Introduction:
The Allahabad High Court, in a crucial ruling on the scope of powers under the Goods and Services Tax regime, has held that officers appointed under the State Goods and Services Tax Act (SGST Act) are deemed to be “Proper Officers” under both the Integrated Goods and Services Tax Act (IGST Act) and the Central Goods and Services Tax Act (CGST Act). The case titled Shree Maa Trading Company and 2 Others v. State of U.P. and 3 Others [WRIT TAX No. 3171 of 2025] was decided by Justice Piyush Agrawal, who examined the provisions of Section 4 of the IGST Act read with Rule 20 of the CGST Rules. The Court dismissed the petitioner’s contention that, in the absence of a specific notification under Section 4 of the IGST Act, State Tax Officers lacked jurisdiction to intercept and seize goods moving interstate. The ruling reaffirms the wide ambit of Section 4 of the IGST Act, which authorizes State GST officers to act as proper officers for the purposes of the IGST and CGST Acts unless exceptions or conditions are specifically notified on the recommendation of the GST Council.
The dispute arose when the petitioner’s goods were intercepted in Jhansi, Uttar Pradesh, on 26 May 2025 while being transported from Delhi to Raipur. Though the petitioner claimed the goods were accompanied by valid documents, the driver failed to produce them before the authorities at the time of interception. A seizure order was passed, and a show-cause notice was issued a week later. The petitioner challenged the legality of the seizure and penalty imposed under Section 129(b) of the GST Act, arguing primarily that the State GST officers had no jurisdiction to act in respect of interstate movement of goods under the IGST Act. The Allahabad High Court rejected this contention, holding that the legal framework itself empowered State GST officers to act as proper officers under all three enactments—SGST, CGST, and IGST—without requiring a separate notification unless exceptions were specified.
Arguments of the Petitioners:
The petitioners, represented by Advocate Naveen Chandra Gupta, contended that the entire seizure proceedings were without jurisdiction and thus liable to be quashed. Their first submission was that under Section 4 of the IGST Act, no notification had been issued by the Central Government authorizing State GST officers to act as proper officers under the IGST Act. According to them, in the absence of such notification, officers appointed under the SGST Act could not assume jurisdiction to detain or seize goods moving from one state to another, as this was exclusively governed by the IGST Act. They argued that the interception of their goods on 26.05.2025 at Jhansi, U.P., amounted to overreach by State authorities who had no authority to act under the IGST framework.
Secondly, the petitioners argued that the seizure proceedings stood vitiated because the show-cause notice was issued one week after the goods were detained. They submitted that the delay in issuing the notice was fatal to the validity of the proceedings and contrary to the procedural requirements of natural justice. They emphasized that the authorities had acted mechanically without following due process, rendering the seizure and penalty order illegal.
Thirdly, the petitioners contended that the goods in question were duly accompanied by valid invoices, e-way bills, and other requisite documents. They claimed that the failure of the driver to produce these documents at the time of interception was inadvertent and beyond their control, and that such inadvertence should not be used to penalize the consignor. They argued that the goods were legitimate and their movement was properly documented, and therefore, the authorities had no reason to detain them.
Finally, the petitioners sought to establish their ownership of the goods and challenged the finding of the authorities that they were not the owners. They argued that the transactions had been properly recorded, and the conclusion that the transactions were not reflected in their GST portal was erroneous. They pleaded for quashing of the seizure order and penalty imposed under Section 129(b) of the GST Act.
Arguments of the Respondents:
The respondents, represented by Additional Advocate General Anoop Trivedi and counsel Ravi Shankar Pandey, opposed the writ petition. They argued that the petitioners’ claim regarding lack of jurisdiction of State GST officers was wholly misconceived. They relied on Section 4 of the IGST Act, which explicitly provides that officers appointed under the State GST Act or Union Territory GST Act are authorized to act as proper officers for the purposes of the IGST Act. They submitted that the provision itself is self-executory and does not require a separate notification unless exceptions or conditions are specified by the Government on the recommendation of the GST Council. In the present case, no exceptions had been carved out, and therefore, State GST officers were fully empowered to intercept and seize goods moving interstate.
The respondents further pointed to Rule 20 of the CGST Rules and the circulars issued on 01.07.2017 and 04.08.2020, which had already notified officers of the State Government as authorized officers to discharge functions under Section 129 of the GST Act. These circulars, according to them, reinforced the position that State GST officers were competent to act under both CGST and IGST frameworks.
Regarding the delay in issuing the show-cause notice, the respondents contended that the time taken to issue the notice did not vitiate the proceedings, especially when the seizure itself was lawful. They argued that procedural delay could not nullify the jurisdictional competence of the authorities to seize goods.
On the issue of documents, the respondents highlighted that the goods were not accompanied by any documents at the time of interception and seizure. The plea of the driver’s inadvertence was an afterthought raised for the first time in appeal and could not absolve the petitioners of liability. The respondents argued that compliance with GST regulations requires documents to be produced at the time of interception, and failure to do so justifies seizure under the law.
Lastly, on the issue of ownership, the respondents pointed out that the transactions relating to the seized goods were not reflected in the GST portal of the petitioner, who claimed to be the owner. This omission cast serious doubt on their ownership claim. The authorities had rightly concluded that the petitioner was not the owner of the goods, and therefore, the imposition of penalty under Section 129(b) was justified.
Court’s Judgment:
Justice Piyush Agrawal, after considering the submissions of both parties, upheld the validity of the seizure proceedings and penalty imposed on the petitioner. The Court began by analyzing Section 4 of the IGST Act, which states that:
“Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such exceptions and conditions as the Government shall, on the recommendations of the Council, by notification, specify.”
The Court observed that the provision clearly conferred authority on SGST officers to act as proper officers under the IGST Act. A notification would only be necessary if the Government, on the recommendation of the GST Council, intended to create exceptions or impose conditions. In the absence of such exceptions, the provision itself sufficed to vest jurisdiction in SGST officers. Therefore, the argument that no notification had been issued empowering State GST officers was rejected.
The Court also referred to Rule 20 of the CGST Rules and the circulars dated 01.07.2017 and 04.08.2020, which had specifically authorized State Government officers to discharge functions under Section 129 of the GST Act. Taken together, these provisions and circulars made it abundantly clear that State GST officers were competent to intercept and seize goods moving interstate.
On the issue of delay in issuing the show-cause notice, the Court held that while procedural propriety is important, the mere fact that the notice was issued after a week did not render the seizure illegal. The decisive factor was whether the seizure itself was lawful, and since the seizure was based on the absence of documents at the time of interception, the proceedings could not be invalidated on the ground of delay.
Regarding the production of documents, the Court emphasized that the petitioner’s plea of inadvertence by the driver was raised only in appeal and not at the time of seizure. The failure to produce valid documents at the time of interception justified the seizure. The Court further noted that the claim of ownership was unsupported by entries in the GST portal, and therefore, the authorities were justified in concluding that the petitioner was not the owner of the goods.
The Court held that the penalty imposed under Section 129(b) of the GST Act was proper and required no interference. The writ petition was accordingly dismissed, and the Labour Court’s findings were upheld in toto.
This judgment provides much-needed clarity on the scope of jurisdiction of State GST officers under the unified GST framework. It reinforces the principle that SGST officers are empowered to act under CGST and IGST laws unless exceptions are notified. It also underscores the importance of compliance with GST documentation requirements during the transportation of goods, as failure to produce documents at the time of interception can result in lawful seizure and penalties.