State GST Authorities Cannot Detain Or Confiscate Goods Merely In Transit: Andhra Pradesh High Court

The Andhra Pradesh High Court held on 1 April that State GST authorities cannot invoke detention or confiscation powers for goods merely passing through the State in the course of inter-State trade, including on grounds such as valuation discrepancies or mismatch in quantity.

A Division Bench of Justices R. Raghunandan Rao and T.C.D. Sekhar held that such action exceeds jurisdiction in cases involving inter-State movement under the IGST framework. The Court stated:

"Amounts rightfully due to State A or State C are being appropriated, by State B. It is our view that Section 129 or 130 cannot be pressed to vindicate such appropriation."

The ruling arose from a batch of writ petitions where consignments moving from one State to another, were intercepted in Andhra Pradesh and subjected to proceedings under the GST law.

The Court clarified that Section 129 (detention and release of goods in transit) and Section 130 (confiscation and penalty) can be exercised only by a “proper officer” acting within jurisdiction. While cross-empowerment exists between Central and State officers, such powers are not unlimited and depend on administrative allocation of taxpayers and the statutory scheme.

On valuation, the Court observed that undervaluation or discrepancies cannot justify detention under these provisions. Referring to precedents, it recorded agreement with the view that “questions of seizure or confiscation would not arise… on grounds of variation in valuation etc."

The Court further noted:

"Parliament alone could tax interstate supply of goods and services. One of the reasons for conferment of such exclusive power is Article 286 of the Constitution, which restricts the power of State legislatures to impose taxes on the sale or purchase of goods, in the course of import or export of goods, out of India."

Explaining jurisdiction under the IGST regime, the Court held that inter-State supplies fall within the exclusive legislative domain of Parliament, and an intermediary State through which goods merely pass does not have a claim over such transactions.

Accordingly, the Court ruled that Andhra Pradesh GST authorities cannot detain or confiscate goods simply because they are in transit through the State.