Intermediate State Cannot Detain or Seize Goods Merely Passing Through in Transit: Allahabad HC Follows Its Own Division Bench Ruling in Maruti Enterprises

The Allahabad High Court has quashed a penalty order imposed under Section 129(1) of the GST Act on goods that were merely in transit through Uttar Pradesh, holding that the GST authorities of an intermediate state have no power or jurisdiction to detain and seize goods that are destined for another state and are only passing through. The ruling, by Justice Piyush Agrawal in Writ Tax No. 3051 of 2026 (Sawarlal Agarwal, decided 03.09.2026), follows the Division Bench judgment of the same court in Maruti Enterprises v. State of U.P. [2026] 186 taxmann.com 980 (Allahabad) and the identical view taken by the Andhra Pradesh High Court in Golden Traders v. Deputy Assistant Commissioner of State Tax [2026] 185 taxmann.com 569 (Andhra Pradesh).

The petitioner, carrying on business under the name M/s Rahul Steel, was engaged in the sale of kitchen and household articles made of iron and steel to dealers in Kolkata. The goods were in transit from Delhi to Kolkata and were passing through U.P. when they were intercepted by the state’s GST authorities on the ground that the documents in possession of the person in charge of the conveyance did not match the goods in question. The goods were seized, a penalty was imposed for their release under Section 129(1), and the petitioner’s appeal was also dismissed.

The court’s reasoning rested squarely on the settled proposition that when goods are merely in transit through a state and are destined for delivery in another state, the authorities of the transit state are not authorised to detain and seize those goods. The court noted that this issue was no longer open to debate in light of the Division Bench ruling in Maruti Enterprises, which the Standing Counsel appearing for the State was unable to dispute. The Andhra Pradesh High Court had independently arrived at the same conclusion in Golden Traders, reinforcing the position that the power of interception and seizure under Section 129 does not extend to goods that have no connection with the intercepting state beyond physical passage through its territory.

The writ petition was allowed, the impugned penalty order was quashed, and the court directed the release of the goods forthwith. Any amount deposited by the petitioner during the proceedings was ordered to be refunded within one month from the date of production of a certified copy of the order.

2026-juristway.com-1237-HC(Allahabad)-GST  |  High Court of Allahabad  |  Writ Tax No. 3051 of 2026  |  03.09.2026