Sawarlal Agarwal Vs State of U.P. and 3 Others (Allahabad High Court)
Summary: The Allahabad High Court allowed the writ petition filed by Sawarlal Agarwal, carrying on business under the name M/s Rahul Steel, against an appellate order passed under Section 107 of the Uttar Pradesh Goods and Service Tax Act, 2017. The petitioner dealt in kitchen and household articles made of iron and steel and had sold goods to dealers in Kolkata. While the goods were being transported from Delhi to Kolkata through Uttar Pradesh, they were intercepted on the allegation that the documents carried by the person in charge of the conveyance did not match the goods. The goods were consequently seized, and the petitioner’s appeal against the action was dismissed.
The petitioner contended that the goods were merely passing through Uttar Pradesh while being transported from Delhi to West Bengal and were never intended for supply within Uttar Pradesh. It was therefore argued that the GST authorities in Uttar Pradesh had no jurisdiction to seize such goods. Reliance was placed on the Allahabad High Court Division Bench judgment in Maruti Enterprises v. State of U.P., [2026] 186 taxmann.com 980 (Allahabad) and the Andhra Pradesh High Court judgment in Golden Traders v. Deputy Assistant Commissioner of State Tax, [2026] 185 taxmann.com 569 (Andhra Pradesh).
The High Court noted that it was undisputed that the goods were only passing through Uttar Pradesh and were meant for West Bengal. Nevertheless, they had been detained under Section 129(1) of the GST Act and penalty had been imposed for their release. The Court observed that both Maruti Enterprises and 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 them.
The Court held that the controversy was squarely covered by the Division Bench judgment in Maruti Enterprises, a position which could not be disputed by the State. Accordingly, the writ petition was allowed and the impugned order was quashed.
The High Court further directed that the detained goods be released forthwith. If the petitioner had deposited any amount during the proceedings, the same was directed to be refunded within one month from production of a certified copy of the order.
Cases Discussed
1. Maruti Enterprises v. State of U.P. — [2026] 186 taxmann.com 980 (Allahabad High Court) — Followed. The Division Bench held that where goods are merely passing through a State, the authorities of that State are not authorised to detain and seize the goods. The Court held that the present case was squarely covered by this judgment.
2. Golden Traders v. Deputy Assistant Commissioner of State Tax — [2026] 185 taxmann.com 569 (Andhra Pradesh High Court) — Relied upon. Cited for the identical proposition that authorities of a State cannot detain and seize goods which are merely passing through that State.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Mr. Pranit Bag, learned Advocate along with Mr. Yashonidhi Shukla, learned counsel for the petitioner and Mr. Shashi Kant Mishra, learned Standing Counsel for the opposite parties.
2. The present writ petition has been filed assailing the order dated 20.04.2026 passed under Section 107 of the Uttar Pradesh Goods and Service Tax Act, 2017.
3. Learned counsel for the petitioner submits that the petitioner is carrying on business in the name and style of M/s. Rahul Steel and is engaged in the business of kitchen and household articles made of iron and steel. In the normal course of business, the petitioner sold the goods to dealers at Kolkata. The goods were in transit from Delhi to Kolkata and were passing through the State of U.P. The same were intercepted on the alleged ground that the documents in possession of the person in charge of the conveyance did not match with the goods in question, and the goods were accordingly seized. Aggrieved by the said order, an appeal was preferred, which has been dismissed. Hence, the present writ petition.
4. The learned counsel further submits that the goods in question were passing through the State of U.P. while in transit from Delhi to Kolkata and were never intended for U.P. Learned counsel further submits that the authorities in U.P. have no power or jurisdiction to seize the goods when the same are in transit from Delhi to West Bengal. In support of his submission, he relies upon the judgment of the Division Bench of this Court in the case of Maruti Enterprises v. State of U.P., reported in [2026] 186 taxmann.com 980 (Allahabad), and the identical view has been expressed by Andhra Pradesh High Court in the case of Golden Traders v. Deputy Assistant Commissioner of State Tax reported in [2026] 185 taxmann.com 569 (Andra Pradesh).
5. Per contra, learned Standing Counsel supports the impugned order and submits that the proceedings have rightly been initiated against the petitioner and he prays for dismissal of the writ petition.
6. After hearing the learned counsel for the parties, Court has perused the record.
7. It is not in dispute that the goods in question were passing through the State of U.P. and were meant for West Bengal. The goods were detained and an order was passed under Section 129(1) of the GST Act, and a penalty was imposed for release of the goods. Against the said order, the petitioner preferred an appeal, which has been dismissed.
8. The learned counsel for the revisionist has raised the issue that, if the goods were meant for West Bengal and were merely passing through the State of U.P., the same could not have been intercepted and seized by the GST authorities in U.P. The Division Bench of this Court in the case of Maruti Enterprises (supra) and the High Court of Andhra Pradesh in the case of Golden Traders (supra) have taken the view that where the goods are merely passing through the respective State, the authorities of that States are not authorized to detain and seize the goods.
9. The issue in hand is squarely covered by the judgment and order of Division Bench of this Court in the case of Maruti Enterprises (Supra) which cannot be disputed by learned ACSC appearing on behalf of the State-respondents.
10. In view of the aforesaid judgments, the present writ petition is allowed. The impugned order cannot be sustained and is hereby quashed.
11. The goods in question are directed to be released forthwith. If any amount has been deposited by the petitioner during the present proceedings, the same shall be refunded within a period of one month from the date of production of a certified copy of this order.
