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Detention and Seizure of Goods in Transit

In this article we will understand when goods in transit can be detained or seized by the GST officer:

Inspection of goods in transit

Before detaining and seizing goods the first step is to inspect goods in transit. For this, the authorized officer has the power to inspect the goods in transit.

So person-in-charge must carry all the required documents such as

  1. An invoice
  2. An e-Way bill

Difference between Detention & Seizure

As these words are commonly used under GST it is important to know what makes these two words distinct from each other. So, here is the difference between the Detention and Seizure

Detention

Detention is a condition when the owner of the goods is not allowed to access the goods. But it shall be noted that the ownership of the detained goods remains with the owner. The detention order is passed by the government at the time of under suspicion that the goods are liable to be confiscated.

Seizure

Unlike detention, in seizure, the actual possession of the goods is taken by the department. However, the seizure of goods can only take place after a proper inspection of goods has been done and where the department has found that the goods inspected shall be confiscated.

Now the question arises what is confiscation?

Confiscation of the goods is an ultimate act that takes place after detention and seizure. Under confiscation, the ownership of the goods is take away from the owner by the government authority.

Penalty for seized goods

In case if the person-in-charge is transporting the consignment without any proper documents or in contravention to the GST Act, then the consignment along with the transporting vehicle can be seized by the authorized officer. However, both things can be released after paying the tax and penalty. The quantum of penalty is based on two scenarios and they are:

  1. In case if the owner of the goods voluntarily comes forward: Generally, in such cases, the quantum of penalty is equal to the amount of tax that has to be paid.
  2. In case if the owner doesn’t come forward voluntarily: In such a case, the owner has to pay the penalty amount equal to 50% of the value of the goods before tax.
  3. It shall be noted that in the case of exempted goods the penalty amount decreases to 2% and 5% of the value of the goods respectively or 25,000 INR whichever is lower.

For better understanding let us seen an example, how the penalty process works under GST:

Particulars Owner coming forward Owner not coming forward
Value of goods 2,00,000 2,00,000
GST @12% 24,000 24,000
Penalty 24,000 1,00,000
Total Payment 48,000 1,24,000

So, through this, we can conclude that the taxpayer needs to pay more if he does not come forward.

Process of Detention and Seizure of goods in transit

  1. To detain and seize the consignments and the transporting vehicle, the tax officer needs to provide an order of detention to the person-in-charge moving the consignment.
  2. After detaining, a notice is issued by the tax officer containing the tax payable on the goods along with the penalty. However, the taxpayer is given an opportunity of being heard.
  3. Once the tax and penalty amount are paid by the owner the tax officer releases all the detention charges.
  4. In case if the owner does not pay the remaining tax amount and penalty levied within 7 days from the date of order passed, then in such case, the goods get confiscated. Moreover, it shall be noted that in the case of hazardous goods and perishable items the time-frame may vary.