GST Confiscation Set Aside: Gujarat High Court Says Section 130 Cannot Bypass Section 129 Process

Background of the Dispute

The matter in Krishna Industries Vs State Tax Officer & Anr. (Gujarat High Court) concerned the detention and subsequent proposed confiscation of goods and vehicle under the Goods and Services Tax Act, 2017.

The assessee, registered under the GST regime and engaged in trading of metal scrap, was transporting goods from Ahmedabad to Sarkhej. The consignment was carried in a truck bearing registration number GJ 27 HT 2658, accompanied by the necessary documents.

On 22.11.2023, at around 6:11 AM, the vehicle was intercepted at Aslali, Ahmedabad by the State Tax Officer (2), Mobile Squad, Ahmedabad. Following the interception:

  • An order for physical verification was issued in Form GST MOV-04.
  • Proceedings were initially undertaken under Section 129 for detention/seizure during movement of goods.
  • While the writ petition was pending, a notice dated 02.12.2023 in Form GST MOV-10 was issued, proposing confiscation of goods and conveyance under Section 130.

The assessee challenged both:

  1. The original detention of the goods and vehicle under Section 129.
  2. The subsequent confiscation notice in Form GST MOV-10 issued under Section 130.

The core grievance was that the authorities had started proceedings under Section 129, but instead of completing that process, they abruptly shifted to Section 130 and issued a confiscation notice, without following the statutory scheme applicable to detention during transit.

Reliefs Sought in the Writ Petition

In the writ petition, the assessee prayed for:

  • Declaration of illegality of the detention of the truck and goods:

    • A writ of mandamus to declare the action of the first respondent in detaining the vehicle and metal scrap transported from Ahmedabad to Sarkhej, with all valid documents, under Section 129 as unlawful; and
    • A direction for immediate release of the goods and conveyance.

  • Challenge to confiscation notice under Section 130:

    • A writ of mandamus to declare the notice dated 02.12.2023 issued under Section 130 of the Central Goods and Services Tax Act, 2017 for confiscation of goods by the State Tax Officer, Central Mobile Squad, Ahmedabad as being:
      • without jurisdiction,
      • illegal,
      • contrary to the provisions of the Act, and
      • therefore bad in law.

  • Interim protection:

    • An ex parte ad-interim order to stay the operation of the Form GST MOV-10 notice dated 02.12.2023 and to stay all further proceedings for confiscation of goods and conveyance pending final disposal of the petition.

Initially, the petition focused mainly on the detention under Section 129. After issuance of Form GST MOV-10, the assessee amended the writ petition to specifically challenge the confiscation notice as well.

Position Taken by the Petitioner

The assessee’s main contentions were:

  1. Improper shift from Section 129 to Section 130
    • The authorities had first detained the goods and vehicle under Section 129 pursuant to interception in transit.
    • Without completing the statutory process under Section 129, they directly invoked Section 130 and issued a confiscation notice in Form GST MOV-10.
    • Such mid-stream abandonment of Section 129 proceedings was argued to be contrary to law and without authority.