The High Court of Andhra Pradesh ruled that State GST officers cannot detain or confiscate goods in interstate transit under the Integrated Goods and Services Tax (IGST) framework for valuation issues or when they lack jurisdiction over the taxpayer. The case involved Golden Traders and other petitioners transporting goods between states, merely passing through Andhra Pradesh. The GST officers in Andhra Pradesh intercepted and detained these consignments, citing undervaluation or discrepancies in quantity, despite the presence of necessary documents like invoices and e-way bills in most cases.
The court addressed the issue of whether State GST officers have the authority to detain or confiscate goods in interstate transit and challenge valuation under Sections 129/130. It concluded that GST functions on an administrative allocation system between the Centre and States. A State officer is a "proper officer" only for taxpayers assigned to them. Without this allocation, exercising powers under CGST/IGST is beyond their jurisdiction.
The court emphasized that while officers can intercept goods in transit, IGST transactions involve taxes belonging to the originating or destination states and the Centre, not intermediary states. Detaining goods for valuation issues would unjustly benefit the transit state. The court agreed with other High Courts that valuation concerns are assessment issues, not grounds for detention or confiscation, which should be reserved for blatant violations like fraud or absence of documents. Minor discrepancies do not justify such severe actions.
Order Date – 01 April 2026
Parties: Golden Traders & Others Vs Deputy Assistant Commissioner of State Tax & State of Andhra Pradesh
Facts –
- Golden Traders & other petitioners were transporting goods from one State to another (e.g., Kerala to Delhi), merely passing through Andhra Pradesh.
- The Andhra Pradesh GST officers intercepted these consignments at check posts and detained/confiscated goods under Sections 129/130, mainly citing undervaluation or mismatch in quantity.
- Importantly, in most cases, all required documents like invoices and e-way bills were present, except in one case.
- Despite this, authorities imposed penalties and initiated confiscation proceedings, prompting the petitioners to approach the High Court challenging jurisdiction and legality.
Issue –
- Whether State GST officers detain/confiscate goods in interstate transit (IGST) and question valuation under Sections 129/130?
Order –
- The Court held that GST operates on a system of administrative allocation between Centre and State. A State officer becomes a “proper officer” only for taxpayers assigned to it. Without such allocation, exercising powers under CGST/IGST is beyond jurisdiction.
- While officers can generally intercept goods in transit, IGST transactions are different because tax belongs to originating/destination States and Centre, not intermediary States. Allowing interception would unjustly enrich the transit State.
- The Court agreed with multiple High Courts that undervaluation or pricing differences are assessment issues, not grounds for detention or confiscation. Such matters should be handled by proper adjudication, not roadside enforcement.
- Severe actions like confiscation can only be invoked in cases of blatant violations (e.g., fake documents, no documents, fraud). Minor discrepancies or valuation doubts do not meet this threshold and detention in such cases is arbitrary.
