No Detention by Transit State Officers Without Jurisdiction

Case Details: Golden Traders vs. Deputy Assistant Commissioner of State Tax - [2026] 185 taxmann.com 569 (Andhra Pradesh)

Judiciary and Counsel Details

R. Raghunandan Rao & T.C.D. Sekhar, JJ.
P. Girish Kumar, V. Raghuraman, M.V.J.K. Kumar, Pasupuleti Venkata Prasad, Sameer Gupta & Akula Vamsi Krishna, Ld. Counsels for the Petitioner.
R. Kalyan Chakravarthy, Ld. Govt. Pleader for the Respondent.

Facts of the Case

The petitioners, engaged in inter-state trade and transportation of goods, challenged interception proceedings initiated by officers during transit. The officers detained the consignments invoking the Section 129 of the CGST Act, and in several instances proceeded to confiscation under Section 130, contending that they were competent ‘proper officers’ even in respect of goods merely passing through the State. It was submitted that except in one case alleging absence of invoices and e-way bills, the consignments were accompanied by requisite statutory documents, and that the proceedings were nevertheless initiated on grounds such as alleged undervaluation, mismatch in description, and minor quantity variations. The petitioners contended that, even if assumed, such discrepancies did not indicate any intent to evade tax. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the cross-empowerment mechanism under Section 6 of the CGST Act, read with Section 4 of the IGST Act, applied only in respect of taxpayers administratively assigned to the respective state authorities, and not to inter-state consignments merely transiting through a state without any tax revenue allocation. It further held that officers of an intermediary State could not assume jurisdiction to levy penalties, appropriate goods, or initiate confiscation proceedings under Section 129 or Section 130 for consignments originating and terminating outside the State. The Court observed that the role of such officers was limited to verifying documents and forwarding any discrepancies to the proper jurisdictional officers of the consignor or consignee, and that they could not undertake valuation or assessment at the interception stage. It was further held that detention or confiscation based on alleged undervaluation, description mismatch, or minor quantity variation was impermissible. Consequently, the proceedings were set aside.

List of Cases Reviewed

Alfa Group v. Asstt. State Tax Officer [2020] 113 taxmann.com 222/34 GSTL 142 (Kerala) (para 33)
K.P. Sugandh Ltd. v. State of Chhattisgarh [2020] 122 taxmann.com 291/38 GSTL 317 (Chhattisgarh) (para 33)
Panchi Traders v. State of Gujarat [R/Special Civil Application No. 9250 of 2020, dated 11-12-2025]/2025 (12) TMI 941 (para 33)
Shamhu Saran Agarwal & Company v. Additional Commissioner Grade [2024] 160 taxmann.com 151/103 GST 127/84 GSTL 181 (Allahabad) (para 33), followed