APRIL 08, 2026

GST Checkposts - Strait Hormuz

By Vijay Kumar

JUST as oil tankers inch nervously through Hormuz, fearing a blockade, traders now tiptoe through checkposts of Andhra Pradesh-where every consignment risks being bottled up, not by buccaneers, but by babus with detention memos.

Can a truck carrying goods from Kerala to Maharashtra (covered under IGST) be intercepted, seized and penalised by officers of the State GST Department of Andhra Pradesh, while the truck is in Andhra Pradesh?

This was the question before the Andhra Pradesh High Court in a judgement significantly delivered on the 1st of April 2026. 2026-TIOL-508-HC-AP-GST

When a truck from Kerala to Maharashtra is stopped in Andhra Pradesh, it's not logistics-it's jurisdictional gymnastics worthy of a tax trapeze act.

It is an admitted fact, that the goods were accompanied by all the necessary documents, as required under the GST Laws. However, the goods were intercepted and proceedings, under Section 129 or 130 of the GST Act, were initiated and continued by the Andhra Pradesh GST authorities.

The officers found fault everywhere-prices too low, descriptions too vague, quantities too high. In short, invoices were guilty until proven innocent. And so began the great paperwork yatra to Amaravati. (Parliament having just sealed its status as the permanent capital of Andhra Pradesh)

The petitioners contended:

1. The State authorities in the State of Andhra Pradesh, have no jurisdiction, to initiate proceedings under Section 129 or section 130, in relation to movement of goods under the IGST Act, and

2. The question of valuation etc., cannot be taken up under Section 129 or 130.

Can the officers of APGST exercise any power under Section 129 or 130 of the APGST Act or CGST Act for intercepting, detaining or confiscating goods moving under the ambit of the IGST Act?

Section 129 deals with detention/seizure and release of goods and conveyances in transit. The officer who can detain or seize goods, under this provision is an officer designated and authorized as a 'proper officer'.

Section 130 deals with confiscation of goods or conveyances and levy of penalty. Section 130(2) r/w Section 130(6) and 130(7) makes it clear that the officer who can pass an order of confiscation of goods or conveyances and also levy of penalty is only the 'proper officer'. The term 'proper officer' is defined, in Section 2(91), of the APGST Act:

(91) "proper officer" in relation to any function to be performed under this Act, means the Chief Commissioner or the officer of the State tax who is assigned that function by the Chief Commissioner.

Any officer, assigned a function by the Chief Commissioner, would be a proper officer in relation to such function. This would also mean that a proper officer, assigned by the Chief Commissioner, under the APGST Act, would have jurisdiction to perform the function, assigned to him, only in terms of the APGST Act.

Assignment of function, by the Chief Commissioner, under the APGST Act, would not empower such an officer to act under either the CGST Act or under the IGST Act.

However, section 6 of the CGST Act, as well as Section 4 of the IGST Act, provides for cross empowerment to an officer appointed under the APGST Act, to act as a 'proper officer' under the CGST Act also.

The Department argued that an officer, appointed under the APGST Act, can function as proper officer under the CGST Act or IGST Act, and his functioning as proper officer can be subjected to such restrictions, that the Central Government, on the recommendations of the council, by notification, may specify.

The petitioners countered that, no officer, appointed under the APGST Act, can perform the functions of a 'proper officer' under the CGST Act or the IGST Act, unless a notification is issued by the Central Government, setting out the functions that can be performed by an officer appointed under the APGST Act and the conditions, subject to which the State Officer is to function.

The High Court noted that the GST regime introduced a new concept of taxation, in terms of the lists contained in Schedule VII of the Constitution of India. Prior to the introduction of the GST regime, the power to tax, barring certain duties like stamp duty, was granted, either under the Union List or the State list, exclusively to the States or the Union. However, the GST regime created a system of simultaneous taxation, wherein both the Union and the States are taxing the same transactions of supply of goods or services or both.

While Article 246A(1) conferred power on the State legislature, to legislate, on taxation of intra state supply of goods and services, Article 246A(2) and Article 269A, conferred exclusive power, to tax interstate supply of goods and services, including import and export supplies, on Parliament.

Thus, while both, the state legislatures and Parliament, could simultaneously legislate on taxing supply of goods and services, Parliament alone could tax interstate supply of goods and services.

The High Court held:

An officer, appointed under the APGST Act, is not automatically cross empowered to exercise any function, under the CGST Act or the IGST Act, unless the tax payer against whom any action is proposed had been administratively allotted to the State of Andhra Pradesh and the said officer has been appointed as the proper officer, in relation to such a tax payer. The same principle would apply vice versa to officers appointed under the CGST or IGST Acts.

Under Section 129, or Section 130, it is the 'proper officer', who has to detain, seize or release the goods and conveyances in transit or confiscate the same.

The Court reminded everyone: cross empowerment is not a free buffet. Andhra Pradesh officers cannot ladle out IGST penalties unless the taxpayer has been formally served at their table.

It's the same story when GST officers seize cash during searches. The law never gave them the power, but the temptation to treat bundles of notes as taxable cargo proved irresistible. Whether it's trucks on highways or cash in cupboards, the babus seem to believe "detain first, justify later" From trucks to trunks, zeal masquerades as jurisdiction.

The State That Mistook Transit for Treasure

In the normal course, evasion of tax, on intra-state sales, would result in non-payment of taxes, which are rightfully due to that State and the Union. Thus, the State or Central authority, assigned the functions of a 'proper officer', would be recovering the penalty and other sums demanded, under these provisions, as the rightful dues of that State and the Union.

In the case of IGST, no part of the taxes is due, to any intermediary state, through which the goods are passing.

In such a situation, can the intermediary state, under Section 129 or 130, levy and collect penalties or fines?

Even if it is held that the State officer of the intermediary state, is cross empowered to undertake such a function, various high courts have held to the contrary.

Can goods be seized in transit on grounds of valuation or quantity?

The High Court held:

Questions of seizure or confiscation, would not arise before a proper officer, under Section 129 or 130, even in the normal course, on grounds of variation in valuation etc.,

But how do you know where the goods are from and where they are going until the vehicle is stopped and the documents are verified?

The Court addressed this practical problem and directed,

In a case where it is found that the consignment relates to an interstate supply, the state officer would have to permit the vehicle to continue its journey. However, if any discrepancies are found, it would be open to the state officer to forward the said discrepancies to the proper officer of the consignee as well as the consignor. If it is found that, the consignment is not accompanied by necessary waybills, it would be open to the state officer, to presume that the consignment is an intra-state supply, unless that presumption is rebutted.

The High Court concluded:

A. An officer, appointed under the APGST Act, would be cross empowered, to exercise jurisdiction under the CGST or IGST Act, in relation to a tax payer, when such tax payer has been administratively allotted to the State and the State officer is the proper officer, assigned to discharge the said function, by the Chief Commissioner and vice versa for Central officers.

B. A proper officer appointed under the APGST Act, and assigned the functions, under section 129 and/or 130, of the APGST Act, can discharge such functions, under the CGST Act also, in relation to intra state sales.

C. A proper officer appointed under the APGST Act, and assigned the functions, under section 129 and/or 130, of the APGST Act, can discharge such functions, under the IGST Act also, in relation to inter-state sales, only when the State of Andhra Pradesh is entitled to an allocation of a share of the tax , under section 17 of the IGST Act, in relation to such transaction.

D. A proper officer appointed under the APGST Act, and assigned the functions, under section 129 and/or 130, of the APGST Act, cannot discharge such functions, under the IGST Act, in relation to inter-state sales, which originate outside the State and culminate outside the State.

E. In the event of any discrepancies found, in any movement of goods, under the IGST Act, it would be open to the State officer, to forward the said discrepancies to the proper officer of the consignee and the proper officer of the consignor, to take further action.

Checkposts are for checking movement, not re - writing invoices.

In the Strait of Hormuz, ships fear blockades. In checkposts of Andhra Pradesh, traders fear invoice inspectors. Either way, commerce is held hostage to someone else's stopwatch - Proof that GST's seamless flow can still be dammed by a babu with a memo and a rubber stamp - relics of checkposts that were meant to be history - yet still function as choke points.