GST Search, Inspection & Seizure Under Section 67: Reasons to Believe, INS-01, Electronic Devices, Cash, Release & 2026 High Court Law

By Adv. Govind Bali
Fastrack Legal Solutions LLP

GST • Section 67 • DGGI Search • Inspection • Seizure • GST INS-01 • Electronic Devices • Documents • Cash • 2026 Case Law

A GST search is not an unrestricted revenue power. Section 67 of the Central Goods and Services Tax Act, 2017 creates separate powers of inspection, search and seizure, each subject to statutory conditions. The threshold expression is “reasons to believe”. The authorised officer must also act within the written authorisation, follow the prescribed forms, prepare a seizure record or inventory where applicable, respect statutory limits on retention, and comply with the procedural safeguards governing electronic devices, documents, goods and access to premises.

The subject has acquired renewed importance in 2026. Recent High Court decisions have examined mechanical search authorisations, the distinction between inspection and search, sealing of business premises, seizure and retention of material, coercive tax recovery during search, and the requirement that statutory safeguards be treated as real conditions rather than formalities.

Quick legal answer

Section 67(1) governs inspection where a proper officer not below the rank of Joint Commissioner has reasons to believe that specified tax-evasion circumstances exist.
Section 67(2) governs search and seizure where the proper officer has reasons to believe that goods liable to confiscation or relevant documents, books or things are secreted in a place.
Inspection and search are not synonymous. Search is a more intrusive power and must independently satisfy Section 67(2).
Written authorisation is ordinarily issued in FORM GST INS-01.
Seizure is recorded in FORM GST INS-02; where physical seizure is impracticable, an order of prohibition may be issued in FORM GST INS-03.
Section 67(4) permits sealing or breaking open only where access to the premises, almirah, electronic device, box or receptacle is denied.
Documents not relied upon for a notice must be returned within the statutory period under Section 67(3).
Goods may be provisionally released under Section 67(6), read with Rule 140, on bond/security or payment as applicable.
If no notice in respect of seized goods is issued within six months, Section 67(7) requires their return, subject to a possible statutory extension of up to another six months on sufficient cause.
Search authorisation, summons and similar communications are also governed by CBIC’s DIN framework, subject to the limited exceptions recognised in the circulars.
Search does not itself determine tax liability. Investigation, adjudication, demand, appeal and prosecution are distinct stages.

Statutory framework: Section 67 CGST Act

The primary statutory source is Section 67 of the CGST Act on the CBIC portal. Section 67 forms part of Chapter XIV dealing with inspection, search, seizure and arrest.

Section 67(1): inspection

A proper officer not below the rank of Joint Commissioner may authorise inspection where he has reasons to believe, inter alia, that a taxable person has suppressed transactions or stock, claimed excess input tax credit, contravened the Act or Rules to evade tax, or that a transporter, warehouse owner or operator is keeping goods or accounts in a manner connected with tax evasion.

The critical points are:

the statutory officer must be of the prescribed rank;
there must be reasons to believe;
the belief must relate to one or more circumstances recognised by Section 67(1); and
the authorisation must be in writing.

Section 67(2): search and seizure

Search is more intrusive. Section 67(2) requires reasons to believe that:

goods liable to confiscation; or
documents, books or things useful or relevant to proceedings under the Act

are secreted in a place. The proper officer may then authorise a search and seizure or conduct it himself where legally empowered.

The word “otherwise” in Section 67(2) means that search need not always be preceded by an inspection. But that does not dilute the independent statutory threshold for search.

Inspection, search and seizure are legally distinct

The distinction matters because an authority cannot use the less intrusive power of inspection as a substitute for a search where officers are in fact probing for concealed material.

In M/s Bhima Enterprises v. Principal Chief Commissioner of GST, decided on 5 August 2026, the Madurai Bench of the Madras High Court emphasised that inspection, search and seizure are conceptually distinct. The Court examined whether a composite GST INS-01 authorisation demonstrated real application of mind and stressed that the statutory safeguards in Section 67 cannot be reduced to mechanical reproduction of statutory language.

The judgment is particularly useful for one proposition: the authority must know whether it is authorising an inspection or a search and must form the belief required for that specific statutory power.

“Reasons to believe” is a jurisdictional safeguard

“Reasons to believe” is not the same as an unrecorded hunch. It requires an objective nexus between material available to the competent officer and the statutory circumstances that permit action.

The courts have repeatedly treated the existence of reasons and their connection with the statutory power as judicially reviewable, even though the sufficiency of material is not ordinarily re-appreciated as if the writ court were an appellate authority.

In Bhima Enterprises, the Madras High Court reiterated that:

belief must be held in good faith;
it cannot be a mere pretence;
it cannot rest on bare suspicion;
there must be information or material supporting the formation of belief; and
there should be a rational or live link between the material and the action authorised.

A similar focus on the statutory precondition can be seen in M/s Murliwala v. Union of India, Rajasthan High Court, decided on 20 April 2026, where the Court considered Section 67 authorisation and the statutory requirement of reasons to believe.

FORM GST INS-01: what should the authorisation contain?

Rule 139 of the CGST Rules governs inspection, search and seizure. The relevant CBIC text is available in the CGST Rules — Chapter XVII.

Under Rule 139(1), where the competent officer has reasons to believe that a place is to be visited for inspection or search or that seizure is required under Section 67, he issues an authorisation in FORM GST INS-01.

A defensible authorisation should identify the legal nature of the proposed action and should not be a blind reproduction of every possible statutory ground. The 2026 Madras High Court decision in Bhima Enterprises is significant because it criticised a composite authorisation that did not clearly demonstrate whether the authority had applied its mind to inspection or search.

Can officers search a residence?

Section 67(2) is not confined to the registered principal place of business. If the competent officer has the statutory reasons to believe that relevant goods, documents, books or things are secreted at another place, a search may extend to that place, including a residence, provided the authorisation and statutory conditions support it.

However, the more intrusive the location, the more important it becomes to examine:

who formed the reasons to believe;
what premises were specifically authorised;
whether the officer executing the warrant stayed within the authorised premises;
whether the search was documented through a panchnama or comparable contemporaneous record; and
whether electronic devices, documents or goods taken away were properly inventoried and covered by seizure documentation.

Section 67(4): sealing and breaking open premises or devices

Section 67(4) is narrower than is sometimes assumed. It authorises the officer conducting a search to seal or break open the door of premises, or break open an almirah, electronic device, box or receptacle, where access is denied.

This statutory condition is important. On 10 August 2026, in Sri Surendra Sharma v. State of Assam, the Gauhati High Court examined Section 67(4) and held, on the facts before it, that the power could not be used as a continuing device to keep premises sealed after the search had culminated. The Court also emphasised that the statutory power to seal or break open is linked to denial of access.

Accordingly, a taxpayer challenging continued sealing should examine whether:

access was ever actually denied;
the search was still continuing;
seizure documentation had already been completed;
the premises were effectively being used as storage for seized material; and
the continued restraint has a separate statutory basis.

Electronic devices: phones, laptops, servers and hard drives

Section 67 expressly refers to electronic devices in subsection (4). Digital records may also qualify as documents or things relevant to an investigation. This makes phones, laptops, hard drives, ERP systems, accounting software and cloud-access devices a frequent feature of GST searches.

Key legal and practical issues include:

whether the device itself was seized or merely accessed for imaging;
whether seizure is supported by the authorisation and seizure memo;
whether the device is required for ongoing business operations;
whether forensic imaging can satisfy the investigative need without indefinite retention of the physical device;
whether privileged or unrelated personal material is present;
whether the taxpayer has requested copies or extracts under Section 67(5), where applicable; and
whether continued retention remains necessary for inquiry or proceedings.

Where devices are critical to daily operations, a written request for imaging, copying and return should ordinarily be made promptly rather than waiting indefinitely.

Seizure memo: FORM GST INS-02

Rule 139(2) provides that where goods, documents, books or things are liable to seizure under Section 67(2), the proper officer or authorised officer shall make an order of seizure in FORM GST INS-02.

Rule 139(5) further requires preparation of an inventory containing relevant particulars such as description, quantity or unit, make, mark or model where applicable, and the inventory is to be signed by the person from whom the material is seized.

A taxpayer should preserve:

GST INS-01 authorisation shown or supplied;
panchnama;
GST INS-02 seizure order;
inventory;
device serial numbers and descriptions;
copies of statements recorded;
acknowledgements for documents handed over voluntarily; and
proof of any payment made during or immediately after the search.

When seizure is impracticable: GST INS-03

Where it is not practicable to seize goods, Section 67(2) permits the officer to prohibit the owner or custodian from removing, parting with or otherwise dealing with them without prior permission.

Rule 139(4) gives effect to this through FORM GST INS-03. This is a restraint order, not a transfer of possession. The scope and duration of the restraint should therefore be examined against the underlying proceedings and statutory purpose.

Right to copies and extracts of seized documents

Section 67(5) gives the person from whose custody documents are seized the right to make copies or take extracts in the presence of an authorised officer at the time and place indicated by the officer, unless the proper officer considers that allowing copies would prejudicially affect the investigation.

Businesses should invoke this provision where seized records are required for:

statutory filings;
banking or audit;
ongoing litigation;
customer or vendor reconciliation;
responding to GST notices; or
continuity of business operations.

How long can documents and books be retained?

Section 67(2) permits retention only for so long as necessary for examination and for inquiry or proceedings under the Act.

Section 67(3) adds a specific return obligation: documents, books or things that are not relied upon for issuance of notice must be returned within a period not exceeding thirty days from issuance of the notice.

This creates a useful post-search audit question: once a show cause notice has been issued, which seized materials are actually relied upon, and which must now be returned?

Provisional release of seized goods: Section 67(6) and Rule 140

Section 67(6) allows provisional release of seized goods on execution of a bond and furnishing security in the prescribed manner, or on payment of applicable tax, interest and penalty, as the case may be.

Rule 140 provides for:

a bond for the value of the goods in FORM GST INS-04; and
security in the form of a bank guarantee equivalent to the applicable tax, interest and penalty payable.

Where business stock is commercially critical, a provisional release application should ordinarily address:

ownership and value of goods;
nature of alleged discrepancy;
risk of deterioration or market loss;
business hardship;
availability of security; and
undertaking to produce the goods if legally required.

Six-month rule for seized goods: Section 67(7)

Section 67(7) provides an important temporal safeguard. If goods are seized and no notice in respect of the goods is issued within six months of seizure, the goods are to be returned to the person from whose possession they were seized.

The proviso permits extension for a further period not exceeding six months on sufficient cause. Therefore, the record should be checked for:

exact date of seizure;
whether a notice was actually issued in respect of those goods;
whether an extension order exists;
whether sufficient cause was recorded; and
whether the goods remain in custody beyond the statutory period.

Perishable or hazardous goods: Rule 141

Rule 141 contains a special procedure for perishable or hazardous goods. It permits release on payment of the lower of the market price or the tax, interest and penalty that is or may become payable, and also provides a disposal mechanism if payment is not made.

Can cash be seized during a GST search?

The seizure of cash under Section 67(2) has generated divergent litigation because the statutory expression is “goods or documents or books or things”. Several High Courts have had to consider whether cash found during search can be treated as a “thing” liable to seizure, particularly where cash itself is not alleged to be goods liable to confiscation.

The legally safer position is that cash seizure cannot be treated as automatic merely because currency is found during a search. The authority must be able to connect the proposed seizure to the statutory language and investigative purpose. The issue remains fact-sensitive and court-specific, especially where the Department alleges that cash is directly connected with unaccounted supplies or evidentiary material.

Any challenge should examine the seizure memo, reasons recorded, connection between cash and alleged tax evasion, and the jurisdictional High Court’s current precedent.

Can tax be forced to be paid during search?

No search power authorises coercive collection. A payment through DRC-03 may be described as voluntary, but a taxpayer can contest whether it was truly voluntary where the surrounding facts show threat, unlawful detention, denial of access, or other coercive circumstances.

Businesses should record contemporaneously:

time and circumstances of payment;
who instructed or demanded payment;
whether any written liability computation was supplied;
whether the taxpayer asked for time to reconcile records;
whether the premises or persons were allowed to leave; and
whether protest was lodged immediately afterwards.

The issue was directly raised in Bhima Enterprises, where the petitioner alleged that substantial tax was extracted during the search while the Department described the payment as voluntary. The case illustrates why contemporaneous documentation is critical.

DIN requirement for search authorisation

CBIC Circular No. 122/41/2019-GST dated 5 November 2019 introduced the Document Identification Number system to strengthen transparency and create an audit trail for communications including search authorisations, summons, arrest memos and inspection notices.

The general rule is that covered communications should bear a computer-generated DIN prominently. Limited exceptional situations are recognised by the CBIC framework, but reasons must be recorded and the prescribed post-facto procedure followed.

In Bhima Enterprises, the Madras High Court examined the DIN issue in detail while considering the validity of the search process. The practical takeaway is to verify the DIN immediately and preserve the result of verification.

Section 67(10): criminal-procedure safeguards

Section 67(10) applies the provisions of the Code of Criminal Procedure relating to search and seizure, so far as may be, subject to the statutory modification concerning the authority to whom the record is sent. After the commencement of the Bharatiya Nagarik Suraksha Sanhita, 2023, the procedural framework must be read with the current criminal-procedure law and corresponding statutory adaptations.

The provision reinforces a broader point: GST search is a statutory coercive power governed by procedure, not an informal inspection exercise.

Recent 2026 case law on Section 67

Case	Court / Date	Key point
M/s Bhima Enterprises v. Principal Chief Commissioner of GST	Madras High Court (Madurai Bench), 5 Aug 2026	Inspection, search and seizure are distinct; reasons to believe are a condition precedent; mechanical composite authorisation can show lack of application of mind; DIN and search safeguards examined.
Sri Surendra Sharma v. State of Assam	Gauhati High Court, 10 Aug 2026	Section 67(4) sealing/breaking power is linked to denial of access and cannot be converted into indefinite sealing after the search has culminated.
M/s Murliwala v. Union of India	Rajasthan High Court, 20 Apr 2026	Examines Section 67 authorisation and the jurisdictional importance of reasons to believe.
Smruti Waghdhare v. Joint Director, DGGI	Bombay High Court, 10 Mar 2026	Reiterates that the statutory ingredients of Section 67(2) are conditions for exercise of search power and are amenable to judicial scrutiny.
Additional Commissioner of Central Tax v. Vigneshwara Transport Company	Karnataka High Court, 11 Mar 2026	Illegal-search objections do not necessarily create an automatic exclusionary rule for otherwise relevant evidence; adjudicatory objections remain fact-sensitive.

Can an illegal search invalidate all later GST proceedings?

Not necessarily. A challenge to the legality of a search and a challenge to the evidentiary use of material found during that search are related but distinct questions.

Indian law does not generally apply an automatic exclusionary rule under which every piece of relevant evidence becomes inadmissible solely because of an illegality in the search process. Courts may still examine:

whether the search itself was without jurisdiction;
whether consequential coercive orders must be set aside;
whether evidence is otherwise relevant and admissible;
whether principles of natural justice were followed in the later show cause and adjudication proceedings; and
whether the taxpayer had a proper opportunity to rebut the material.

This distinction is reflected in the 2026 decision concerning Vigneshwara Transport Company.

Parallel Central and State GST investigation

A Section 67 search may also raise a separate jurisdictional issue where another GST authority has already acted on the same taxpayer or subject. The Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate, 2025 INSC 982, clarified the scope of Section 6(2)(b) and held that investigation or summons cannot simply be equated with adjudicatory “proceedings” for every purpose.

The judgment is important because a taxpayer cannot assume that an earlier State inquiry automatically bars every Central intelligence-based search or summons. The exact nature and subject matter of the earlier and later action must be compared.

For the connected investigation framework, see our article on GST Summons Under Section 70 & Arrest Under Section 69.

What should a business do when GST officers arrive?

Verify identity and authorisation. Ask to see official identification and GST INS-01.
Verify the premises. Confirm that the address being searched is covered by the authorisation.
Verify DIN. Preserve the communication and verification details.
Inform responsible management and legal/tax advisers.
Do not obstruct a lawful search. Obstruction can create separate legal consequences.
Do not volunteer speculation. Answer factual questions accurately and distinguish personal knowledge from assumptions.
Preserve the panchnama and inventory.
Record devices and documents taken. Note serial numbers, storage media and descriptions.
Do not sign blank or inaccurate documents.
Do not create, alter or destroy records.
Document any payment made. Record whether it was voluntary and the basis supplied by the Department.
Request copies needed for business continuity.
After the search, prepare a chronology immediately. Record arrival/departure times, officers present, rooms searched, documents taken, statements recorded and payments made.

Post-search legal checklist

Was the authorising officer of the prescribed rank?
Was the action inspection under Section 67(1) or search under Section 67(2)?
Does the authorisation identify the correct premises?
Was the DIN valid or was an exception lawfully invoked?
Was a panchnama prepared?
Was GST INS-02 issued for seized goods/documents/things?
Was an inventory signed?
Were electronic devices properly described?
Was access actually denied before Section 67(4) powers were used?
Were premises sealed after the search ended, and if so on what statutory basis?
Were payments made during the search?
Were statements recorded under Section 70?
Is provisional release appropriate under Section 67(6)/Rule 140?
Has the six-month period under Section 67(7) expired?
After issuance of notice, which documents are not relied upon and must be returned under Section 67(3)?

When is a writ petition under Article 226 maintainable?

High Courts ordinarily exercise restraint during ongoing tax investigation. However, writ jurisdiction may be invoked where the complaint goes to the root of jurisdiction or fundamental procedural legality, for example:

absence of statutory reasons to believe;
search by or on authorisation of an incompetent officer;
search of premises not covered by the authorisation;
continued sealing without statutory authority;
retention beyond statutory limits;
failure to release material despite a clear statutory entitlement;
coercive recovery;
violation of fundamental procedural safeguards; or
manifest abuse of search power.

The existence of an alternative remedy does not invariably bar a writ where the challenge is to jurisdiction, natural justice or a patently unlawful coercive action. But where the dispute concerns factual tax liability, classification, valuation or evidentiary appreciation, the statutory adjudication and appellate route may be the stronger forum.

How search connects with demand proceedings

A search does not itself crystallise a tax demand. The Department must still follow the applicable demand and adjudication provisions. For FY 2024-25 onward, Section 74A is central to the demand framework.

If an appealable order is eventually passed, the statutory first appeal lies under Section 107, subject to limitation and pre-deposit requirements. See GST Appeal Under Section 107.

Frequently asked questions

Can GST officers enter without giving prior notice?

Yes, a lawfully authorised search is ordinarily a surprise action. Prior notice is not a statutory prerequisite to a Section 67(2) search.

Must officers show the search authorisation?

The taxpayer is entitled to verify that the officers are acting pursuant to lawful authority. The authorisation, identity of officers, premises covered and DIN should be checked and documented.

Can officers take my mobile phone?

A device may be seized if the statutory conditions of Section 67(2) are met and the device is treated as relevant material. Indefinite retention should not be assumed to be automatic. A request for forensic imaging/copying and return may be appropriate where business operations are affected.

Can officers break open a laptop or almirah?

Section 67(4) permits breaking open an electronic device, almirah, box, receptacle or premises where access is denied during a lawful search. The denial-of-access condition is significant.

Can officers seal my office for days after the search?

Continued sealing requires legal authority. The Gauhati High Court’s 10 August 2026 decision in Sri Surendra Sharma is important authority against treating Section 67(4) as a continuing power to keep premises sealed after the search has culminated.

How long can seized goods be retained without notice?

Ordinarily six months under Section 67(7), subject to a possible extension of up to another six months on sufficient cause.

Can I obtain provisional release?

Yes. Section 67(6) read with Rule 140 provides a statutory route through bond/security or payment, as applicable.

Can I obtain copies of seized documents?

Section 67(5) provides a right to make copies or extracts in the presence of an authorised officer, except where the proper officer considers that doing so would prejudicially affect the investigation.

Does an illegal search automatically destroy the tax case?

No. Search legality and admissibility/use of evidence are distinct questions. Courts may set aside unlawful coercive action while still permitting legally admissible material to be examined in proper adjudication.

Can I refuse to cooperate because I believe the search is illegal?

Physical obstruction is usually a poor legal strategy. The safer course is to record objections, preserve evidence of procedural defects, cooperate without waiving legal rights, and challenge the action before the appropriate forum.

Key takeaways

Section 67 is a structured coercive power, not an open-ended inspection power.
“Reasons to believe” is a jurisdictional safeguard.
Inspection under Section 67(1) and search under Section 67(2) require distinct analysis.
GST INS-01, GST INS-02 and GST INS-03 should be carefully examined.
Section 67(4) sealing/breaking powers are tied to denial of access.
Businesses should document every item and device taken during search.
Section 67(5), (6) and (7) create important rights concerning copies, provisional release and return of seized goods.
DIN compliance remains a significant transparency safeguard.
Coercive tax collection during search is legally vulnerable.
Recent 2026 High Court decisions show increasing judicial scrutiny of mechanical authorisations and prolonged coercive measures.

Authoritative sources

This article is intended for general legal education and GST compliance awareness. It does not constitute solicitation, advertisement or case-specific legal advice. Search, seizure, investigation and writ remedies depend on the exact authorisation, statutory record, jurisdiction and facts of the case.

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