GST UPDATE

Hon’ble Court: HIGH COURT OF ANDHRA PRADESH
Case Title: Golden Traders vs Special Secretary
Petition No. & Citation: W.P.No.541 of 2026 & batch

Hon’ble Judge(s)	R Raghunandan Rao
Date of Order	1 April, 2026
Outcome	Petition allowed in favor of Petitioner

Brief Facts of the Case

The petitioners, including Golden Traders and several others, was engaged in inter-State movement of goods, where consignments originated from one State and were destined for another State, merely passing through Andhra Pradesh. During such transit, the State GST authorities of Andhra Pradesh intercepted the vehicles at check posts and initiated proceedings under Section 129 (detention) and in certain cases Section 130 (confiscation) of the GST Acts. In most cases, the consignments were accompanied by valid documents such as invoices and e-way bills, except in one instance. Despite this, the authorities detained the goods alleging undervaluation, mismatch in quantity, or discrepancy in description. Subsequently, confiscation orders were passed and penalties imposed.
Aggrieved, the petitioners approached the High Court by filing the writ petition, challenging that the proceedings were without jurisdiction and violative of constitutional provisions.

Relevant Sections/ Circulars

Section 6 CGST Act and Section 4 IGST Act
Sections 129 and 130 of the GST Act
Section 2(91) of the CGST Act- definition of Proper Officer
Circular No. 01/2017 bearing Reference F. No. 166/Cross Empowerment/GSTC/2017 dated 20.09.2017

Question before Hon’ble Court / Authority

Whether State GST authorities have jurisdiction to detain/confiscate goods in inter-State movement (IGST transactions)?
Whether valuation discrepancies or minor mismatches justify detention under Sections 129/130?

Scope and Extent of Cross Empowerment

Brief Arguments by Petitioner

Lack of Jurisdiction

The petitioners contended that the State GST officers have no jurisdiction, to initiate proceedings under Section 129 or section 130, in relation to movement of goods under the IGST Act as there exists no valid cross-empowerment notification authorizing such action.

Question of Valuation cannot be taken up under Section 129 or 130

It was contended that goods can not be intercepted and seized under Section 129 and Section 130 on the basis of valuation of a good in the invoice or qantum of goods intercepted, was far higher than the quantum set out in the accompanying document.

Documents Were Valid

The petitioner contended that in most of the cases goods were accompanied by proper invoices and e-way bills (except one case). Hence, detention was arbitrary.

Brief Arguments by Respondent

Cross-Empowerment Exists

On account of Section 6 CGST Act and Section 4 IGST Act, State officers can act under Central/IGST law.

Irregularities Justifies Action

The authorities held that the goods were undervalued / mismatched, indicating possible tax evasion and therefore detention is necessary to protect revenue and prevent evasion.

Cases Relied Upon

Case Laws	Citation
Armour Security (India) Ltd. v. Commr. (CGST)	(2025) 145 GSTR 385 : 2025 SCC OnLine SC 1700
TVL Vardhan Infrastructure vs. Special Secretary	2024 (16) CENTAX 509 (MAD)
Alfa Group Vs. The Assistant State Tax Officer	(2020) 113 taxmann.com 222 (Kerala)
K.P. Sugandh Ltd. & Others Vs. State of Chhatisgarh & Ors
Panchi Traders Vs. State of Gujarat

Findings and Judgement

REGARDING JURISDICTION OF STATE TAX OFFICER UNDER IGST
Upon careful analysis of the relevant sections and notifications, it is pertinent to take note of the scope and extent of the Cross Empowerment which has been discussed in detail in the said judgement.
Statutory Basis of Cross-Empowerment
Cross-empowerment is statutorily provided under:

Section 6 of the CGST Act
Section 4 of the IGST Act
Section 6 of the respective SGST Acts

These provisions enable officers appointed under one enactment (e.g., State GST) to act as “proper officers” under another enactment (e.g., CGST/IGST), subject to conditions and notifications issued on the recommendation of the GST Council. The Court emphasized that these provisions are enabling in nature, meaning they permit cross-empowerment but do not automatically confer it in all circumstances.
Administrative Allocation of Taxpayers as the Core Determinant
The GST framework introduced a system of administrative allocation of taxpayers between Centre and State to ensure a single interface and avoid duplication. As per GST Council guidelines issued via Circular No. 01/2017 dated 20.09.2017, taxpayers are divided and assigned to either authority. Therefore, if a taxpayer is assigned to the State, the State officer may act as a proper officer under CGST and IGST also, but only in relation to that taxpayer. Conversely, if assigned to the Centre, State officers cannot assume jurisdiction over such taxpayer.
Purpose: Avoidance of Dual Control and Multiplicity of Proceedings
The introduction of cross-empowerment was necessitated by the dual taxation structure under GST, where both Centre and State tax the same transaction to avoid Parallel proceedings by different authorities and Increased compliance burden on taxpayers. The Court, relying on judicial interpretation in case of Armour Security (India) Ltd. highlighted that cross-empowerment serves a twofold purpose:

To ensure a single authority handles a taxpayer
To prevent overlapping jurisdiction and multiplicity of proceedings

Bar on Parallel Proceedings and Coordinated Functioning
One of the key features of cross-empowerment is the avoidance of parallel proceedings. Once an authority (either Centre or State) initiates action on a particular subject matter, the corresponding authority is barred from initiating proceedings on the same issue, thereby preventing duplication and conflicting decisions. Further, when an order is passed under one Act, a corresponding order must be passed under the parallel Act, ensuring consistency and coordination.
Powers in line with the Constitutional Framework
The Court placed significant reliance on the constitutional framework of GST:

Article 246A allows simultaneous taxation by Centre and States
Article 269A gives exclusive power to Parliament over inter-State supplies (IGST)

In light of this, States do not have independent taxing power over inter-State supplies and further cross-empowerment cannot be interpreted in a way that allows States to exercise powers beyond constitutional limits.
Scope in IGST Context is Limited and Controlled
The Court clarified that although cross-empowerment extends to the IGST Act, its application isrestricted.

A State officer can act under IGST only when the taxpayer is assigned to that State, and the officer is properly empowered
However, a State cannot exercise jurisdiction merely because the goods are passing through its territory, or it there is a potential discrepancy

Thus, cross-empowerment in IGST matters is taxpayer-centric, not location-centric.

Accordingly, in relation to the instant case, this can be summarised as follows:
A. Cross Empowerment:
State and Central GST officers can act as “proper officers” under CGST Act / IGST Act / APGST Act if the taxpayer is administratively assigned to them.
B. Intra-State Powers:
State officers authorized under Sections 129/130 of APGST can exercise the same powers under CGST for intra-state transactions.
C. Inter-State (Limited Power):
State officers can act under IGST for inter-state transactions only if Andhra Pradesh government gets a share of tax under Section 17 of IGST.
D. No Power for External Transactions:
State officers cannot act under IGST where the transaction both originates and ends outside Andhra Pradesh.
E. Coordination Role:
If discrepancies are found in IGST goods movement, State officers can report to the appropriate jurisdictional officers (consignor/consignee) for further action.
REGARDING INTERCEPTION OF VEICHCLE ON ACCOUNT OF MINOR DISCREPANCY LIKE VALUATION DIFFERENCE

Reliance on earlier judicial precedents

The Court, while relying on the decision of the Gujarat High Court in Panchi Traders v. State of Gujarat, categorically held that although interception of vehicles in transit is permissible for verification of documents, such power does not extend to detention, seizure, or confiscation on the basis of valuation discrepancies in the normal course. It was observed that minor discrepancies, including differences in valuation, clerical errors, or mismatch in documents, do not justify invocation of Sections 129 or 130 of the GST Act. Even in cases of procedural violations without any intention to evade tax, the proper course would be imposition of penalty under Section 129, and not confiscation.
Proper Officer not entitled to conduct Valuation
The Court further emphasized that valuation is a matter of assessment, which cannot be undertaken at the stage of interception of goods in transit. A proper officer is not empowered to conduct valuation scrutiny, rely on portal data, or infer tax evasion during roadside checks. Such adjudication must be carried out through proper assessment proceedings. Confiscation, being a drastic measure, can be resorted to only in cases of serious contraventions involving clear intent to evade tax, such as absence of documents, fake invoices, or forged e-way bills.
Accordingly, the Court affirmed that mere variation in valuation cannot be a ground for detention or confiscation, and any such action would amount to an overreach of statutory powers. However, it clarified that in cases where there is a complete absence of required documents like e-way bills, appropriate action may still be taken in accordance with law.

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GST update /2026-27/0008

GST UPDATE

Brief Facts of the Case

Relevant Sections/ Circulars

Question before Hon’ble Court / Authority

Scope and Extent of Cross Empowerment

Brief Arguments by Petitioner

Brief Arguments by Respondent

Cases Relied Upon

Findings and Judgement

Opinion

Author’s Comment

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