Gujarat High Court Clarifies Distinction Between Section 129 and Section 130 Proceedings Under GST Act; Quashes Confiscation Notice Issued Midway

Background and Context
The petitioner, a company engaged in the sale of metal scrap and registered under the Goods and Services Tax Act, 2017, challenged the detention of its truck and goods by the State Tax Officer, Ahmedabad. The truck was intercepted on 22.11.2023, and an order for physical verification was passed. Subsequently, during the pendency of the writ petition, a notice for confiscation under Section 130 of the CGST Act was issued in Form MOV-10 on 02.12.2023. The petitioner contended that the authorities had abandoned the proceedings under Section 129 and directly invoked Section 130, which was contrary to law.

Legal Issue
The central issue before the Gujarat High Court was whether the authorities could bypass the completion of proceedings under Section 129 of the CGST Act and directly initiate confiscation proceedings under Section 130, particularly in the absence of clear evidence of intent to evade tax.

Court’s Reasoning
The Court noted that the issue was squarely covered by its earlier decision dated 11.12.2025 in Special Civil Application No. 9250 of 2025 and allied matters. The relevant legal reasoning from that decision was reiterated in detail. The Court explained that after the deletion of sub-section (2) of Section 129 by the Finance Act, 2021, provisional release of goods under Section 67(6) is no longer available for goods and conveyances detained during transit. The only remedy for release is as prescribed under Section 129.

The Court further clarified the distinction between Section 129 and Section 130 of the CGST Act. Section 129 deals with seizure and detention of goods and conveyances during transit, while Section 130 pertains to confiscation and has graver consequences, including vesting of goods or conveyances in the government. The two sections operate independently unless bridged by the element of “intention to evade tax.” The Court emphasized that the procedure under Section 129 must be brought to its logical conclusion before resorting to confiscation under Section 130, except where there is clear evidence of intent to evade tax.

The Court rejected the argument that Section 129, by virtue of its non-obstante clause, precludes any action under Section 130. Instead, it held that while Section 129 proceedings must be completed, authorities may invoke Section 130 if there is a blatant intention to evade tax, as evidenced by forged documents, ambiguous descriptions, or other clear indicators.

Decision and Outcome
Applying these principles, the Court found that the respondents had directly invoked Section 130 without completing the process under Section 129, and without establishing the requisite intent to evade tax. Consequently, the impugned notice dated 02.12.2023 and all subsequent proceedings were quashed and set aside. The writ petition was allowed, and the rule was made absolute.

This judgment reaffirms the procedural safeguards under the GST Act and clarifies the legal distinction between detention and confiscation proceedings, ensuring that taxpayers are not subjected to arbitrary confiscation without due process.