Goods detained under GST sections 129-130 must be provisionally released under section 67(6) after confiscation notice

Gujarat HC held that goods detained under sections 129-130 of GST Act must be provisionally released under section 67(6). Court ruled that once confiscation notice in Form MOV-10 is issued under section 130, goods are deemed seized under section 67(2), making section 129 inapplicable. Authorities must mandatorily exercise powers under section 67(6) for provisional release upon execution of bond/security or payment of applicable tax, interest and penalty. HC directed respondent authorities to provisionally release goods and vehicle subject to adjudication proceedings.

---

---

Issues Involved:
1. Setting aside the order under Section 129 of the GST Act and the show cause notice under Section 130.
2. Denial of provisional release under Section 67(6)/129(2) of the GST Act.
3. Authority's power to provisionally release goods and conveyance during pending proceedings.
4. Interpretation and application of Sections 67(6), 129, and 130 of the GST Act.

Detailed Analysis:

1. Setting aside the order under Section 129 and the show cause notice under Section 130:
The petitioners sought to set aside the order under Section 129 of the GST Act in Form GST MOV-06 and the show cause notice under Section 130 in Form GST MOV-10. They also requested the release of goods and conveyance detained by the authorities. The court examined whether during the pendency of proceedings, the authority could exercise powers under Section 67(6) and/or Section 129(2) for provisional release of goods.

2. Denial of provisional release under Section 67(6)/129(2):
The petitioners argued that the goods and conveyance were accompanied by valid documents (tax invoice and e-way bill) but were seized due to alleged irregularities in upstream vendors' transactions. Their application for provisional release under Section 67(6) was rejected, as the authority claimed that release was not possible once proceedings under Section 130 were initiated. The petitioners contended that Section 130 does not provide for seizure, and provisional release should be allowed under Section 67(6).

3. Authority's power to provisionally release goods and conveyance during pending proceedings:
The court analyzed the statutory provisions, noting that Section 67(6) allows for provisional release of seized goods upon furnishing security or payment of tax and penalty. Section 129(2) states that provisions of Section 67(6) apply mutatis mutandis to the seizure of goods under Section 129(1). The court found that the contention that no power exists to release seized goods liable for confiscation is contrary to statutory provisions.

4. Interpretation and application of Sections 67(6), 129, and 130:
The court observed that Section 130 provides for confiscation of goods, whether seized at the premises or in transit, and that provisional release is permissible under Section 67(6). The court held that the authority's refusal to provisionally release goods based on their location (in transit vs. premises) was illogical and contrary to the GST Act's provisions. The court emphasized that the use of "shall" in Section 67(6) indicates a mandatory requirement for provisional release if conditions are met.

Conclusion:
The court concluded that the respondent authorities must release the goods provisionally under Section 67(6) once a show cause notice under Section 130 is issued, regardless of whether the goods are seized in transit or at the premises. The court directed the authorities to provisionally release the goods and conveyance upon execution of a bond and payment of tax, interest, and penalty within three weeks. The petitions were disposed of with this direction, and the rule was made absolute to the extent specified.

---