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The Gujarat High Court’s decision in Panchhi Traders is best read not as another routine “MOV-form” writ, but as a constitutional-legal reminder that confiscation is an extraordinary sovereign act. The Court was confronted with a pattern that had become disturbingly common after 01-01-2022: once a conveyance was intercepted and goods were detained in transit under Section 129, confiscation notices in Form GST MOV-10 under Section 130 were issued almost reflexively, as if confiscation were the natural sequel to detention. The petitions, in a large batch, challenged this mechanical drift in enforcement and required the Court to re-draw the doctrinal boundary between detention/seizure in transit and confiscation as a punitive, property-depriving consequence.
The legal setting is crucial. Sections 129 and 130 of the CGST Act were materially amended with effect from 01-01-2022 (Finance Act, 2021). The Court took notice of the legislative intent behind these amendments: transit contraventions were meant to be dealt with through a tightened and self-sufficient Section 129 mechanism, and the earlier “automatic bridge” that practically pushed cases from Section 129 into Section 130 was consciously dismantled. In this post-amendment regime, Section 129 is not a mere temporary holding bay until confiscation is invoked; it is a complete statutory code for contraventions relating to goods in movement, prescribing the manner of detention, the notice-and-order sequence, the penalty architecture, and the eventual consequences for non-compliance.
This is where the Court’s reasoning becomes jurisprudentially significant. Confiscation under Section 130 is not simply a higher penalty; it is an act that transfers title—upon confiscation, the goods or conveyance vests in the Government. The Court repeatedly treats this as a “grave consequence”, and therefore as a power that must be exercised with heightened legal discipline. The State’s argument, in substance, was that if a “blatant evasion” is noticed at the transit stage, authorities are empowered to proceed to confiscation. The petitioners, conversely, argued that after 01-01-2022, Section 129 has overriding primacy for goods in transit, and that straightway invocation of Section 130 midstream, through MOV-10, is impermissible. The High Court does not accept either extreme in absolute form. It rejects the idea that Section 130 becomes unusable merely because interception occurs during transit; but it equally rejects confiscation as a routine escalation. The Court insists that the two provisions must operate within their own contours, and that they are “bridged” only by the statutory element that appears in Section 130: intention to evade payment of tax.
The Court’s key doctrinal move is to identify “intention to evade” as the juridical switch that converts a Section 129 situation into a Section 130 situation. Without that switch, Section 129 remains the complete answer for transit contraventions. With that switch—meaning, with material that justifies a concrete opinion of intent to evade—confiscation may be legitimately invoked even from a transit interception. But the Court is categorical that this opinion cannot rest on mere suspicion, on portal-level mismatches, on generic assumptions, or on ipse dixit. The formation of opinion must be anchored to objective material that can withstand legal scrutiny, and the officer must examine the genuineness and coherence of the foundational documents presented at interception: the invoice, the e-way bill, consignment particulars, registration details, and surrounding circumstances of movement. Confiscation, being a last resort, cannot be initiated as a mechanical sequel to detention.
The judgment also engages with the enforcement architecture built around the MOV forms and the CBIC circular-driven procedure. The Court notes that the procedure for interception, inspection, detention, release and confiscation has been operationalised through MOV forms, particularly under Circular No. 41/15/2018-GST dated 13-04-2018, which contemplates that where the proper officer forms the opinion that movement is being effected to evade payment of tax, the officer may invoke Section 130 by issuing MOV-10. The Court does not treat this as a charter for routine confiscation; it treats it as conditional power that becomes available only when the statutory threshold—evasion-intent—exists in an evidentiary sense. This is a subtle but crucial point: the circular and forms do not dilute the statute; they must be read as subordinate tools that operate only when the statute’s conditions are satisfied.
A related strand in the judgment concerns the post-amendment discontinuity with Section 67(6). In the pre-amendment regime, provisional release mechanisms and the interplay between seizure and release had created practical arguments about whether, once confiscation is initiated, provisional release must follow. The Court reads the deletion and re-structuring after 01-01-2022 as a deliberate legislative separation: detention and release of goods and conveyances intercepted in transit must be governed by Section 129’s own machinery, and not by importing provisional release concepts from the search-and-seizure chapter. In doing so, the Court underscores that the transit code is now intended to run on its own rails. That, however, does not mean confiscation is barred; it means confiscation must be justified on its own statutory foundation, not used as a shortcut for recovery or as a pressure tool.
The judgment’s treatment of precedent is also instructive for practitioners. The Gujarat High Court places its earlier Division Bench reasoning in Synergy Fertichem in a continuing line, particularly the proposition that confiscation at the threshold requires a very strong case and cannot be founded on mere suspicion. At the same time, the Court addresses the post-amendment arguments grounded in the retention of the non-obstante clause in Section 129 and its deletion in Section 130, and it declines to accept the submission that this structural change makes Section 129 so overriding that Section 130 cannot be invoked during transit. The Court instead chooses a harmonising approach: the overriding nature of Section 129 ensures that transit contraventions are handled through its complete procedure; but where material discloses intention to evade, Section 130 is not legislatively meant to be silenced. The law, the Court says in substance, cannot be read with a myopic vision that creates hostility between the two provisions.
What gives the decision its real normative force is the Court’s insistence on disciplined fact-formation. It cautions against building confiscation on acts or omissions of persons not proximately linked to the dealer’s alleged evasion. It also recognises the practical reality that many transit discrepancies may arise from upstream mistakes, third-party defaults, or clerical lapses that do not, by themselves, reveal the mens rea-like statutory ingredient embedded in Section 130’s text. Confiscation is not to be treated as an enforcement reflex; it is to be treated as a conclusion drawn from material that demonstrates an evasion design. If such opinion is not formed within the lawful time frame and on tangible evidence, the conveyance must be released in accordance with law; and even where release occurs under Section 129, the Court acknowledges that confiscation may still be invoked later if serious incriminating material is subsequently discovered—again, not as routine escalation, but as a material-driven statutory response.
The practitioner takeaway from Panchhi Traders is therefore a tight, court-backed rule of restraint: after 01-01-2022, Section 129 is the normal and complete code for goods-in-transit contraventions; Section 130 is an exceptional confiscatory power that can be invoked from a transit interception only upon formation of a concrete, evidence-based opinion of intention to evade tax. Confiscation is a last resort with grave civil consequences and cannot be founded on mere suspicion, generalised allegations, or mechanical issuance of MOV-10. This ratio arms assessees and transporters with a principled challenge to “confiscation first” practice, while simultaneously preserving the State’s power to confiscate where evasion is demonstrable and the record shows genuine satisfaction based on material.
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By Adv. G. Jayaprakash (Advocate; Former Central Excise Officer