Check-Posts Cannot Value or Confiscate Goods in Transit: Andhra Pradesh High Court

The Andhra Pradesh High Court has held that authorities stationed at GST check-posts lack jurisdiction to examine the valuation of goods or to confiscate and levy penalties merely because the goods are in transit.

The Bench comprising Justice R. Raghunandan Rao and Justice T.C.D. Sekhar, observed that disputes relating to valuation and tax liability must be examined only by the jurisdictional assessing authority and not by proceedings initiated at the stage of interception under Sections 129 or 130 of the CGST Act. Sections 129 and 130 of the CGST Act, 2017, empower tax authorities to detain and confiscate goods/conveyances in transit for violating GST laws. The Bench stated:

"The provisions of Section 129 & Section 130 of the G.S.T. Act are to ensure due compliance of the taxation laws. This is to ensure that there is no loss of revenue to the State where the tax is payable. In such a situation, the right or jurisdiction of the Tax Authorities of another State to levy penalties or to confiscate goods, on the ground of evasion of tax in another State does not appear to be a reasonable exercise of power."

The common order was delivered while dealing with a batch of writ petitions filed by traders whose consignments were seized or confiscated on allegations of gross under-valuation during movement. The Department had initiated proceedings under Sections 129 and 130, alleging that the goods being transported were under-valued.

In most cases, the consignments included all statutory documents prescribed under Section 68 of the GST Act, including tax invoices and e-way bills. Despite this, the check-post officials detained the goods and vehicles solely because the declared value of the goods appeared low.

The petitioners argued that the detention was illegal, as check-post authorities cannot determine valuation or tax liability during transit and must leave it to the jurisdictional assessing officer.

In one instance, the Department claimed that the driver had not cooperated during inspection and that the e-way bill was generated after inspection.

The High Court observed that the power under Sections 129 and 130 is intended to ensure compliance with procedural requirements during transit and to safeguard revenue, but not to adjudicate valuation disputes. 

The Bench further held that when goods merely transit through a State, authorities of that State cannot confiscate goods or impose penalties on the premise of possible tax evasion in another State. Such an exercise of power exceeds the scope of Sections 129 and 130.

Holding that the seizures were legally unsustainable, the High Court directed that all goods and vehicles detained or confiscated under the impugned proceedings be released forthwith.

Accordingly, the Court directed that fresh samples, if required, be drawn transparently and divided into three sealed parts, one each for the department, the jurisdictional assessing officer, and the petitioners. The Bench clarified that any further proceedings on valuation must be undertaken only by the competent assessing authority in accordance with law.

For Petitioner: P. Girish Kumar, V. Raghuraman, M. V. J. K. Kumar and Pasupuleti Venkata Prasad

For Respondent: R. Kalyan Chakravarthy