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Article Dated 22nd April, 2024

Section 67: Power of Inspection, Search and Seizure

In the realm of tax enforcement, the power of inspection, search, and seizure plays a pivotal role in ensuring compliance and preventing tax evasion. Section 67 of the CGST Act 2017, provides the legal framework for authorities to exercise these powers, enabling them to access premises, scrutinize records, and seize goods or documents suspected of being involved in tax evasion. Let`s delve deeper into the nuances of this power and its implications.

Section 67 of the CGST Act 2017:


Under Section 67, inspection can only be carried out by a Proper officer upon written authorization from an officer of the rank of Joint Commissioner or above. This authorization is granted based on specific circumstances where there is reason to believe that a Taxable person has engaged in any of the following activities:

  • suppressed any transaction of supply of goods or services;

  • suppressed stock of goods in hand;

  • claimed Input tax credit in excess of his entitlement;

  • contravened any provision of the Act to evade tax;


any person engaged in transporting of goods or an owner or operator of a warehouse or a godown or any other place has kept goods which have escaped payment of tax or has kept his accounts or goods in a manner that is likely to cause evasion of tax.

Understanding "Reason to Believe":

The concept of "reason to believe" is pivotal in authorizing inspections and searches. It denotes an objective assessment based on credible information rather than mere suspicion. Authorities must have sufficient cause to believe that a violation of tax laws has occurred, backed by relevant material and circumstances. This ensures that the exercise of inspection and search powers is grounded in rationality and fairness.

Search and Seizure:

Either pursuant to an inspection or otherwise, if it is felt that any goods which are liable for confiscation under the Act , or any documents or books or things are secretly stored are found or any documents/books of accounts are found, which may be useful for the department in the proceedings for demand of tax, the department could search and seize such goods, documents and books.

A search and seizure can be conducted by authorized officers if there are reasonable grounds to believe that goods liable for confiscation or relevant documents are concealed. The term "seizure" implies (although not defined in act) the act of taking physical custody of property under legal process. It allows authorities to take possession of goods, documents, or other assets suspected of being involved in tax evasion, thereby safeguarding government revenue.

The person from whom documents and books of accounts are seized shall have the right to take copies of such documents and books of accounts with prior approval of the Proper officer.

Confiscation of Goods:

As per section 130 of the CGST Act, 2017 goods become liable for confiscation under various circumstances which are mentioned below:

  • They are supplied or received in contravention of GST Act provisions with the intent to evade tax.

  • They are not accounted for despite being subject to tax under the GST Act.

  • They are supplied without the required registration under the GST Act.

  • Any provisions of the CGST Act or rules made thereunder are contravened with the intent to evade tax.

  • Conveyances are used for transporting goods in contravention of GST Act provisions, unless lack of owner`s knowledge or connivance is proven.

Power of officer during Search:

During a search operation, an officer is vested with the authority to meticulously inspect premises and seize goods or documents pertinent to proceedings under the Act. Should seizing the goods prove impractical, the officer may opt to detain them, accompanied by an order preventing the owner or custodian from disposing of them without explicit permission.

Importantly, individuals from whom goods are seized are entitled to extract copies or extracts of seized records, under the supervision of an authorized officer, although such privileges may be denied if the officer deems it could prejudice the investigation.

Additionally, the officer holds the power to forcefully access areas of suspicion, including breaking open doors, almirahs, or boxes if access is denied and concealment is suspected.

Furthermore, premises may be sealed off if access is persistently denied during the search. It is crucial to note that seized documents or items must be retained solely for the duration required for examination, enquiry, or proceedings.

Any items not utilized as evidence must be returned to the owner within 30 days from the issuance of a show cause notice, ensuring due process and fairness in the investigative procedures.

The release of confiscated goods and documents follows a structured process aimed at maintaining fairness and efficiency in handling seized items:

1. Provisional Basis Release: Seized goods are provisionally released upon execution of a bond and furnishing of a prescribed amount of security or upon payment of applicable tax, interest, and penalty.

2. Actual Return of Goods: In the event of goods being seized, a notice must be issued within six months. If no such notice is issued within this timeframe, all seized goods are to be returned to the owner. However, the Proper officer has the discretion to extend this period by another six months, provided there are sufficient grounds to warrant such an extension.

3. Disposal of Goods: The government, taking into consideration factors such as perishability, hazardous nature, depreciation in value over time, storage constraints, or any other relevant considerations, may notify specific goods for disposal. In cases where such goods have been seized during a search, the Proper officer is tasked with preparing an inventory of the seized goods in the prescribed manner.

During search operations, strict adherence to basic requirements is essential to uphold transparency and legality. The following principles serve as guidelines for conducting searches:

1. Valid Search Warrant: No search of premises should be conducted without a valid search warrant issued by the Proper officer. This ensures that searches are authorized and conducted within the bounds of the law.

2. Presence of Lady Officer: A female officer should accompany the search team when conducting searches at residences. This measure is in place to respect privacy and cultural sensitivities.

3. Disclosure of Identity: Officers must disclose their identity by presenting their identity cards to the person in charge of the premises before commencing the search.

4. Execution of Search Warrant: The search warrant should be executed before the start of the search. The person in charge of the premises should acknowledge the warrant by signing it, along with at least two witnesses. This formalizes the authorization for the search.

5. Presence of Witnesses: The search should be conducted in the presence of at least two independent witnesses from the locality. If local witnesses are unavailable or unwilling, individuals from another locality should be asked to witness the search. Witnesses should be briefed about the purpose of the search to ensure transparency.

6. Offer for Personal Search: Before and after the search, the search team and accompanying witnesses should offer themselves for a personal search to the person in charge of the premises. This measure reinforces fairness and integrity in the search process.

7. Preparation of Panchnama/Mahazar: A detailed Panchnama or Mahazar of the search proceedings must be prepared on the spot. This document should include a list of all goods, documents recovered, and items seized or detained. Signatures of witnesses, the premises` in-charge or owner, and authorized officers conducting the search should be obtained, ensuring documentation of the search activities.

8. Return of Search Warrant: After the search concludes, the duly executed search warrant should be returned to the issuing officer along with a report on the search outcome. This ensures accountability and maintains a record of search activities.

9. Maintenance of Records: The authority issuing the search warrant should maintain a register of records of search warrants issued and returned. Used search warrants should be properly documented and retained for records.

10. Providing Copy of Panchnama: A copy of the Panchnama or Mahazar, along with its annexure, should be provided to the person in charge or owner of the premises being searched, with acknowledgement. This promotes transparency and provides the concerned party with a record of the search proceedings.

Safeguards available with respect to Search and Seizure:

1. Timely Release: Seized goods or documents should not be retained beyond the period necessary for their examination. This prevents undue prolongation of the seizure process and ensures timely resolution.

2. Access to Photocopies: The person from whose custody documents are seized is entitled to take photocopies of the documents. This provision allows individuals to retain copies of important documents for their records or legal purposes.

3. Notice Period for Goods: If a notice is not issued within six months of the seizure of goods, they shall be returned to the person from whose possession they were seized. This ensures that individuals are not unduly deprived of their property without due process. Additionally, the period of six months can be extended for justified reasons for a further maximum period of six months, providing flexibility while maintaining accountability.

4. Disposition of Specified Goods: Certain specified categories of goods, such as perishable or hazardous items, can be disposed of immediately after seizure. This provision prevents potential hazards or losses associated with the retention of such goods. An inventory of these goods seized must be prepared by the seizing officer to maintain transparency and accountability.

5. Application of Criminal Procedure Code: The provisions of the Code of Criminal Procedure 1973 relating to search and seizure apply. However, an important modification is made in relation to the transmission of records. Instead of sending copies of records made during the search to the nearest Magistrate empowered to take cognizance of the offense, they are required to be sent to the Principal Commissioner/Commissioner of CGST. This ensures that records are transmitted to the appropriate authority for further action under the CGST Act.


In conclusion, Section 67 of the CGST Act establishes a framework for the power of inspection, search, and seizure, ensuring that such actions are carried out with due diligence and adherence to legal procedures. The provision includes safeguards to protect the rights of individuals subject to search or seizure, such as the timely release of seized goods or documents, the provision of photocopies to the concerned party, and the requirement for issuance of notices within a specified period. Furthermore, the disposal of specified goods and the application of the Code of Criminal Procedure contribute to maintaining transparency and accountability in enforcement activities. Overall, Section 67 strikes a balance between empowering authorities to enforce tax laws effectively and safeguarding the rights of taxpayers, thereby promoting fairness and integrity in the administration of GST regulations.Section 67

CA Pranay Jain is a young and aspiring Chartered Accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.

He is also socially active on LinkedIn at

CA Pranay Jain
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