Goods and Services Tax (GST) and Corporate Tax Planning · Inspection, Search, Seizure, Offences and Penalties

Confiscation of Goods and Conveyances under Section 130 CGST

Updated 11 October 2026 · Fact-checked

Section 130 CGST lets the officer confiscate goods or conveyances when a person commits listed contraventions, such as supplying goods with intent to evade tax. The owner can pay a redemption fine instead. The person also faces penalty under section 122. A hearing is mandatory before any order.

Understand Confiscation of Goods and Vehicles

Confiscation means the Government takes ownership of goods or a vehicle because of a breach of GST law. Under Section 130(5), once goods or a conveyance are confiscated, title vests in the Government.

Section 130(1) lists when this applies. A person:

supplies or receives goods in contravention of the Act or Rules with intent to evade tax;
does not account for goods on which tax is payable;
supplies taxable goods without applying for registration;
contravenes any provision of the Act or Rules with intent to evade tax; or
uses a conveyance to carry goods in contravention of the Act or Rules.

For the conveyance ground, the owner escapes if he proves the use was without the knowledge or connivance of himself, his agent, if any, and the person in charge of the conveyance. Then goods or conveyances become liable to confiscation and the person is liable to penalty under section 122.

The owner is not left without a choice. Under Section 130(2), the adjudicating officer must give the owner an option to pay a fine in lieu of confiscation (the redemption fine). This fine is whatever the officer thinks fit, but it is capped. Paying it lets the owner keep the goods.

Do not mix this with Section 129. Section 129 deals with goods and conveyances detained or seized in transit, and releases them on payment of penalty. Section 130 is wider: it needs one of the listed grounds, and it ends in confiscation or a fine in lieu. Section 67 supplies the search and seizure power that often comes first.

Key rules to remember

Cap on redemption fine (s.130(2), first proviso): Fine ≤ Market value of goods − Tax chargeable on them; This is only the upper limit. The officer fixes the actual fine within it.
Floor on fine plus penalty (s.130(2), second proviso): Fine + Penalty ≥ 100% of tax payable on such goods; The test is on the aggregate of fine and penalty, not on the fine alone.
Redemption of a conveyance used for hire: Fine = Tax payable on the goods being transported; Applies where the conveyance carries goods or passengers for hire. The owner gets the option to pay this fine.
Hearing requirement (s.130(4)): No confiscation or penalty order without an opportunity of being heard; An order passed without a hearing is open to challenge.
Vesting and disposal (s.130(5)-(7)): Title vests in Government; disposal only after up to 3 months to pay fine; The officer must be satisfied the goods are not needed in other proceedings under the Act.

How to solve Confiscation of Goods and Vehicles questions

Use this order for any case question on confiscation. It matches the provision, facts, conclusion pattern.

1Identify what is at stake: goods, a conveyance, or both, and whether they were in transit or elsewhere.
2Match the facts to a ground in section 130(1). Look for intent to evade tax, unaccounted goods, no registration, or misuse of a conveyance.
3For a conveyance, check whether the owner can prove lack of knowledge or connivance of himself, his agent and the person in charge.
4State the consequence: goods or conveyance liable to confiscation, and penalty under section 122 on the person.
5Apply section 130(2): the officer must offer a fine in lieu. Compute the cap (market value less tax) and check the floor (fine plus penalty not below 100% of tax).
6Check procedure: hearing under section 130(4), then vesting of title, possession and disposal under section 130(5) to (7).
7Conclude clearly with the amount payable and what the owner can do.

Quickest way: Ground, option, cap, floor

When to use it: Use this when a numerical question gives market value, tax and a proposed fine, and asks what is payable.

Write the ground from section 130(1) in one line.
Cap: market value minus tax. The fine cannot exceed it.
Floor: tax payable × 100%. Fine plus penalty must reach at least this.
Compute penalty under section 122 only if the question gives the rate or amount; otherwise state it as payable.
Add a line on the hearing and the option to pay a fine in lieu.

Common mistakes in Confiscation of Goods and Vehicles

Treating section 129 and section 130 as the same
Both involve goods, penalty and release, so they look alike.
Fix: Section 129 is for goods in transit with a fixed penalty for release. Section 130 needs a listed ground and gives confiscation with a fine in lieu.
Saying the fine can be any amount
Students remember that the officer decides the fine.
Fix: Remember the cap: market value less tax chargeable. Also remember the floor on fine plus penalty.
Applying the 100% floor to the fine alone
The proviso is read loosely.
Fix: The floor applies to the aggregate of fine and penalty. The fine alone can be lower.
Forgetting the owner's defence for conveyances
Students focus on goods and skip clause (v).
Fix: For the conveyance ground, the owner must prove the use was without knowledge or connivance of himself, his agent and the person in charge.
Ignoring the hearing requirement
Students jump straight to the order.
Fix: Always mention section 130(4): no confiscation or penalty order without an opportunity of being heard.
Quoting section 130(3)
Older notes still carry it.
Fix: Sub-section (3) was omitted from 1 January 2022. Do not cite it.

Worked examples

Example 1

Shree Traders, Pune, supplies taxable goods worth ₹4,00,000 (tax chargeable ₹72,000) without having applied for registration. The goods are found with the officer, who proposes confiscation. What is the maximum redemption fine, and what is the minimum aggregate of fine and penalty? Assume the market value equals ₹4,00,000.

Show the solution

Ground: supplying goods liable to tax without having applied for registration is section 130(1)(iii). The goods are liable to confiscation and the person to penalty under section 122.
The officer must give an option to pay a fine in lieu of confiscation under section 130(2).
Cap on fine = market value − tax chargeable = ₹4,00,000 − ₹72,000 = ₹3,28,000.
Floor on fine plus penalty = 100% of tax payable = ₹72,000.
A hearing must be given before the order under section 130(4).

Answer: The fine can be at most ₹3,28,000. The aggregate of fine and penalty cannot be less than ₹72,000. Goods are confiscated only if the owner does not pay the fine, and the order needs a hearing.

Example 2

A transporter's truck carries goods for hire, in contravention of the Act, with intent to evade tax. Tax payable on the goods is ₹1,10,000. The goods owner and the truck owner are different persons. The truck owner says he did not know of the contravention. Advise on the truck.

Show the solution

Ground: using a conveyance to carry goods in contravention of the Act is section 130(1)(v). The goods are also liable if the contravention is with intent to evade tax.
The truck owner is protected only if he proves the use was without knowledge or connivance of himself, his agent, if any, and the person in charge of the conveyance. Merely saying he did not know is not enough; he must prove it.
If he fails to prove it, the truck is liable to confiscation.
Because the truck is used for carriage of goods for hire, the owner gets an option to pay, in lieu of confiscation, a fine equal to the tax payable on the goods transported.
Fine = ₹1,10,000.

Answer: If the owner proves lack of knowledge or connivance of himself, his agent and the person in charge, the truck is not liable. If not, it is liable to confiscation, but he can pay a fine of ₹1,10,000 in lieu. A hearing is required first.

Exam tips

Write the provision, the facts, then the conclusion. Quote the relevant clause of section 130(1) by number.
In any numerical question, show the cap and floor separately before the final answer.
Add a one-line contrast with section 129 when the facts mention transit or detention.
Mention the hearing, vesting of title and disposal after up to three months to add points on procedure.
Cite only sections you are sure of: 130, 129, 122 and 67 are enough for most answers.

Practice questions from Inspection, Search, Seizure, Offences and Penalties

Confiscation of Goods and Vehicles: frequently asked questions

What is the redemption fine under GST?

It is the fine the owner may pay in lieu of confiscation under section 130(2). The officer fixes it, but it cannot exceed market value less tax chargeable. The fine and penalty together cannot be less than 100% of the tax payable on the goods.

What is the difference between section 129 and section 130?

Section 129 deals with goods and conveyances detained or seized in transit and releases them on payment of penalty. Section 130 applies on listed grounds, such as intent to evade tax, and leads to confiscation unless a fine is paid in lieu.

Can goods be confiscated without a hearing?

No. Section 130(4) says no order for confiscation or penalty can be issued without giving the person an opportunity of being heard.

What happens to confiscated goods?

Title vests in the Government. The proper officer takes possession and, if the goods are not needed in other proceedings, can dispose of them after allowing reasonable time not exceeding three months to pay the fine. The sale proceeds go to the Government.