Section 130 of CGST Act - Confiscation of Goods or Conveyances and Levy of Penalty

Section 130 of the Central Goods and Services Tax Act, 2017 deals with confiscation of goods or conveyances in specified serious contraventions, the penalty consequences, the option to pay a fine in lieu of confiscation, and the procedural safeguards before a confiscation order is made.

Updated: 15 September 2026

At a glance: Confiscation is more severe than detention. Section 130 applies where the statutory conditions for confiscation are established. For several clauses, an intent to evade tax is expressly required. A person affected by a proposed confiscation or penalty must be given an opportunity of being heard.

Meaning and scope of Section 130

In GST law, confiscation results in the title to confiscated goods or conveyance vesting in the Government. Section 130 identifies the contraventions that can make goods or a conveyance liable to confiscation and also links the person concerned to penalty under Section 122.

The provision should be read with Section 129, which deals with detention, seizure and release of goods and conveyances in transit. Under the current statutory scheme, failure to pay the penalty under Section 129 within the prescribed period can lead to further proceedings under Section 130.

Section 130 - statutory provision and explanation

Sub-section (1): Grounds of confiscation

Notwithstanding anything contained in the CGST Act, goods or conveyances may become liable to confiscation where a person:

(i) supplies or receives goods in contravention of the Act or the rules with intent to evade payment of tax;

(ii) does not account for goods on which tax is payable under the Act;

(iii) supplies taxable goods without having applied for registration;

(iv) contravenes the Act or the rules with intent to evade payment of tax; or

(v) uses a conveyance to transport goods in contravention of the Act or rules, unless the conveyance owner proves that it was so used without the knowledge or connivance of the owner, the owner's agent, if any, and the person in charge of the conveyance.

Where the statutory conditions are met, the goods or conveyance are liable to confiscation and the person is liable to penalty under Section 122.

Sub-section (2): Option to pay fine instead of confiscation

When confiscation is authorised, the adjudicating officer must give the owner of the goods an option to pay a fine in lieu of confiscation. The fine cannot exceed the market value of the confiscated goods less the tax chargeable on them.

The provision also sets a statutory floor by reference to the penalty leviable under Section 129(1). Where a conveyance is used for carriage of goods or passengers for hire, its owner must be given the statutory option to pay the prescribed fine in lieu of confiscation of the conveyance.

Sub-section (3): Other dues remain payable

A fine in lieu of confiscation does not by itself extinguish other statutory liabilities. Tax, penalty and charges payable in respect of the goods or conveyance remain payable as provided by law.

Sub-section (4): Mandatory opportunity of hearing

No confiscation order or order imposing penalty can be issued without giving the affected person an opportunity of being heard. This is an express statutory safeguard and reflects the principles of natural justice.

Sub-sections (5) and (6): Vesting and possession

Once goods or a conveyance are confiscated, title vests in the Government. The proper officer may take and hold possession, and police officers are required to assist when requisitioned by the proper officer.

Sub-section (7): Disposal after reasonable time

If the confiscated goods or conveyance are not required in another proceeding under the Act, the proper officer may dispose of them after giving reasonable time, not exceeding three months, to pay the fine in lieu of confiscation. The sale proceeds are deposited with the Government.

When can Section 130 be invoked?

Ground	Key statutory element
Contravening supply or receipt of goods	Intent to evade payment of tax is expressly required.
Unaccounted taxable goods	Goods liable to tax are not accounted for.
Taxable supply without applying for registration	The person supplies taxable goods without applying for required registration.
Other contravention of Act or rules	Intent to evade payment of tax is expressly required.
Use of conveyance in contravention	Statutory protection is available where the owner proves absence of the specified knowledge or connivance.

Important distinction: A mere irregularity should not automatically be described as confiscation-worthy without examining the precise clause invoked and its statutory ingredients. Where Section 130(1) expressly requires intent to evade tax, that ingredient is material to the proposed action.

Fine in lieu of confiscation

Section 130 does not make physical forfeiture inevitable in every case. Sub-section (2) requires an option to pay a redemption fine where confiscation is authorised. The statutory ceilings, minimum consequences and special rule for a conveyance used for hire should be examined before quantifying the fine.

Hearing, vesting and disposal

Before an order of confiscation or penalty is passed, the affected person must be heard. If confiscation is ultimately ordered, title passes to the Government. The proper officer can take possession and, subject to Section 130(7), dispose of the confiscated property after allowing reasonable time of up to three months for payment of fine in lieu of confiscation.

Official GST resources

For the authoritative statute, amendments, rules, notifications and circulars, consult the official Government sources below. The statutory text should prevail over any explanatory summary.

Disclaimer: This article is for general legal information. GST consequences depend on the facts, the applicable statutory text, amendments, notifications, circulars and judicial decisions.