Intermediate State Has No Jurisdiction under Section 129/130 for Interstate Movement Passing Through the State- Held Andhra Pradesh High Court
Intermediate State Has No Jurisdiction under Section 129/130 for Interstate Movement Passing Through the State- Held Andhra Pradesh High Court
Date and Year of Judgment
01 April 2026
This is a landmark judgment on the scope of powers under Sections 129 and 130 in interstate movement of goods under IGST, particularly concerning the jurisdiction of an “intermediate State”.
The Court undertook a detailed constitutional and statutory analysis of the GST framework, cross-empowerment mechanism, and jurisdictional limits under the IGST regime.
Full Case Citation
Golden Traders & Ors. v. Deputy Assistant Commissioner of State Tax & Ors.
W.P. Nos. 541, 1756, 3097, 3225, 3227, 3252, 3254, 3258 and 3354 of 2026
Judgment dated: 01.04.2026
High Court of Andhra Pradesh at Amaravati
Bench:Justice R. Raghunandan RaoJustice T.C.D. Sekhar
1. Main Issue Involved
Whether officers appointed under the APGST Act can exercise powers under Sections 129 and 130 of the GST Acts in relation to goods moving in the course of interstate trade under the IGST Act, where:
Goods originate outside Andhra Pradesh, and
Destination is also outside Andhra Pradesh, and
Andhra Pradesh is merely an intermediary/transit State.
A connected issue was whether detention/confiscation proceedings under Sections 129 and 130 can be initiated merely on allegations of:
Undervaluation
Valuation mismatch
Difference in quantity
Description mismatch
when the goods are accompanied by proper documents and e-way bills.
The judgment fundamentally restricts the jurisdiction of transit States in IGST movement and limits misuse of Sections 129 and 130 for valuation disputes.
2. Sections and Constitutional Provisions Discussed
Section 129 CGST/APGST Act – Detention and seizure of goods in transit
Section 130 CGST/APGST Act – Confiscation of goods and conveyance
Section 6 CGST Act – Cross empowerment
Section 4 IGST Act – Authorization of State officers
Section 17 IGST Act – Apportionment of tax
Section 2(91) – Proper officer
Article 246A of Constitution
Article 269A of Constitution
Article 286 of Constitution
The Court interpreted GST legislation together with constitutional provisions governing interstate taxation and tax apportionment.
3. Facts of the Case
Multiple writ petitions involved consignments moving through Andhra Pradesh in the course of interstate trade.
The goods:
Originated outside Andhra Pradesh
Were destined outside Andhra Pradesh
Merely passed through Andhra Pradesh in transit
The State GST authorities intercepted the consignments at various checkpoints and initiated proceedings under Sections 129 and/or 130.
In most cases:
Goods were accompanied by invoices and e-way bills
Detention/confiscation was based on allegations such as:
Undervaluation
Quantity mismatch
Difference in description
Quantification issues
The petitioners challenged the proceedings on jurisdictional as well as substantive grounds.
The State attempted to exercise detention/confiscation powers over transactions which had no taxable nexus with Andhra Pradesh.
4. Petitioners’ Submissions
The petitioners contended that:
Andhra Pradesh authorities had no jurisdiction over interstate movement where:
Origin and destination are outside Andhra Pradesh.
APGST officers cannot exercise powers under IGST Act in such cases.
Intermediate/transit States are not entitled to tax apportionment under Section 17 of the IGST Act.
Valuation disputes cannot be grounds for detention/confiscation under Sections 129 or 130.
Goods were accompanied by valid documents and e-way bills.
Reliance was placed on various High Court decisions including:
Alfa Group – Kerala HC
K.P. Sugandh Ltd. – Chhattisgarh HC
Panchi Traders – Gujarat HC
The petitioners challenged both:
Jurisdiction of transit State, and
Mechanical invocation of Sections 129/130 for valuation disputes.
5. Department’s Submissions
The department contended that:
Officers appointed under APGST Act are cross-empowered under Section 6 CGST Act and Section 4 IGST Act.
Therefore State officers can act as “proper officers” under IGST Act also.
The consignments were undervalued or mismatched and hence liable for detention/confiscation.
The department attempted to interpret cross-empowerment provisions broadly to justify jurisdiction over all interstate movements passing through the State.
6. Analysis and Findings of the Court
The Court undertook a detailed constitutional and statutory analysis.
(i) Constitutional Scheme of GST
The Court analysed Articles 246A and 269A and observed that:
Parliament has exclusive power over interstate supplies.
IGST collected on interstate supplies is apportioned between:
Union Government, and
Destination/entitled States.
The Court emphasized that an intermediary State through which goods merely pass has no tax entitlement under Section 17 of the IGST Act.
The Court linked jurisdiction under Sections 129/130 with constitutional and fiscal entitlement under IGST scheme.
(ii) Scope of Cross-Empowerment
The Court held that cross-empowerment under Section 6 CGST Act and Section 4 IGST Act is not unlimited.
An APGST officer can act under IGST Act only when:
The taxpayer is administratively assigned to the State, and
Andhra Pradesh has jurisdictional nexus with the transaction.
The Court disagreed with a blanket interpretation allowing unrestricted powers to State officers over all interstate transactions.
Cross-empowerment does not create universal jurisdiction for every State officer over every IGST movement.
(iii) Intermediate State Cannot Appropriate Penalty/Fine
The Court gave an important illustration:
If goods move from State A to State C through State B, and State B confiscates goods and collects penalty/fine:
State B appropriates amounts relating to a transaction not taxable in State B.
GST law contains no mechanism for redistribution of such penalty/fine to actual entitled States.
Therefore, the Court held that Sections 129 and 130 cannot be interpreted to permit such appropriation by intermediary States.
This is one of the most important conceptual findings in GST jurisprudence relating to interstate transit detention.
Officers under Section 129/130 cannot conduct valuation assessment during transit interception.
Such issues may be referred to jurisdictional officers for further proceedings.
Transit interception powers are not intended to convert mobile squads into “assessment authorities”.
Important Observations of the Court
Intermediate State Has No Jurisdiction
The Court held:
“A ‘proper officer’ appointed under the APGST Act… cannot discharge such functions under the IGST Act, in relation to inter-State sales, which originate outside the State and culminate outside the State.” (Para 37-D)
No Fiscal Entitlement of Transit State
The Court observed:
“In such a case, State B is collecting penalties and fines… in relation to transactions which are not taxable in State B.” (Para 29)
Valuation Disputes Not Ground for Detention
The Court approved the view that:
“Under valuation of a good in the invoice cannot be a ground for detention of the goods and vehicle…” (Para 31)
Assessment Cannot Be Done During Transit
The Court approved Gujarat High Court observations:
“The proper officer cannot venture into the assessment and valuation of goods at the time of interception…” (Para 32)
Transit State Can Only Forward Information
The Court finally held:
“If any discrepancies are found… it would be open to the State officer to forward the said discrepancies to the proper officer of the consignee and the proper officer of the consignor…” (Para 37-E)
The Court completely restructures the practical scope of detention powers in interstate transit cases.
7. Judgment of the Court
The Andhra Pradesh High Court held that:
APGST authorities lack jurisdiction over interstate movements:
originating outside AP, and
terminating outside AP.
Proceedings initiated under Sections 129/130 were set aside.
Goods/conveyances directed to be released.
State authorities may only forward discrepancy reports to proper jurisdictional officers of consignor/consignee States.
The judgment substantially curtails detention powers of intermediate States in IGST movement cases.
8. Similar / Related Judgments
Alfa Group v. Assistant State Tax Officer – Kerala HC
K.P. Sugandh Ltd. v. State of Chhattisgarh – Chhattisgarh HC
Panchi Traders v. State of Gujarat – Gujarat HC
Shambhu Saran Agarwal & Co. – Allahabad HC
Tvl Vardhan Infrastructure v. Special Secretary – Madras HC
The judgment synthesizes multiple High Court rulings restricting misuse of Sections 129 and 130.
9. CA BTA Insights
This is one of the most important judgments under GST relating to: