Can Confiscation Under S. 130 Be Invoked Straight From S. 129 Detention? Gujarat HC Answers

The Gujarat High Court has ruled on a batch of over 120 connected petitions challenging the State tax department’s practice of directly invoking Section 130 (confiscation) of the CGST Act immediately after detaining goods under Section 129. The bench of Justice A.S. Supehia and Justice Pranav Trivedi upheld the power of authorities to initiate confiscation proceedings at the detention stage, but laid down strict safeguards and clarified the legislative scheme post the 2022 amendments. The lead matter, M/s Panchhi Traders vs. State of Gujarat, was heard along with more than a hundred other writ petitions. All petitioners challenged the department’s issuance of Form MOV-10 to begin confiscation proceedings despite ongoing Section 129 proceedings. They argued that after the 2021 Finance Act amendments, Sections 129 and 130 were “delinked”, making it illegal to jump straight to confiscation. Senior counsels including Tushar Hemani, Avinash Poddar, and others represented the petitioners. Advocate General Kamal Trivedi defended the State. Petitioners raised several key submissions: 1. Amended Section 129 Is a Self-Contained Code The 2022 amendments enhanced penalties and inserted Section 129(6) permitting auction on non-payment. Hence, confiscation under Section 130 is unnecessary and impermissible during transit. 2. Non-Obstante Clause Removed from Section 130 While Section 129 continues with the overriding clause (“notwithstanding…”), the same was deleted from Section 130. This, they argued, means Section 129 must take precedence in transit cases. 3. Confiscation Requires ‘Intent to Evade’ — Not a Clerical Issue Petitioners argued that mere e-way bill defects cannot establish the statutory requirement of intent to evade tax, which must be based on substantive investigation under Section 67. 4. Circular 41/2018 and MOV Forms Are Ultra Vires They contended that the circular and MOV forms—introduced before the legal amendments—cannot override statutory provisions and were therefore invalid post-2022. State’s Stand: Confiscation and Detention Are Separate & Independent Advocate General Kamal Trivedi strongly relied on the High Court’s earlier ruling in Synergy Fertichem Pvt Ltd (2019), arguing the following: 1. Sections 129 and 130 Are Mutually Exclusive The Division Bench in Synergy Fertichem had already held that neither provision depends on the other, and confiscation can be invoked at the detention stage if tax evasion is apparent. M:S PANCHHI TRADERS 2. Post-Amendment Changes Do Not Alter This Position Even after deletion of the non-obstante clause in Section 130, the two provisions continue to operate independently, and there is no statutory bar on issuing MOV-10. M:S PANCHHI TRADERS 3. Strong Cases of Evasion Justify Direct Invocation of Section 130 If authorities detect blatant or intentional evasion during transit, confiscation proceedings are justified without waiting for completion of Section 129 proceedings. High Court’s Findings: Sections 129 & 130 Remain Independent After Amendments The Bench carried out a detailed analysis of the 2021 Finance Act, GST Council Minutes, amended statutory text, and the MOV procedure. 1. GST Council Intentionally Delinked the Two Proceedings The Court reproduced the 39th GST Council Meeting minutes and Finance Bill memoranda, confirming Parliament's intent to treat Section 129 detentions and Section 130 confiscations as separate processes. 2. Retaining Non-Obstante Clause in Section 129 Does Not Override Section 130 The Court held that a non-obstante clause operates only when there is a conflict, and no such conflict exists between Sections 129 and 130. 3. Amendments Strengthen Section 129 Penalties but Do Not Replace Section 130 Despite the enhanced 200% penalty and auction provisions under Section 129, the legislature did not remove Section 130 or limit confiscation only to post-auction situations. Court Upholds Power to Invoke Confiscation at the Detention Stage — But with Safeguards Relying heavily on Synergy Fertichem, the Bench reiterated that: 1. Confiscation at Threshold Is Allowed Only in Strong Cases Authorities must identify clear indicators showing intent to evade tax; mere suspicion or technical lapses are insufficient. 2. Reasons Must Be Recorded and Reviewed by a Superior Officer The Court insisted that the officer must record reasons in writing for invoking Section 130 directly, and such reasons must be reviewed by a higher authority. 3. Section 67(6) Provisional Release Cannot Apply Now The Court clarified that after its deletion from Section 129, Section 67(6) cannot be invoked to seek provisional release of confiscated goods. The legislative intent is clear that release must follow only Section 129 or Section 130 mechanisms. 4. MOV-10 Procedure & Circular 41/2018 Remain Valid The Court rejected the challenge to the circular, holding that administrative instructions can supplement but not contradict the statute—and here they align with the Act. Case Details Case Title: M/S PANCHHI TRADERS Versus STATE OF GUJARAT Case No.: R/SPECIAL CIVIL APPLICATION NO. 9250 of 2020 Date: 11/12/2025 Counsel For Petitioner: TUSHAR HEMANI SR. ADVOCATE Counsel For Respondent: HARSHVARDHAN SHARMA, Click Here To Read Order Read More: Transport Owners Involved in Illegally Procuring Spirit Through Multiple GST Holders for Illicit Liquor Manufacturing: Patna High Court Grants Anticipatory Bail

Can Confiscation Under S. 130 Be Invoked Straight From S. 129 Detention? Gujarat HC Answers

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