take the lower.
Release against security: Security = amount payable under the applicable clause above; Goods and conveyance can be released on furnishing security in the prescribed form and manner, instead of paying.
Fine in lieu of confiscation (section 130): Penalty under 129(1)(a) or (b) as applicable ≤ Fine ≤ Market value of goods − Tax chargeable; The fine is in addition to the tax and other charges payable. Penalty under section 122 is separate.
Section 129 vs 130 test: No intent needed → section 129. Intent to evade tax, or the listed acts → section 130; If the section 129 amount is not paid within 15 days from the date of receipt of the order, the goods or conveyance are liable to be detained or confiscated under section 130 (section 129(6)). The order itself is passed within 7 days from the date of service of the notice.

How to solve Penalty for Detention and Confiscation of Goods questions

Use this order for any case scenario or written question on detention and confiscation.

1Identify the facts: what is moving, where, which documents are missing or wrong, and who is the owner.
2Decide whether the goods are in transit in contravention of the Act or Rules. If so, section 129 applies to goods, conveyance and documents.
3Look for intent to evade tax or the specific acts listed in section 130, such as supply without registration or unaccounted goods. If you find them, section 130 applies.
4For section 129, check whether the owner comes forward (clause (a)) or not (clause (b)). Then pick the penalty: 200% of tax if yes, the higher of 50% of value and 200% of tax if no. The tax is paid in addition. Use the exempted-goods rule if the goods are exempt. Note the role of the person in charge of the conveyance, if the facts give one.
5Compute: tax plus penalty. Split by head of tax: IGST for inter-State, CGST and SGST for intra-State.
6State the release options: pay, or furnish security. Mention the notice under section 129(3), the hearing, and the order within seven days from the date of service of the notice.
7If the amount is not paid within 15 days from the date of receipt of the order, say that the goods or conveyance are liable to be detained or confiscated under section 130 (section 129(6)). Give the fine range and the section 122 penalty.
8Conclude in provision-facts-conclusion form with the total amount payable.

Quickest way: Three-question shortcut

When to use it: Use it for MCQs and for short case scenarios with limited time.

Q1: Is there intent to evade tax? If yes, section 130. If no, section 129.
Q2: Under section 129, is the goods owner coming forward? Yes (clause (a)): penalty is 200% of tax. No (clause (b)): penalty is the higher of 50% of value and 200% of tax. The person in charge of the conveyance may also be involved, so mention the conveyance in your answer.
Q3: Are the goods exempt? Then use 2% (owner comes forward) or 5% (owner does not) of value, capped at ₹25,000, and take the lower figure.
Add the tax for taxable goods. Total = tax + penalty. Write the split by head of tax.
If unpaid within 15 days from the date of receipt of the order, the goods or conveyance are liable to be detained or confiscated under section 130 (section 129(6)).

Common mistakes in Penalty for Detention and Confiscation of Goods

Treating every detention as confiscation.
Students mix sections 129 and 130 because both deal with seized goods.
Fix: Section 129 is release on payment and needs no intent. Section 130 needs intent to evade or the listed acts. Test intent first.
Forgetting to add the tax to the penalty.
The question focuses on penalty, so students stop at penalty.
Fix: For taxable goods, the amount for release is tax plus penalty. Compute both and give the total.
Applying the exempted-goods rule to taxable goods, or vice versa.
Students remember the 2% and ₹25,000 figures and use them everywhere.
Fix: Those figures apply only to exempted goods. For taxable goods use 200% of tax (clause (a)) or the higher of 50% of value and 200% of tax (clause (b)).
Taking the higher of 2% of value and ₹25,000 for exempted goods.
Students misread 'whichever is less'.
Fix: Compute both figures and choose the lower one.
Ignoring the conveyance and the fine in lieu under section 130.
Students focus only on the goods.
Fix: State that conveyance is also liable to detention or confiscation, and that the owner may pay a fine in lieu within the bounds set by section 130(2).

Worked examples

Example 1

A truck carrying taxable goods of value ₹6,00,000 within one State is intercepted without a valid e-way bill. GST on the goods is 12% (CGST 6%, SGST 6%). The owner comes forward. There is no evidence of intent to evade tax. Compute the amount payable for release of goods and conveyance.

Show the solution

Provision: section 129 applies because the goods are in transit in contravention of the Rules. No intent is found, so section 130 is not attracted.
Tax payable = 12% × ₹6,00,000 = ₹72,000. Split: CGST ₹36,000 and SGST ₹36,000.
Owner comes forward, so penalty = 200% of tax = 2 × ₹72,000 = ₹1,44,000. Split: CGST ₹72,000 and SGST ₹72,000.
Total = ₹72,000 + ₹1,44,000 = ₹2,16,000. This is CGST ₹1,08,000 and SGST ₹1,08,000.
Release can also be obtained by furnishing security equal to this amount, that is ₹2,16,000.

Answer: ₹2,16,000 (tax ₹72,000 plus penalty ₹1,44,000), payable as CGST ₹1,08,000 and SGST ₹1,08,000. Alternatively, security of ₹2,16,000 can be furnished.

Example 2

A trader supplies taxable goods without applying for registration. Officers seize the goods. Market value of the goods is ₹8,00,000 and tax chargeable at 18% is ₹1,44,000. The trader, as owner, claims the goods. Under section 130, state the range of fine in lieu of confiscation and the other amounts payable.

Show the solution

Provision: supply of taxable goods without applying for registration is a listed ground in section 130. The goods are liable to confiscation.
The owner can opt to pay a fine in lieu of confiscation.
Upper limit of fine = market value − tax chargeable = ₹8,00,000 − ₹1,44,000 = ₹6,56,000.
Lower limit of fine = penalty leviable under section 129(1), as applicable. These are not transit goods, so the facts do not fix the clause. Assume clause (a), because the owner is the person claiming the goods. The penalty is then 200% of tax = 2 × ₹1,44,000 = ₹2,88,000.
So on the clause (a) assumption the fine lies between ₹2,88,000 and ₹6,56,000.
If clause (b) applied instead, the lower limit would be the higher of 50% of value (₹4,00,000) and 200% of tax (₹2,88,000), which is ₹4,00,000. The range would then be ₹4,00,000 to ₹6,56,000.
In addition, the trader must pay the tax of ₹1,44,000 and other charges, and is liable to a penalty under section 122.

Answer: On the assumption that clause (a) applies because the owner claims the goods, the fine in lieu of confiscation lies between ₹2,88,000 (200% of tax) and ₹6,56,000. If clause (b) applied, the lower limit would be ₹4,00,000, the higher of 50% of value and 200% of tax. The trader also pays tax of ₹1,44,000 and other charges, plus the penalty under section 122.

Exam tips

Case scenarios usually give one fact that decides the section: missing e-way bill points to 129, supply without registration or unaccounted goods points to 130. Underline it.
Always show the computation lines: tax, penalty, total, and the split by head of tax. Marks are awarded for each line.
Write the conclusion in the form provision, facts, conclusion. Name the section, apply it to the facts, then state the amount.
In MCQs, check whether the owner comes forward, whether the goods are exempt, and whether the question says 'whichever is less'.
Remember the timelines: order within 7 days from the date of service of the section 129(3) notice, and 15 days from the date of receipt of the order to pay. After that, the goods or conveyance are liable to be detained or confiscated under section 130 (section 129(6)).

Practice questions from Offences and Penalties and Ethical Aspects under GST

Penalty for Detention and Confiscation of Goods: frequently asked questions

What is the difference between section 129 and section 130 of the CGST Act?

Section 129 deals with goods in transit in contravention of the law. They are detained and then released on payment of tax and penalty or security, and no intent to evade is required. Section 130 needs intent to evade tax or one of its listed acts. It leads to confiscation, with an option to pay a fine in lieu.

How do I calculate penalty under section 129 for taxable goods?

If the owner comes forward (clause (a)), the penalty is 200% of the tax payable, and you also pay the tax, so the total is 3 times the tax. If the owner does not come forward (clause (b)), the penalty is the higher of 50% of the value of goods and 200% of the tax payable, and you also pay the tax.

What happens if the section 129 amount is not paid in time?

If the amount is not paid within 15 days from the date of receipt of the order, the goods or conveyance are liable to be detained or confiscated under section 130 (section 129(6)). The owner can still avoid confiscation by paying a fine in lieu, plus the tax and other charges.

Can the goods be released without paying the amount?

Yes, by furnishing security equal to the amount payable, in the form and manner prescribed. This lets the vehicle move while the matter is decided.

Is a notice and hearing required before the order?

Yes. Section 129(3) requires a notice specifying the tax and penalty, and the order is passed within seven days from the date of service of the notice. Section 129(4) says no tax, interest or penalty is determined without giving the person concerned an opportunity of being heard. Section 130 also needs a notice and an opportunity of being heard before confiscation. Section 129 does not run through sections 73 or 74.