Facts of the Case:

In this case, the petitioner challenged the seizure and confiscation of goods and vehicles in transit by GST authorities. The petitioners had also filed interlocutory applications seeking release of the detained goods and vehicles.

The authorities had initiated proceedings under Section 129 and Section 130 of the CGST Act, 2017 on the allegation that there was gross undervaluation of goods being transported. In almost all cases, the transporters possessed the documents required under Section 68 of the CGST Act, such as invoices and e-way bills. The principal dispute raised before the Court was whether officers conducting inspection of goods in transit at check posts could examine the issue of valuation of goods and detain them on the ground of undervaluation.

The petitioners relied upon several judicial precedents which held that valuation disputes cannot be examined during detention proceedings.

Issue:

Whether GST authorities detaining goods in transit under Sections 129 or 130 of the CGST Act can examine the valuation of goods and detain the goods on the ground of undervaluation.

Held that:

The Court held that issues relating to valuation of goods cannot be examined by authorities during detention proceedings under Sections 129 or 130 of the CGST Act. Such questions fall within the domain of the jurisdictional assessing authority, which can examine the valuation and determine tax liability during assessment proceedings. The Court further observed that the purpose of Sections 129 and 130 is to ensure compliance with transport and documentation requirements so that there is no evasion of tax payable in the relevant State. Authorities of a State through which goods are merely passing in transit cannot ordinarily exercise powers of confiscation or penalty on the allegation of tax evasion in another State.

In the case where the department alleged that the e-way bill was generated after inspection, the Court noted that the department failed to comply with Rule 138C of the CGST Rules, which requires the officer to upload a summary report of inspection within 24 hours and a final report within three days. Since no report of the alleged earlier inspection had been uploaded, the Court did not accept the department’s contention. The Court also observed that the method adopted by the authorities to determine valuation was one-sided, as samples were collected without the presence or participation of the petitioners.

Accordingly, the Court directed that all the seized goods and vehicles in the concerned writ petitions be released to the petitioners.

Case Name: M/s GOLDEN TRADERS & ORS. v. THE DEUPTY ASSISTANT COMMISSIONER OF STATE TAX & ORS. dated 16.02.2026

To read the complete judgement 2026 Taxo.online 574