Check-Post Officers Cannot Decide Valuation: Andhra Pradesh High Court orders Release of Goods Seized in Transit

The Andhra Pradesh High Court has held that officers detaining goods in transit under the Central Goods and Services Tax Act, 2017 cannot undertake adjudication on valuation or allege under-valuation as a ground for seizure or confiscation. The Court ordered the immediate release of goods and vehicles detained in multiple cases, while clarifying that any dispute on valuation must be examined only by the jurisdictional assessing authority. The bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar passed a common order in nine writ petitions filed by traders and business entities, including Golden Traders, T.M. Enterprises, Al Badar Spices, R.G. Traders, Shiva Traders, Sreekrishna Traders and others, who had challenged detention and confiscation proceedings initiated under Sections 129 and 130 of the Central Goods and Services Tax Act, 2017. In all the petitions, the State tax authorities had intercepted consignments in transit and initiated proceedings on the allegation of “gross under-valuation” of goods. The petitioners contended that they were carrying valid documents prescribed under Section 68 of the CGST Act, including tax invoices and e-way bills, and that valuation disputes cannot be the basis for detention at check-posts. The Court recorded that, except in one case, all consignments were accompanied by the required statutory documents. Even in that exceptional case, procedural lapses on the part of the department were found. The Bench noted that the core issue was whether check-post authorities are empowered to examine valuation of goods while exercising powers under Sections 129 and 130. Relying on consistent judicial precedents from various High Courts, the Bench reiterated that valuation is a matter to be examined during assessment proceedings and not at the stage of interception or detention. The Court referred to decisions of the High Court of Kerala in Alfa Group v. Assistant State Tax Officer, the High Court of Chhattisgarh in K.P. Sugandh Ltd. v. State of Chhattisgarh, and earlier judgments of the erstwhile High Court of Andhra Pradesh, among others, which have uniformly held that check-post authorities cannot decide valuation issues. The Court observed that Sections 129 and 130 are intended to ensure compliance with GST laws and prevent evasion of tax, not to conduct a roving inquiry into valuation. The Bench also raised an important jurisdictional concern, noting that where goods are merely passing through a State while being transported from one State to another, the tax authorities of the transiting State cannot reasonably exercise powers of confiscation or penalty on the allegation of tax evasion in another State. Such an exercise, the Court held, would be beyond the object and purpose of the GST legislation. In one writ petition, the department claimed that no e-way bill existed at the time of first inspection and that the transporter generated it later. The Court rejected this argument, pointing out that Rule 138C of the CGST Rules, 2017 mandates that every inspection must be recorded online within 24 hours in Part A and a final report within three days in Part B. Since no record of the alleged first inspection existed and the online report did not mention any earlier inspection, the Court declined to accept the department’s version. The Bench also expressed serious concern over the manner in which the authorities attempted valuation by sending samples to an organisation in Karnataka without associating the petitioners and without following transparent procedures. Terming the approach “extremely one-sided,” the Court directed that fresh samples be drawn from all consignments in a fair manner, divided into three parts — one to be retained by the department, one to be sent to the jurisdictional assessing officer, and one to be handed over to the petitioners. All samples must be sealed and countersigned by both officials and the petitioners or their representatives. The Court ordered that all seized or confiscated goods shall be released to the petitioners. Any vehicles detained in connection with the consignments shall also be released. The jurisdictional assessing officer may, if required, initiate further proceedings based on the samples drawn. Case Details Case Title: Golden Traders and Others Versus Deputy Assistant Commissioner Of State Tax Citation: JURISHOUR-13-HC-2026(AP) Case No.: Writ Petition Nos.541, 1756, 3097, 3225, 3227, 3252, 3254, 3258 And 3354 Of 2026 Date: 16/02/2026 Counsel For Petitioner: Pasupuleti Venkata Prasad Counsel For Respondent: GP Click Here To Read Order Read More: ICAI Releases Updated Compilation on Landmark GST Judicial & Advance Rulings

Check-Post Officers Cannot Decide Valuation: Andhra Pradesh High Court orders Release of Goods Seized in Transit

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