Jurisdiction of GST Authorities to Detain Goods in Transit Under Section 129

Can a Transit State Detain Goods? Examining the Jurisdiction of GST Authorities Under Section 129

Summary: In an inter-State movement of goods, it is common for goods to originate in one State, pass through another State and ultimately be delivered in a third State. The article examines whether GST authorities of such a transit State can invoke Section 129 of the CGST/SGST Act merely because the goods and vehicle are physically within their territorial limits. It distinguishes the power under Section 68 to intercept a conveyance, verify prescribed documents and inspect goods from the separate power to detain and seize goods under Section 129. The discussion focuses on the Allahabad High Court’s decision in Sawarlal Agarwal v. State of U.P., involving goods moving from Delhi to Kolkata through Uttar Pradesh. The Court noted that the goods were merely passing through Uttar Pradesh and were meant for West Bengal. Relying upon Maruti Enterprises v. State of U.P. and the Andhra Pradesh High Court’s decision in Golden Traders v. Deputy Assistant Commissioner of State Tax, it held that authorities of a State through which goods are merely passing are not authorised to detain and seize such goods. The article further examines whether mere physical presence of goods within a State creates jurisdiction and whether an alleged document or e-way bill discrepancy changes the jurisdictional position. It emphasises that the power to check goods in transit and jurisdiction to invoke detention proceedings under Section 129 are distinct issues.

Introduction

In an inter-State movement of goods, it is common for a vehicle to travel from State A to State C while merely passing through State B, with no sale, delivery or other taxable transaction intended to take place in the transit State. This raises an important question under the GST law: can the GST authorities of State B detain and seize the vehicle or goods merely because they are physically passing through its territory? The issue becomes particularly significant when detention proceedings are initiated under Section 129 of the CGST/SGST Act, since the question is not merely whether the vehicle can be intercepted for verification, but whether the authorities of a State having only a transit connection with the movement possess jurisdiction to detain the goods and impose the statutory consequences under Section 129. The recent decision of the Allahabad High Court in Sawarlal Agarwal v. State of U.P. brings this question into sharp focus, where the goods were moving from Delhi to Kolkata through Uttar Pradesh. Pasted text

The Issue Before the Courts

The core issue before the courts is whether the GST authorities of a transit State can exercise powers under Section 129 to detain and seize goods when the goods are merely passing through that State and the actual movement is between two other States. In other words, where goods originate in State A, are destined for State C, and merely pass through State B, does the physical presence of the goods within State B’s territory confer jurisdiction upon its GST authorities to detain the vehicle or goods? The issue requires examination of the distinction between the power to verify goods in movement and the jurisdiction to invoke detention proceedings under Section 129. In Sawarlal Agarwal, the Allahabad High Court considered precisely this issue in respect of goods moving from Delhi to West Bengal through Uttar Pradesh.

Understanding the Concept of a “Transit State”

In an inter-State movement of goods, it is important to distinguish between the origin State, destination State and transit State. The origin State is where the movement of goods begins, while the destination State is where the goods are ultimately intended to be delivered. A transit State, on the other hand, is merely a State through which the goods pass during their journey from the origin to the destination, without the goods being intended for delivery or consumption there. For example, if goods are transported from Delhi to West Bengal through Uttar Pradesh, Delhi is the origin State, West Bengal is the destination State, and Uttar Pradesh is merely the transit State. In such a movement, the underlying supply is between the origin and destination and the mere physical passage of the goods through Uttar Pradesh does not, by itself, make Uttar Pradesh a party to that transaction. This distinction becomes important when considering whether the GST authorities of the transit State can exercise detention powers under Section 129.

Section 68 vs. Section 129 — Inspection and Detention

The GST law draws a distinction between the inspection of goods in movement and their detention or seizure. Section 68 empowers the proper officer, when a conveyance is intercepted, to require the person in charge to produce the prescribed documents and devices for verification and to allow inspection of the goods. taxinformation.cbic.gov.in Section 129, on the other hand, deals with detention and seizure of goods and the conveyance where goods are transported in contravention of the provisions of the GST law or the rules made thereunder. Therefore, the mere fact that an officer has the power to intercept a vehicle for verification does not, by itself, answer the separate question of whether the officer has jurisdiction to detain the vehicle and goods under Section 129. This distinction assumes particular importance where the vehicle is merely passing through a State and the underlying movement is between two other States. The issue, therefore, is not simply whether the vehicle can be checked, but whether the transit-State authorities can legally detain and seize it under Section 129.

What Happens When the Goods Are Merely Passing Through the State?

Where goods are moving from one State to another and merely passing through an intermediate State, the question arises whether the authorities of that intermediate State can exercise detention and seizure powers merely because the goods are physically within its territorial limits. The distinction between a transit State and the State connected with the actual supply becomes significant in such circumstances. If the goods originate in one State, are destined for another State, and the intermediate State has no role in the underlying transaction, the mere passage of the goods through that State does not, by itself, establish jurisdiction to detain and seize them under Section 129. In Sawarlal Agarwal, the Allahabad High Court specifically noted that the goods were merely passing through Uttar Pradesh and were meant for West Bengal, and held, relying on Maruti Enterprises and Golden Traders, that authorities of the State through which goods are merely passing are not authorised to detain and seize such goods.

Maruti Enterprises v. State of U.P. — The Key Precedent

The decision in Maruti Enterprises v. State of U.P. assumes particular significance in determining the jurisdiction of GST authorities of a transit State. The Allahabad High Court, in the present Sawarlal Agarwal case, specifically relied upon the Division Bench judgment in Maruti Enterprises and held that the issue was squarely covered by that decision. The Court noted that Maruti Enterprises, along with the Andhra Pradesh High Court’s decision in Golden Traders, had taken the view that where goods are merely passing through a State, the authorities of that State are not authorised to detain and seize the goods. Thus, Maruti Enterprises forms the principal judicial foundation for the proposition that the mere movement of goods through Uttar Pradesh, when the goods are destined for another State, does not by itself confer jurisdiction upon U.P. GST authorities to invoke detention proceedings under Section 129.

Golden Traders v. Deputy Assistant Commissioner of State Tax — The Andhra Pradesh High Court View

The decision of the Andhra Pradesh High Court in Golden Traders v. Deputy Assistant Commissioner of State Tax provides an important parallel to the principle recognised by the Allahabad High Court. In Golden Traders, the issue also concerned goods moving through a State which was not the ultimate destination of the goods. The Andhra Pradesh High Court took the view that where goods are merely passing through a State, the authorities of that State are not authorised to detain and seize the goods. This decision was expressly relied upon in Sawarlal Agarwal, where the Allahabad High Court noted that Golden Traders had taken an identical view to Maruti Enterprises. Thus, the two decisions provide significant judicial support for examining the jurisdiction of a transit State separately from the mere physical presence of the goods within its territory.

Sawarlal Agarwal v. State of U.P. — The Recent Allahabad High Court Ruling

The recent decision of the Allahabad High Court in Sawarlal Agarwal v. State of U.P. & Others, WRIT TAX No. – 3051 of 2026 (September 3, 2026) brings the above principle directly into focus. The petitioner was transporting goods from Delhi to Kolkata, with the goods merely passing through Uttar Pradesh. The vehicle was intercepted on the allegation that the documents in the possession of the person in charge did not match the goods, following which the goods were seized and proceedings were initiated under Section 129(1). The petitioner contended that since the goods were never intended for Uttar Pradesh and were only in transit to West Bengal, the U.P. authorities had no jurisdiction to detain and seize them. The Allahabad High Court noted that the goods were admittedly passing through U.P. and were meant for West Bengal, and, relying upon Maruti Enterprises and Golden Traders, held that authorities of a State through which goods are merely passing are not authorised to detain and seize such goods.

Is Mere Physical Presence of Goods Enough to Create Jurisdiction?

The mere physical presence of goods or a vehicle within the territorial limits of a State does not, by itself, answer the question of whether the GST authorities of that State have jurisdiction to detain and seize the goods under Section 129. In a movement where goods originate in one State, are destined for another State and merely pass through an intermediate State, the transit State has no underlying role in the supply merely because the vehicle travels through its territory. The question of jurisdiction must therefore be examined with reference to the nature of the movement and the statutory authority sought to be exercised. In Sawarlal Agarwal, the Allahabad High Court noted that the goods were passing through Uttar Pradesh and were meant for West Bengal, and, following Maruti Enterprises and Golden Traders, held that the authorities of the State through which the goods were merely passing were not authorised to detain and seize them.

What If There Is a Document or E-Way Bill Discrepancy?

The existence of a discrepancy in the documents accompanying goods in transit does not, by itself, resolve the separate question of jurisdiction of the transit-State authorities to detain and seize the goods. In Sawarlal Agarwal, the vehicle was intercepted on the allegation that the documents in the possession of the person in charge did not match the goods, and the goods were consequently seized. However, the High Court’s determination focused on the fact that the goods were merely passing through Uttar Pradesh and were destined for West Bengal. The Court, relying on Maruti Enterprises and Golden Traders, held that the authorities of a State through which goods are merely passing are not authorised to detain and seize them. Thus, even where a discrepancy is alleged during transit, the question of whether the authority invoking Section 129 possesses the necessary jurisdiction remains a distinct and important legal issue.