Transit State Jurisdiction Under GST: Can Section 129 Detention Powers Be Exercised Over Goods Merely Passing Through?

Introduction: A Question of Jurisdiction in Inter-State Goods Movement

Inter-State movement of goods is a routine commercial reality under India's GST framework. Goods frequently originate in one State, travel through one or more intermediate States, and are ultimately delivered at a destination in an entirely different State. This everyday scenario raises a legally significant question: when goods are merely passing through an intermediate State, do the GST authorities of that State have the power to not just intercept and inspect the goods, but to actually detain and seize them under Section 129 of the CGST/SGST Act?

This is not a trivial procedural question. The consequences of detention under Section 129 are substantive — they carry statutory financial implications and can disrupt legitimate commerce. It is therefore critical to examine whether a State that has no underlying connection to the transaction can exercise such sweeping powers merely because a vehicle happens to travel through its territory.

The Allahabad High Court's ruling in Sawarlal Agarwal v. State of U.P., WRIT TAX No. – 3051 of 2026 (decided on September 3, 2026), squarely addresses this issue and provides important judicial clarity on the jurisdictional limits of a transit State's GST authorities.

Understanding the "Transit State" in an Inter-State Movement

To appreciate the legal issue fully, it is necessary to first understand what is meant by a "transit State" in the context of goods movement.

In any inter-State supply chain, three distinct roles can be identified:

  • Origin State — the State where the movement of goods begins
  • Destination State — the State where the goods are to be delivered and consumed
  • Transit State — an intermediate State through which the goods pass during their journey, with no delivery, sale, or taxable event intended to occur there

Consider a practical illustration: goods are transported from Delhi to West Bengal, with the vehicle travelling through Uttar Pradesh. In this scenario:

  • Delhi = Origin State
  • West Bengal = Destination State
  • Uttar Pradesh = Transit State

The underlying supply is between the origin and the destination. Uttar Pradesh's only connection to this movement is the physical passage of the vehicle through its roads. No transaction is intended, no delivery is planned, and no taxable event is contemplated within Uttar Pradesh. This factual matrix forms the backdrop of the jurisdictional debate that courts have been called upon to resolve.

The Statutory Framework: Section 68 vs. Section 129 — Two Distinct Powers

A foundational aspect of this debate is the distinction between two separate statutory powers under GST law.

Section 68 — Inspection During Transit

Section 68 of the CGST Act confers authority upon the proper officer to intercept a conveyance in movement and require the person in charge to produce prescribed documents and devices for verification. The officer is also empowered to inspect the goods being transported.

This power is primarily a verification power — it enables the officer to check whether the goods in movement are accompanied by the requisite documentation such as a valid e-way bill.

Section 129 — Detention and Seizure

Section 129, by contrast, is a substantive enforcement power. It deals with the detention and seizure of goods and the conveyance where goods are being transported in contravention of the provisions of the CGST/SGST Act or the rules framed thereunder. Detention under Section 129 triggers specific statutory consequences including the payment of tax and penalty.