Valuation Issues Alone Not Valid Grounds for Detention of Goods in Transit in IGST Movement: AP HC [Read Order]

In a recent ruling, the Andhra Pradesh High Court held that valuation issues alone are not valid grounds for detention of goods in transit in Integrated Goods andServices Tax (IGST) movement, as such matters cannot be examined at the stage of interception under Sections 129 and 130 of the Goods and Services Tax (GST) Act.

The petitioners, including Golden Traders and others, were transporting goods in the course of inter-State trade, where both the origin and destination were outside the State of Andhra Pradesh. While the goods were passing through Andhra Pradesh, the State tax authorities intercepted the consignments and initiated proceedings under Sections 129 and 130 of the GST Act on grounds such as undervaluation, mismatch in quantity, or discrepancies in description, even though the consignments were accompanied by relevant documents.

The petitioners approached the High Court challenging these actions and sought release of goods and vehicles, arguing that the detention was arbitrary and beyond the scope of the statutory provisions.

The petitioners’ counsel argued that issues relating to valuation or minor discrepancies cannot be grounds for detention under Sections 129 and 130, which are intended to address serious violations such as absence of documents or intent to evade tax. It was argued that valuation disputes must be examined by the appropriate assessing authority and not at the stage of interception.

The State authorities argued that discrepancies such as undervaluation or mismatch justified detention and confiscation of goods under the GST provisions.

The Division Bench comprising Justice R. Raghunandan Rao and Justice T.C.D. Sekhar observed that the power under Sections 129 and 130 is limited and cannot be used to examine valuation issues at the time of interception. The court observed that in several cases, goods were accompanied by proper documents and that mere differences in valuation or similar discrepancies cannot justify detention.

The court explained that valuation disputes or issues relating to price cannot be a ground for invoking detention or confiscation powers and pointed out that such matters should be taken up through appropriate proceedings by the competent authority. The Court also referred to judicial precedents which held that undervaluation by itself is not sufficient to detain goods in transit.

The court held that the detention and confiscation proceedings initiated on the basis of valuation discrepancies were not sustainable in law.

The court set aside the proceedings initiated under Sections 129 and 130 against the petitioners and directed release of the goods while leaving it open to the authorities to take appropriate action in accordance with law through the proper jurisdictional officers.

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