Section 67(6): Provisional Release of Seized Goods

Section 67 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Goods are seized. They are perishing, or blocking a delivery, or simply capital sitting idle. There are two statutory ways out, and they are not equivalent.

Section 67(6): goods seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum as may be prescribed, or on payment of applicable tax, interest and penalty payable, as the case may be. Rule 140(1): the bond is in FORM GST INS-04 for the value of the goods, with a bank guarantee equivalent to the applicable tax, interest and penalty. Rule 140(2): failure to produce the goods when required means the security is encashed. The two routes have very different consequences for the dispute.

Route one: bond and bank guarantee

What it costs:

• a bond in FORM GST INS-04 for the value of the goods — a promise, not a payment;
• a bank guarantee equal to the applicable tax, interest and penalty payable.

"Applicable tax" is defined in the Explanation to Rule 140: central tax and State tax, or central tax and Union territory tax, and the cess, if any, under the GST (Compensation to States) Act, 2017.

What it preserves: everything. Nothing has been paid, nothing conceded. The goods come back, the dispute continues, and if the demand fails the guarantee is simply returned.

What it risks: Rule 140(2) — where the person to whom goods were released provisionally fails to produce the goods at the appointed date and place indicated by the proper officer, the security shall be encashed and adjusted against tax, interest, penalty and fine.

That obligation is real. Goods released provisionally may have to be produced again, so goods that are going to be sold and shipped need thought — the practical answer is usually to ask for the appointed date at the time of release, and to keep the goods identifiable.

Route two: payment of tax, interest and penalty

What it costs: the applicable tax, interest and penalty payable — in cash, not as a guarantee.

What it achieves: immediate release, no bank limit consumed, no bond, no obligation to produce the goods later.

What it costs you strategically: a great deal. Paying "tax, interest and penalty" before any adjudication is, in substance, an acceptance of the department's position on all three. Recovering it later requires:

• a refund claim under s.54, within two years; and
• overcoming the natural inference that a payment described as tax, interest and penalty was a payment of tax, interest and penalty.

The route makes sense where the liability is genuinely accepted, where the amounts are small relative to the cost of a guarantee, or where the goods are perishing and no guarantee can be arranged in time. It does not make sense where the seizure is being contested.

Choosing between them

The general rule is simple: if you intend to contest, use the bond route. The commission on a bank guarantee is a small price for keeping the argument alive.

Perishable and hazardous goods: the better provision

Where the goods are perishable or hazardous, Rule 141(1) is usually the better route.

It allows release forthwith, by an order in FORM GST INS-05, on payment of an amount equal to the market price of the goods or the tax, interest and penalty that is or may become payable, whichever is lower.

Whichever is lower is the point. For high-value perishables with a modest tax incidence, the tax-interest-penalty figure is generally the lower number, and the release is correspondingly cheap and fast.

Rule 141(2): if the person does not pay, the proper officer may dispose of the goods and adjust the realisation against the amounts payable. So inaction on perishables is not neutral — the goods go. Rule 139 and the INS forms →

How to apply

1. Apply in writing, immediately, citing s.67(6) and Rule 140 (or Rule 141 for perishables).
2. State the value of the goods and the computation of applicable tax, interest and penalty — with your own working, because the officer's figure sets the guarantee.
3. Contest an inflated quantum where the tax, interest and penalty have been computed on an assumption you dispute. The guarantee amount follows the computation, so the computation is worth arguing.
4. Ask for the appointed date and place for production under Rule 140(2) to be specified at the outset.
5. Reserve your position expressly — that the release application is without prejudice to the challenge to the seizure itself.
6. Photograph and record the goods on release, so that condition and quantity are documented.
7. Diarise the s.67(7) date — six months from seizure — because if no notice issues, the goods (or the security) must come back anyway. Section 67(7) →

Key takeaways

• Section 67(6) offers bond plus security or payment of tax, interest and penalty.
• Rule 140(1): bond in INS-04 for the value of the goods, bank guarantee for applicable tax, interest and penalty including State tax and cess.
• Rule 140(2): failure to produce the goods when required means the security is encashed.
• The payment route substantially prejudices the dispute; recovery then needs a s.54 refund within two years.
• For perishable or hazardous goods, Rule 141 / INS-05 allows release on the lower of market price and tax-interest-penalty.
• Always apply without prejudice to the challenge to the seizure.

Read next

• Rule 139 and the INS Forms: The Search and Seizure Procedure
• Section 67(7): Six Months and the Return of Seized Goods
• Seizure Is to Secure and Identify, Not to Recover
• Section 130: Confiscation and the Redemption Fine

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Inspection, Search, Seizure and Arrest under GST (July 2025).