2026-VIL-515-ALH
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SGST High Court Cases

GST - Jurisdiction of transit State GST Authorities over Inter-State goods in transit, Scope of cross-empowerment of Central and State Authorities – Jurisdiction to pass penalty orders by the SGST authorities of a transit State against goods originating in one State and destined for another State - Petitioners contend that the transit State authorities lack jurisdiction to detain goods and impose penalties for inter-state transactions where the supply originates and terminates outside the transit State - Revenue authorities argue that cross-empowerment provisions under Section 6 of the Central Act and Section 4 of the IGST Act read with Sections 68 and 129 of the State Act confer jurisdiction on transit State authorities to detain goods and impose penalties for any anomaly in the transaction – HELD - While transit State authorities are empowered to stop, inspect and physically verify goods in transit as a regulatory measure to enforce compliance with prescribed documentation requirements, such power is limited to the extent of noting and reporting deficiencies. The cross-empowerment under Section 6 of the CGST Act and Section 4 of the IGST Act operates only between Central and State authorities with respect to taxable transactions in that State and not between authorities of different States. Since no tax incidence arises in a pure transit State where goods originate and terminate outside such state, no levy of IGST, SGST or CGST can occur in that transit State. Therefore, the transit State authorities cannot impose penalties for violations in inter-state transactions where neither the supply origin nor destination lies within that transit State – Further, permitting transit States to impose penalties would expose goods traversing multiple States to repeated penalties by various State authorities, thereby violating the Constitutional protection of inter-State trade guaranteed under Article 301 of the Constitution. The appropriate action for transit State authorities is to communicate discrepancies noticed to the competent authorities in the origin and destination States while allowing goods to complete their journey unimpeded - The penalty orders are quashed, and goods and vehicles are directed to be released forthwith. The writ petitions are allowed - Issuance of physical tax invoice instead of e-Invoice, Penalty on purchasing dealer – HELD - Issuance of e-Tax Invoice is linked to turnover. That fact is in the special knowledge of the supplier. The purchase/recipient may neither have the means, nor he may be burdened to enquire about the same, before transacting a purchase. That may be a wholly unreasonable burden cast on the recipient/purchaser. To the extent the physical Tax Invoice is not bogus and its issuance is not doubted, the recipient/purchaser may not be penalised, for no fault.
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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