GST Search, Summons, Arrest and Attachment: Limits on Department Powers

GST Investigations: Search, Summons, Arrest and Provisional Attachment — How Far Can the Department Go?

Summary: The Central Goods and Services Tax Act, 2017 arms the department with inspection and search under Section 67, summons under Section 70, arrest under Section 69 and provisional attachment of property under Section 83 — each exercisable on the officer’s own satisfaction, and each capable of being invoked long before any demand is confirmed. This article maps the outer limits the Supreme Court and the High Courts have drawn around those powers, including the Gauhati High Court’s judgment of 22 June 2026 quashing a DGGI bank-account attachment, and sets out, power by power, the remedies available to a taxpayer confronted with an order that recites the statute without disclosing the material behind it.

I. Introduction

Investigation under the GST law is, in practice, the stage at which a taxpayer first feels the weight of the statute. Premises are visited, records and devices are carried away, statements are recorded on oath, bank accounts are frozen — and all of this may happen before a single show-cause notice is issued and long before any adjudicating authority has pronounced on liability.

Each of these powers is conferred in subjective terms: “reasons to believe”, “is of the opinion”, “necessary to protect the interest of government revenue”. That drafting makes the identification of their outer limits a matter of immediate professional importance rather than academic interest, because the only meaningful check on a subjectively exercisable power is the record on which it was exercised.

Over the last four years the Supreme Court and several High Courts — most recently the Gauhati High Court in a judgment delivered in June 2026 — have steadily supplied that check. What follows is a survey of the resulting architecture, the consequences of its breach, and the remedies a taxpayer may pursue.

II. The Statutory Architecture of Investigation

Four provisions do the bulk of the work. Section 67 permits a proper officer, on the authorisation of an officer not below the rank of Joint Commissioner who has “reasons to believe” that a taxable person has suppressed a transaction or availed excess input tax credit, to inspect any place of business and to seize goods liable to confiscation as well as documents, books or things “useful for or relevant to any proceedings” under the Act. Where goods are seized and no notice issues within six months — extendable by a further six months on sufficient cause — Section 67(7) obliges the department to return them.

Section 70 empowers a proper officer to summon any person to give evidence or produce documents “in the same manner as provided in the case of a civil court” under the Code of Civil Procedure, 1908, and Section 70(2) deems the resulting inquiry a “judicial proceeding” for the purposes of Sections 193 and 228 of the Indian Penal Code, 1860. Section 69 permits arrest on the Commissioner’s reasons to believe that a person has committed an offence made cognizable and non-bailable by Section 132(5) — broadly, evasion or wrongful availment of input tax credit exceeding ₹5 crore. Section 83 permits the Commissioner, during the pendency of proceedings under the sections it enumerates, to provisionally attach property including a bank account where he is of the opinion that it is necessary to do so to protect the interest of government revenue, the attachment ceasing to operate after one year under Section 83(2).

Table 1: The four investigative powers at a glance

III. Search and Seizure: The Limits Drawn in Deepak Khandelwal

The reach of the seizure power came to be tested when officers searching a Delhi trader’s residence in January 2020 carried away not only silver bars but ₹7 lakh in cash.

The Delhi High Court held — and the Supreme Court affirmed in 2024 by dismissing the department’s special leave petition in Commissioner of CGST v. Deepak Khandelwal — that the CGST Act confers no power to seize currency in the course of a search unless the currency is shown to bear a direct nexus with GST evasion. Two strands of reasoning carry the ruling. First, “goods” as defined in Section 2(52) expressly excludes money. Second, the residuary category of “things” seizable under Section 67(2) must be read ejusdem generis with “documents” and “books”, and is therefore confined to items of evidentiary value — ledgers, invoices, electronic devices — and not to currency or bullion held merely on a suspicion of unaccounted wealth.

Section 67, the Court was emphatic, “is not a mechanism for revenue recovery” but an instrument for investigating evasion; jurisdiction over unexplained wealth as such lies with the income-tax authorities. On the facts, no notice having been issued in respect of the seized items within the Section 67(7) window, the department was bound to return them.

Practical point: the ruling has since been followed by other High Courts, including in Arvind Goyal CA v. Union of India, and is the operative check on a search that drifts from investigating a specific GST irregularity into a general trawl for unaccounted assets. A panchnama that records the seizure of cash or bullion, without a contemporaneous record connecting it to a specific evasion, is vulnerable on writ from the day it is drawn.

IV. Arrest Under Section 69: Validity Upheld, Exercise Circumscribed

The constitutional validity of the arrest power under Section 69 of the CGST Act, and of its counterpart under the Customs Act, 1962, was settled by a three-Judge Bench of the Supreme Court in Radhika Agarwal v. Union of India, 2025 INSC 272, decided on 27 February 2025 (per Khanna, C.J., with Trivedi, J. concurring separately).

The petitioners, tracing the challenge to the Court’s earlier decision in Om Prakash v. Union of India, contended that the progressive amendments rendering certain offences cognizable and non-bailable had made the arrest power constitutionally infirm in the absence of a magistrate’s prior warrant. The Court rejected the challenge, holding that the powers to summon, arrest and prosecute under Sections 69 and 70 are ancillary and incidental to Parliament’s plenary power to levy and collect goods and services tax under Article 246-A, and fall within the pith and substance of that entry.

The power was upheld, but not left unqualified. The Court held that an arrested person’s right to consult an advocate permits the advocate to remain within visual distance during interrogation, though not within hearing distance and not so as to permit consultation while the interrogation is in progress. It clarified that a person merely summoned under Section 70 does not thereby become an “accused”, and cannot invoke Article 20(3) of the Constitution, that protection attaching only once a formal accusation exists.

Most significantly for practitioners, the Court held that a person subjected to threat, force or coercion in the course of such proceedings “would be entitled to move the courts and seek a refund of tax deposited” under duress, with departmental action to follow against the officers concerned — a remedy since invoked in several High Courts to recover amounts paid during coercive investigation. Trivedi, J., in her concurrence, cautioned that judicial review of an arrest under these special statutes must be exercised “very cautiously and in rare circumstances”, reserved for manifest arbitrariness or gross non-compliance with statutory safeguards rather than deployed as a routine avenue of challenge.

Practical point: the deposit made “voluntarily” at the close of a long day of questioning is now squarely recoverable, provided the circumstances of coercion are documented at the time — by contemporaneous letter, retraction of statement, or complaint — and not reconstructed months later.

V. Provisional Attachment: Radha Krishan Industries and its Application in Assam

The most exacting judicial check on departmental power remains M/s Radha Krishan Industries v. State of Himachal Pradesh, Civil Appeal No. 1155 of 2021, decided on 20 April 2021, in which the Supreme Court described the power of provisional attachment under Section 83 as “draconian in nature”, attracting serious civil consequences, and held that its statutory conditions must be strictly fulfilled and not liberally construed in the department’s favour.

Three propositions emerge. First, the Commissioner’s opinion that attachment is necessary to protect revenue cannot rest on unguided subjective discretion; it must bear a proximate and live nexus to that protective purpose and be founded on tangible material rather than apprehension. Second, attachment is permissible only during the actual pendency of proceedings under one of the sections Section 83 enumerates — on the facts of that case, the notice under Section 74 postdated the attachment order, and the attachment was accordingly held ultra vires. Third, a writ petition under Article 226 lies against such an order notwithstanding the appellate mechanism, since a Joint Commissioner exercising the Commissioner’s delegated power is not an “adjudicating authority” within the meaning of Section 107.

That standard has found direct and recent application closer to home. In M/s Shri Petro Chemical Mercantile Pvt. Ltd. v. Union of India, decided by the Gauhati High Court on 22 June 2026, the petitioner’s account with Punjab and Sind Bank, Dimapur, had been provisionally attached by an order of the Directorate General of GST Intelligence dated 27 February 2026, disrupting the company’s operations including the payment of salaries. The impugned order stated only that the account was being attached “to protect government revenue”, disclosing no material and no reasoning beyond that bare recital.

Applying Radha Krishan Industries, the Gauhati High Court held that Section 83 confers an extraordinary power whose preconditions — formation of opinion on relevant material, demonstrable necessity, and a written and reasoned order — must be strictly complied with, and that an order which merely reproduces the statutory language without disclosing the formation of any independent satisfaction reflects a mechanical exercise of power that cannot be sustained in law. The attachment was quashed and the bank directed to defreeze the account with immediate effect.

Practical point: recitation of the formula “necessary to protect the interest of revenue” is not compliance. The file must show the material on which the opinion was formed, and that material must be capable of surviving scrutiny. The first step on receiving an attachment intimation is therefore to call for the order itself and, where reasons are absent, to place that absence on record at once.

VI. Summons Under Section 70: The Department’s Own Discipline

Concerned at the routine issuance of summons to senior corporate officers for material obtainable by less intrusive means, the Central Board of Indirect Taxes and Customs issued Instruction No. 03/2022-23 (GST-Investigation) dated 17 August 2022. Its principal directions are these:

• A summons issued by a Superintendent requires the prior written permission of an officer not below the rank of Deputy or Assistant Commissioner, with reasons recorded in writing; in urgent cases, oral permission must be reduced to writing thereafter.
• Summons ought not to be issued merely to obtain statutory records such as GSTR-1 and GSTR-3B that are already available on the common portal.
• Senior management — the Managing Director, Chief Executive Officer or Chief Financial Officer — should not ordinarily be summoned in the first instance, absent clear indication of personal involvement in the decision-making that caused the alleged revenue loss.
• Repeated summons — generally beyond three, issued at reasonable intervals, without compliance — should be followed by a complaint under Sections 172 and 174 of the Indian Penal Code, 1860, rather than by indefinite reissuance.

The Document Identification Number mandated by Circular No. 122/41/2019-GST and the format prescribed by Circular No. 128/47/2019-GST apply equally to summons, giving a recipient an immediate means of verifying authenticity. A summons bearing no DIN, or issued without the required approval, is a proper subject of representation before it is a subject of compliance.

VII. Consequences of Non-Compliance and the Remedies Available

Where these safeguards are breached, the consequences run in the taxpayer’s favour along several distinct tracks. The table below maps the common departmental defect to the remedy and its source.

Table 2: Common departmental defect and the corresponding remedy

VIII. Practical Takeaways for Taxpayers and Counsel

1. Ask for and retain the authorisation. An inspection or search under Section 67 must be preceded by written authorisation in Form GST INS-01 by an officer not below the rank of Joint Commissioner. Take a copy before the search proceeds.

2. Insist on a complete panchnama and inventory. Anything seized that is not a book, document or thing of evidentiary value — and cash and bullion in particular — should be recorded as objected to at the time of seizure.

3. Diarise the Section 67(7) date. Six months from the date of seizure, extendable by six months on recorded sufficient cause; absent a notice within that period, return is a statutory obligation and not a concession.

4. Treat a summons as a summons, not a demand. Appear or seek accommodation, produce what is called for, and object in writing where the summons seeks records already on the portal, lacks a DIN, or is directed at senior management in the first instance.

5. Deposit nothing during a search or interrogation without a considered decision. Where a deposit is made under pressure, record the circumstances contemporaneously — Radhika Agarwal makes the refund remedy real, but it turns on the record made at the time.

6. Read the attachment order, not merely the bank’s intimation. If the order recites the statutory formula without disclosing material, file the Rule 159(5) objection within seven days and prepare the writ in parallel.

7. Move early. The rulings surveyed above are strongest at the threshold — against a mechanical order, a nexus-less seizure, or a summons issued in breach of binding instructions — and lose force once the proceeding has matured into a contested demand.

IX. Conclusion

The cumulative effect of these decisions is to confirm that the investigative powers under the CGST Act, however broadly worded, are not exercisable on ipse dixit. Search must connect to a specific evasion and does not license a general seizure of assets. Arrest, though constitutionally valid, carries procedural safeguards a court will enforce where they are manifestly disregarded. Provisional attachment demands a reasoned, material-backed opinion rather than a formulaic order. And summons are subject to the department’s own calibrated internal discipline, which the courts have been willing to hold officers to.

The practical lesson of the Gauhati High Court’s recent intervention is a narrow one, and all the more useful for being narrow: invoking the language of the statute in an attachment or search order is not a shield against judicial review. The underlying file, and the material it does or does not contain, remains decisive. A taxpayer facing an investigative measure that recites the statute without demonstrating the substance behind it has a real, and increasingly well-charted, remedy before the High Court.

Disclaimer: This article is intended for general information on the law as it stands on the date of writing. It does not constitute legal advice on any specific matter, and no reliance should be placed on it without independent professional advice on the facts of a particular case. The views expressed are personal.

References

• “Supreme Court Upholds Constitutional Validity Of ‘Power To Arrest’ Provisions Under Customs Act & GST Acts,”Verdictum, on Radhika Agarwal v. Union of India, 2025 INSC 272
• “SC Rules Out Cash Seizure in GST Cases,”N J Jain & Associates, on Commissioner of CGST v. Deepak Khandelwal
• “Section 83: Provisional attachment under GST & latest SC Judgment,”TaxGuru, on M/s Radha Krishan Industries v. State of Himachal Pradesh
• “Mere reproduction of statutory language is insufficient; the authority must demonstrate application of mind and existence of material justifying provisional attachment,”online, 25 June 2026, on M/s Shri Petro Chemical Mercantile Pvt. Ltd. v. Union of India(Gauhati High Court)
• “Guidelines on issuance of summons under Section 70 of the CGST Act, 2017,”TaxGuru, on CBIC Instruction No. 03/2022-23, dated 17 August 2022