Log In Sign Up

FREE GST Billing & Return Filing at ClearTax GST

File GST Returns
Create GST Bills

We have already discussed about offences & penalties and prosecution under GST. We will continue on Seizure, Detention & Confiscation of goods in transit under GST.

confiscation under gst


Inspection of goods in transit 

The proper officer has the power (authorized by the Centre or State) to intercept goods in transit.

The person in charge of a vehicle carrying goods exceeding a specified value is required to carry certain prescribed documents (i.e. invoice and a declaration).

On interception, the documents and goods can be inspected by the proper officer.

Detentions & Seizure of Goods in Transit

Difference between Detentions & Seizure and Confiscation

Not allowing access to the owner of the goods by a legal order/notice is called detention. However the ownership of goods still lies with the owner. It is issued when it is suspected that the goods are liable to confiscation.

Seizure is taking over of actual possession of the goods by the department. Seizure can be made only after inquiry/investigation that the goods are liable to confiscation.

Confiscation of the goods is the ultimate act after proper adjudication. Once confiscation takes place, the ownership as well as the possession goes out of the hands of the original owner and into the hands of the Government Authority.

When any person transports any goods in contravention to the GST Act then the goods, related documents, and the vehicle carrying them will be seized. The goods will be released only on payment of tax and penalty. There can be two scenarios in this case-

  • If the owner of the goods comes forward — in this case, 100% penalty (equal to the amount of tax) will be charged 
  • If the owner does not come forward — 50% of the value of goods before tax will be charged as penalty

[For exempted goods-
2% or 5% (if owner does not come forward) of value of goods
—–whichever is less]

The table below provides a clear example of the penalty process:

Particulars When owner comes forward When owner does not come forward
Value of goods 1,00,000 1,00,000
GST@18% 18,000 18,000
Penalty 18,000 50,000
Total Payment 36,000 68,000

So, it stands that the penalty is much higher if the owner of the goods does not come forward.

The person can also opt to furnish a security covering the amount payable.

Goods and conveaynce will be detained/seized only after giving an order of detention to the person transporting the goods.

On detaining, the tax officer will issue a notice mentioning the tax payable and pass an order for payment of tax and penalty. An opportunity of being heard will be given. On payment of the tax and penalty, all liabilities under detention will be discharged.

If the owner does not pay within 7 days, then the goods will be confiscated.  The time of 7 days will be reduced in case of perishable or hazardous goods.

Confiscation under GST

The goods and the conveyance will be confiscated if any person – confiscation under gst

  • Supplies/receives goods in contravention of the provisions of GST to evade tax
  • Cannot account for the presence of seized goods
  • Supplies goods without registering (even though he is liable to register)
  • Violates rules to evade tax
  • Uses any conveyance/vehicle to transport goods in contravention to the GST provisions

(unless the owner of the vehicle can prove that it was used without his knowledge)

Penalty will also be applicable in each of the above cases. To know details about penalties under GST, please read our article.

Before confiscating the goods, the tax officer shall give an option of paying a fine instead of confiscation.

Fine in lieu of confiscation

The minimum fine will be as per above i.e., 100% tax if the owner comes forward and 50% of the value of goods before tax if the owner does not come forward.

Maximum fine will be the market value of goods before tax.

For confiscation of vehicle, the owner will be given the option of paying a fine equal to the tax payable on the goods.

Fine in lieu of confiscation does not discharge the other penalties applicable. Other taxes, charges, penalties will still be payable after paying fine in lieu of confiscation.

Goods will not be confiscated without a show cause notice and an opportunity of being heard.

Once confiscated, the goods will become the property of the government. 3 months will be given for payment of the confiscation fine after which the goods will be sold.

Confiscation will not affect other punishments under the provisions of GST, i.e., all penalties and prosecutions will still be applicable.


Simplify Your GST Filing & Invoicing

Get Trained & Try Cleartax GST Software for FREE

Start Free GST Software Trial & Training

Simplify Your GST Filing & Invoicing

Get Trained & Try Cleartax GST Software for FREE

Use GST Software