Last updated: 27 September 2026. Under Section 129 of the CGST Act, goods moving without the documents the law requires can be detained, and since 1 January 2022 they are released against a penalty alone. Where the owner comes forward, the penalty is 200% of the tax payable. Where the owner does not, it is 50% of the value of the goods or 200% of the tax, whichever is higher. The officer must issue a notice within seven days of detention and pass an order within seven days of serving it. If the penalty is still unpaid fifteen days after you receive the order, the goods can be auctioned.
Applicability Note: This guide is based on GST provisions applicable as of 27 September 2026, read from CBIC's active repository that day. Always verify the current position on gst.gov.in or with a GST professional before taking action.
Who Should Care?
This guide applies to:
- Traders and manufacturers dispatching stock ahead of the October–November festive season
- Transporters and fleet owners whose drivers carry the paperwork
- Buyers whose inward consignments are held at a checkpoint
- Accountants who have to answer a MOV-07 notice within days
1. Why a Consignment Gets Stopped
A proper officer authorised under Rule 138B(1) can intercept any conveyance, and under Section 68(3) the person in charge must produce the documents and allow inspection. Rule 138A(1) sets the documents: the invoice, bill of supply or delivery challan, plus the e-way bill (paper, electronic, or mapped to an RFID device). Imported goods also need the bill of entry. E-invoice issuers can show the QR code with the IRN instead of a paper invoice (Rule 138A(2)).
An e-way bill is needed where the consignment value exceeds ₹50,000 (Rule 138(1); intra-State limits are notified by each State). A lapsed bill can be extended "within eight hours from the time of its expiry" under the last proviso to Rule 138(10), inserted by Notification No. 31/2019-Central Tax dated 28 June 2019. A bill that lapsed and was never extended is a common reason goods are held. Our e-way bill guide covers generation and validity.
2. Inspection: The First Forms and the Rule 138C Clocks
The forms come from Circular No. 41/15/2018-GST dated 13 April 2018, as modified by Circular No. 49/23/2018-GST dated 21 June 2018. If documents are missing or the officer wants to inspect, the driver's statement goes in FORM GST MOV-01 and a physical verification order issues in MOV-02. Inspection should conclude within three days of MOV-02 (Circular 49 replaced "three working days" with "three days"), extendable only with written permission in MOV-03 from the Commissioner or an officer he authorises.
The reporting clocks are in Rule 138C(1): a summary report in Part A of FORM GST EWB-03 within 24 hours of inspection, and the final report in Part B within three days, extendable by the Commissioner by up to three more. The Explanation counts both "from the midnight of the date on which the vehicle was intercepted". A vehicle held over 30 minutes can be reported by the transporter in FORM GST EWB-04 (Rule 138D). Once a conveyance has been physically verified, Rule 138C(2) bars a second verification in any State unless specific information on evasion turns up; hard copies of the earlier notices are the proof (Circular 49, para 3.1).
| Form | What it is | Source |
|---|---|---|
| MOV-01 | Statement of the person in charge | Circular 41, para 2(d) |
| MOV-02 | Order for physical verification | Circular 41, para 2(d) |
| MOV-03 | Commissioner's permission to extend inspection beyond three days | Circular 41 para 2(e), as modified by Circular 49 |
| MOV-04 | Physical verification report | Circular 41, para 2(f) |
| MOV-05 | Release order | Circular 41, para 2(g) |
| MOV-06 | Order of detention | Circular 41, para 2(g) |
| MOV-07 | Notice under Section 129(3) | Circular 41, para 2(g) |
| MOV-08 | Bond with bank guarantee for release on security | Circular 41, para 2(i) |
| MOV-09 | Order under Section 129(3) | Circular 41, paras 2(h), 2(j) |
| MOV-10 / MOV-11 | Confiscation notice and order under Section 130 | Circular 41, paras 2(l)–2(n) |
One warning. Circular 41 was written for the pre-2022 Section 129: it speaks of "tax and penalty", and its para 2(k) sends an unpaid case to MOV-10 confiscation after seven days. The statute no longer works that way (Sections 4 and 6 below). Use the forms as the sequence; take amounts and escalation from the Act.
3. What It Costs to Get the Goods Back
Section 129(1) was rewritten by section 117 of the Finance Act, 2021, with effect from 1 January 2022 (Notification No. 39/2021-Central Tax dated 21 December 2021). Release used to need tax plus penalty; now it is against a penalty alone, sized by whether the owner of the goods comes forward.
| Situation | Taxable goods | Exempted goods |
|---|---|---|
| Owner comes forward — Sec 129(1)(a) | 200% of the tax payable | 2% of value or ₹25,000, whichever is less |
| Owner does not come forward — Sec 129(1)(b) | 50% of value or 200% of the tax, whichever is higher | 5% of value or ₹25,000, whichever is less |
| Release on security — Sec 129(1)(c) | Security equal to the (a) or (b) amount; Circular 41 prescribes a bond in MOV-08 with a bank guarantee | |
Under clause (b), 50% of value is a floor ("whichever is higher"). For exempted goods, ₹25,000 is a cap ("whichever is less").
Worked example (inter-State consignment, so the IGST Act alone applies). Goods worth ₹10,00,000 at 18% carry ₹1,80,000 of tax. Owner comes forward: 200% of ₹1,80,000 = ₹3,60,000. Owner does not: the higher of ₹5,00,000 (50% of value) and ₹3,60,000 = ₹5,00,000. Had the goods been exempted: clause (a) gives ₹20,000 (lesser of ₹20,000 and ₹25,000), clause (b) gives ₹25,000 (lesser of ₹50,000 and ₹25,000). On an intra-State movement a corresponding order also issues under the State GST Act (Circular 41, para 2(s)), so have the computation checked before paying.
Detention cannot start informally: the proviso to Section 129(1) requires an order of detention or seizure (MOV-06) to be served on the person transporting the goods.
4. The Clocks After Detention: Seven Days, Seven Days, Fifteen Days
Section 129(3) gives the officer seven days from detention to issue a notice specifying the penalty, and seven days from serving it to pass the order. Summaries go in FORM GST DRC-01 (Rule 142(1)(a)) and DRC-07 (Rule 142(5)). Section 129(4) bars any penalty without a hearing, so reply to the MOV-07 notice in writing.
Payment ends it (Section 129(5)). Pay within seven days of the notice and before the order, and Rule 142(3) has you intimate it in DRC-03; the officer closes the matter in DRC-05.
If the penalty stays unpaid fifteen days after you receive the order, Section 129(6) makes the goods or conveyance liable to sale. Rule 144A (in force from 1 January 2022, Notification No. 40/2021-Central Tax dated 29 December 2021) sets the procedure:
- The officer prepares an inventory and estimates market value.
- An auction notice issues in FORM GST DRC-10. If you pay the penalty and custody costs before that notice, the auction is cancelled and the goods are released.
- The bid or auction date is at least fifteen days after the notice.
- The successful bidder gets DRC-11, pays within fifteen days and receives a DRC-12 certificate.
The officer can shorten the fifteen-day periods for goods that are perishable, hazardous or likely to lose value with time. Under the first proviso to Section 129(6), the conveyance is released once the transporter pays the Section 129(3) penalty or ₹1,00,000, whichever is less.
5. Errors That Should Not Lead to Detention
Circular No. 64/38/2018-GST dated 14 September 2018 draws a line. Where a consignment has an invoice but no e-way bill, Section 129 proceedings may be started. Where both the invoice and the e-way bill are present, the circular says Section 129 proceedings may not be started for these errors, among others:
- A spelling mistake in the consignor's or consignee's name, where the GSTIN is correct
- A wrong PIN code with the correct address, as long as the error does not extend the e-way bill's validity
- An error in the consignee's address, where the locality and other details are correct
- An error in one or two digits of the document number
- An HSN error at the 4- or 6-digit level, where the first two digits and the tax rate are correct
- An error in one or two digits or characters of the vehicle number
Instead, the circular prescribes ₹500 under Section 125 of the CGST Act and ₹500 under the State GST Act (₹1,000 under the IGST Act), in DRC-07, per consignment. Circular 49 (para 3.2) adds that only goods for which a violation is established may be detained: of twenty-five consignments with valid papers for twenty, only the other five and the conveyance can be held.
6. Confiscation Under Section 130 Is No Longer the Automatic Next Step
Before 2022, Section 129(6) sent unpaid cases into Section 130 after fourteen days. The Finance Act, 2021 cut that link, so confiscation now needs one of the grounds in Section 130(1). Clauses (i) and (iv) require intent to evade tax. Clause (ii) covers unaccounted goods and clause (iii) covers supplies without applying for registration. Clause (v) covers a conveyance used in contravention, unless its owner proves it was used without their knowledge or connivance. The fine in lieu of confiscation cannot exceed market value less tax, and fine plus penalty cannot fall below 100% of the tax payable (first and second provisos to Section 130(2)).
7. What the Courts Have Said About Intent
Two rulings come up whenever an expired e-way bill is the only lapse.
In Assistant Commissioner (ST) v. Satyam Shivam Papers Pvt. Ltd. (SLP (C) No. 21132/2021, order dated 12 January 2022), the Supreme Court declined to interfere with a Telangana High Court judgment quashing a penalty where a traffic blockade stopped goods moving within the bill's validity, and imposed ₹69,000 costs on the Revenue. It was a special leave petition dismissal, not a merits judgment, on facts under the pre-2022 text.
In Balkrishna Industries Ltd. v. Union of India (Gujarat High Court, R/Special Civil Application No. 1903 of 2026, judgment dated 23 February 2026), an export consignment's e-way bill expired after a truck breakdown. The extension window closed at 08:00 and the truck was intercepted at 15:22 the same day. The Court quashed a ₹18,00,140 penalty under Section 129(1)(a) as beyond the provision where no tax was payable on the zero-rated supply. That turns on the export facts; it is not a rule that an expired bill never attracts a penalty. If something goes wrong on the road, keep the breakdown report and the EWB-04 entry.
8. Appealing a Section 129 Order
An order under Section 129(3) can be appealed under Section 107. The proviso to Section 107(6) was substituted by the Finance Act, 2025 with effect from 1 October 2025 (Notification No. 16/2025-Central Tax dated 17 September 2025). An appeal against any order demanding penalty without tax now needs a deposit of 10% of the penalty. The replaced proviso required 25% for Section 129(3) orders specifically. If your detention and notice predate 1 October 2025, confirm with your adviser which proviso governs your appeal before you deposit.
Filing also protects the goods: Rule 144A(8) deems the auction stayed once an appeal is filed under Section 107(1) read with Section 107(6), except for perishable or hazardous goods. See our guide to appealing a GST order under Section 107.
Key Takeaways
- Since 1 January 2022, detained goods are released against a penalty alone: 200% of tax where the owner comes forward, and 50% of value or 200% of tax, whichever is higher, where the owner does not.
- The officer has seven days from detention to issue the notice and seven days from service to pass the order (Section 129(3)). Pay before the order and Rule 142(3) closes it in DRC-05.
- Unpaid fifteen days after the order, the goods can be auctioned under Rule 144A. An appeal stays the auction except for perishable or hazardous goods.
- Six minor e-way bill errors listed in Circular 64/38/2018-GST should draw ₹1,000 per consignment under Section 125 (₹500 each under the CGST and State GST Acts, or ₹1,000 under the IGST Act), not a Section 129 detention, where the invoice and e-way bill are both present.
- Circular 41's MOV forms are still the working sequence, but its "tax and penalty" wording and MOV-10 escalation predate the 2022 amendments.
- The appeal pre-deposit on a penalty-only order is 10% of the penalty from 1 October 2025. For older detentions, check which proviso applies.
Frequently Asked Questions
How many days does the officer have to issue a Section 129 notice?
Seven days from detention or seizure to issue the notice, and seven days from service of the notice to pass the order (Section 129(3), as substituted from 1 January 2022).
Can detained goods be released on a bond?
Yes. Section 129(1)(c) allows release on security equal to the penalty amount. Circular No. 41/15/2018-GST dated 13 April 2018 prescribes a bond in FORM GST MOV-08 with a bank guarantee.
What happens if I don't pay the Section 129 penalty?
If the penalty stays unpaid for fifteen days after you receive the order, the goods or conveyance become liable to sale by auction under Section 129(6) and Rule 144A. The conveyance is released if the transporter pays the penalty or ₹1,00,000, whichever is less.
Is a spelling mistake in the e-way bill a reason to detain goods?
Circular No. 64/38/2018-GST dated 14 September 2018 says Section 129 proceedings may not be started for a spelling mistake in a name where the GSTIN is correct, provided the invoice and e-way bill accompany the goods. It prescribes ₹500 under each of the CGST and State GST Acts instead.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. GST rules are subject to frequent changes through notifications and circulars. Please consult a qualified tax professional or verify the current provisions on the official GST portal (gst.gov.in) before making any compliance decisions.
Have a specific question about detained goods or a MOV-07 notice? Ask our GST experts → gstconsultancy.com