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Dr. Sanjiv Agarwal By: Dr. Sanjiv Agarwal
August 4, 2022
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Provisions of section 67 at a glance

The provisions of search and seizure provides enough safeguards and the GST Law stipulates that search of any place of business etc. can be carried out only under authorization from an officer not below the rank of Joint Commissioner and if he has a reason to believe that the person concerned has done at least one of the following:

  1. Goods liable to confiscation or any documents/books/record/things, which may be useful for or relevant to any proceedings, are secreted in any place then all such places can be searched
  2. All such goods/documents/books/record/ things may be seized, however, if it is not practicable to seize any such goods then the same may be detained. The person from whom these are seized shall be entitled to take copies/extracts of seized records
  3. The seized documents/books/things shall be retained only till the time the same are required for examination/enquiry/ proceedings and if these are not relied on for the case then the same shall be returned within 30 days from the issuance of show cause notice
  4. The seized goods shall be provisionally released on execution of bond and furnishing a security or on payment of applicable tax, interest and penalty
  5. In case of seizure of goods, a notice has to be issued within six months, if no notice is issued within a period of six months then all such goods shall be returned. However, this period of six months can be extended by Commissioner for another six months on sufficient cause.
  6. An inventory of the seized goods/documents/ records is required to be made by the officer and the person, from whom the same are seized, shall be given a copy of the same.
  7. To ensure that the provisions for search and seizure are implemented in a proper and transparent manner, the Act stipulates that the searches and seizures shall be carried out in accordance with the provisions of Criminal Procedure Code, 1973. It ensures that any search or seizure should be made in the presence of two or more independent witnesses, a record of entire proceedings is made and forwarded to the Commissioner forthwith.

Gist of Section 67 – Inspection Search and Seizure


Event / Activity

Who can do

Proper officer not below rank of Joint Commissioner


Reason to believe exists


Inspection of place of business, search any place, seizure of goods, documents, books or things for 6 months


By himself or authorizing any officer of central tax in writing

Empowered to

  • To seal or break open the door of premises, almirahs etc.
  • Retain seized good / documents, records etc
  • Release of seized goods, documents etc.
  • Initiate prosecution


Section 67(1) provides for power of inspection of the following :

  1. Place of business of a taxable person
  2. Place of business of person engaged in transporting of goods
  3. Place of business of owner or operator of warehouse or godown
  4. Any other place

What is Inspection?

It is a softer provision than search to enable officers to access any place of business of a taxable person and also any place of business of a person engaged in transporting goods or who is an owner or an operator of a warehouse or godown.

Both ‘inspection’ and ‘search’ have not been defined in the GST Act, 2017. Inspection is nothing but verification (physical or otherwise) to ascertain facts or evidences in relation to business transactions of a taxable person. It may involve access to business premises. Inspection enables officers to access any place of business of a taxable person and also any place of business of a person engaged in transporting goods or who is an owner or an operator of a warehouse or godown.

As per Black’s Law Dictionary, ‘search’ is ‘an examination of a man’s house or other buildings or premises, or of his person, with a view to the discovery of contraband or illicit or stolen property, or some evidence of guilt to be used in the prosecution of a criminal action for some crime or offence with which he is charged.’

Shorter Oxford English Dictionary defines ‘search’ to mean to probe, scrutinize, examine, investigate. The rights of the state to authorize a search are well recognized and are used against those who perpetrate fraud on the revenue.

It may be noted there have to be compelling reasons to order for a search ie transgression into one’s privacy. In case of search, due process of law has to be followed. In case of taxes, a suspicion of undisclosed or concealed income or assets is sufficient for issuance of a search warrant.

Power to Inspect

Any proper officer not below the rank of Joint Commissioner can authorize other officers of CGST/SGST in writing to inspect in terms of section 67(1) of the CGST Act, 2017.

‘Inspection’ is a softer provision than search which enables officers to access any place of business or of a person engaged in transporting goods or who is an owner or an operator of a warehouse or godown. As discussed above the inspection can be carried out by an officer of CGST/SGST only upon a written authorization given by an officer of the rank of Joint Commissioner or above.

A Joint Commissioner or an officer higher in rank can give such authorization only if he has reasons to believe that the person concerned has done one of the following actions:

  1. Suppression of any transaction relating to supply of goods or services or stock in hand
  2. Claimed excess input tax credit
  3. Contravention of any provisions of the Act or the Rules to evade tax

Transporting or keeping goods which escaped payment of tax or manipulating accounts or stocks which may cause evasion of tax Inspection can also be done of the conveyance, carrying a consignment of value exceeding specified limit. The person in charge of the conveyance has to produce documents/devices for verification and allow inspection. Inspection during transit can be done even without authorisation of Joint Commissioner.

The inspection under section 67(1) is based on ‘reasons to believe’.

Accordingly, power to inspect has been granted where any proper officer (not below the rank of Joint Commissioner) has reasons to believe that -

(a)  a taxable person has -

  • suppressed any transaction relating to supply of goods and/or services, or
  • suppressed stock of goods in hand, or
  • claimed input tax credit in excess of entitlement, or
  • indulged in contravention of any of the provisions of GST law or Rules made there under

with an intention to evade tax under this Act; or

(b)  where any person:

  • is engaged in the business of transporting goods or an owner/operator of a warehouse or a godown or any other place of keeping goods which have escaped payment of tax, or
  • has kept his accounts or goods in such a manner which is likely to a cause evasion of tax payable under the Act;
  • then, he may authorize in writing any other officer of CGST/SGST to inspect:
  • any places of business of the taxable person, or
  • any place of the persons engaged in the business of transporting goods, or
  • any place of the owner or the operator of warehouse, or godown, or
  • any other place.

For the purposes of inspection and/or investigation, Director General of Goods and Service Tax Intelligence (DGGSTI) is empowered to conduct investigations through its zonal offices and regional units. The cases where tax evasion has been detected reveal the following types of practices.

  • Short-payment of tax by undervaluing taxable goods and services
  • Wrong availment of exemption notifications
  • Wrong availment/non-reversal of input tax credit
  • Non-payment of tax on supply of taxable goods and services (clandestine removal)
  • Tax collected but not paid to Government exchequer
  • Non-payment of tax under reverse charge mechanism
  • Fraudulent availment of input tax credit on the basis of invoices from fake firms
  • Fraudulent availment of refund of IGST on export of goods etc.

Parallel jurisdiction

CBIC had clarified vide Circular No. CBEC/20/43/01/2017-GST (PT) dated 05.10.2018 that in view of the fact that both Central and State Tax authorities have been authorized to initiate intelligence based enforcement action on the tax payer, irrespective of administrative assignment of tax payer, it has been clarified that the tax authority which initiates the action is only empowered to complete the investigation process i.e., issuance of SCN, adjudication and recovery etc.


By: Dr. Sanjiv Agarwal - August 4, 2022



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