2026 (4) TMI 288 - HC - GST

GST cross-empowerment is limited by taxpayer allocation, and transit detention powers cannot be used beyond the State's taxable nexus.

Cross-empowerment under the GST framework operates only within the limits of taxpayer allocation and assigned function: a State GST officer may exercise ... Cross-empowerment of State tax officers - Jurisdiction, to initiate proceedings under Section 129 or section 130, in relation to movement of goods under the IGST Act - inter-State transit - Detention and confiscation on valuation discrepancies - Whether the officers appointed under the APGST act, can exercise any power under Section 129 or 130 of the APGST Act or CGST Act for intercepting, detaining or confiscating goods, whose movement, falls under the ambit of the IGST Act. Cross-empowerment - Proper officer - Inter-State movement of goods - HELD THAT: - The Court held that cross-empowerment under the GST framework is not automatic in the abstract, but operates in relation to a taxpayer who has been administratively allotted to the State and in respect of functions assigned to the State officer as the proper officer. While such cross-empowerment is sufficient for exercise of corresponding functions under the CGST Act, a distinct limitation applies under the IGST Act. In the case of inter-State supplies originating outside Andhra Pradesh and terminating outside Andhra Pradesh, no part of the tax is allocable to Andhra Pradesh under Section 17 of the IGST Act. Consequently, detention, seizure or confiscation by Andhra Pradesh officers under Sections 129 and 130 would result in recovery of penalty, fine or sale proceeds by an intermediary State which has no statutory entitlement to that transaction. The Court therefore held that APGST officers may act under the IGST regime only where Andhra Pradesh is entitled to allocation of a share of tax; otherwise, if discrepancies are noticed during transit, they may only forward the material to the proper officers of the consignor and consignee. [Paras 28, 29, 36, 37, 38] The impugned proceedings under Sections 129 and 130 were set aside as without jurisdiction, with liberty to the respondents to forward the record and samples to the respective proper officers of the petitioners. Valuation discrepancy - Undervaluation - Scope of detention and confiscation - HELD THAT:- Agreeing with the view taken by other High Court in Panchi Traders Vs. State of Gujarat [2025 (12) TMI 941 - GUJARAT HIGH COURT], the Court held that questions of valuation do not by themselves justify action under Sections 129 and 130. Those provisions are intended to address contraventions of the requisite degree connected with evasion, and not to permit the intercepting officer to undertake an assessment or valuation exercise at the point of transit. In the present batch, where the consignments were generally accompanied by the necessary documents and the action was based on alleged undervaluation, mismatch of description, or excess quantity as against documents, such grounds did not sustain seizure or confiscation under these provisions. As regards the case in which absence of e-way bill was alleged, the Court found no basis to depart from its earlier interlocutory observations, since the alleged earlier inspection had not been recorded in the manner required and the respondents' contention was rejected. [Paras 32, 33, 34, 35, 38] Proceedings based on valuation-related grounds were held unsustainable, and the respondents' stand regarding absence of e-way bill in the concerned writ petition was also rejected. Final Conclusion: The Court held that Andhra Pradesh State tax officers had no jurisdiction to invoke Sections 129 and 130 in respect of goods moving under the IGST regime from outside the State to a destination outside the State, and further held that valuation-related discrepancies did not justify detention or confiscation under those provisions. The writ petitions were accordingly allowed by setting aside the impugned proceedings, while permitting the respondents to transmit the material to the respective proper officers. Issues: (i) Whether officers appointed under the Andhra Pradesh GST law could exercise powers under the CGST and IGST enactments by virtue of cross-empowerment, and if so, to what extent in relation to taxpayers administratively allotted to the State. (ii) Whether proceedings under sections 129 and 130 could be sustained in relation to IGST movement of goods originating outside Andhra Pradesh and culminating outside Andhra Pradesh, particularly on grounds of valuation or quantification.Issue (i): Whether officers appointed under the Andhra Pradesh GST law could exercise powers under the CGST and IGST enactments by virtue of cross-empowerment, and if so, to what extent in relation to taxpayers administratively allotted to the State.Analysis: The statutory scheme of cross-empowerment operates through the relevant GST provisions and the administrative allocation of taxpayers between Centre and States. An officer appointed under the State enactment becomes a proper officer only for the function assigned and, in respect of the taxpayer allotted to the State, can discharge corresponding functions under the parallel Central and Integrated enactments. The scheme does not confer an unqualified or automatic authority on a State officer to act under the Central or Integrated enactments in the absence of the relevant administrative allocation and functional assignment. The objective is to avoid parallel proceedings and conflicting determinations while preserving the jurisdictional limits of each authority.Conclusion: Cross-empowerment exists, but only within the limits of taxpayer allocation and assigned function; there is no automatic universal jurisdiction.Issue (ii): Whether proceedings under sections 129 and 130 could be sustained in relation to IGST movement of goods originating outside Andhra Pradesh and culminating outside Andhra Pradesh, particularly on grounds of valuation or quantification.Analysis: Sections 129 and 130 are directed to detention, seizure, release, and confiscation by the proper officer in transit cases. Their use cannot be expanded to permit an intermediary State to appropriate penalties or fine in relation to a transaction that does not generate taxable revenue for that State. For IGST movements beginning and ending outside the State, the State officer in Andhra Pradesh cannot exercise confiscatory jurisdiction under sections 129 and 130 merely because the vehicle passed through the State. Further, valuation or quantification disputes at the stage of interception do not justify detention or confiscation unless the statutory conditions for invoking the severe power are otherwise satisfied.Conclusion: Proceedings under sections 129 and 130 were not sustainable for the impugned IGST inter-State movements on the grounds invoked.Final Conclusion: The impugned detention and confiscation proceedings were set aside, while the authorities were left free to forward the records to the proper officers concerned for any lawful action.Ratio Decidendi: Cross-empowerment under the GST framework is confined to the proper officer's assigned function and the taxpayer's administrative allocation, and transit powers under sections 129 and 130 cannot be used by an intermediary State to confiscate or detain goods in an IGST movement wholly outside its taxable nexus or merely to assess valuation disputes at interception.