GST Inspection, Search and Seizure in India (2025): Section 67 Powers, Taxpayer Rights, Forms INS-01/02/03, Cash Seizure, Statements and Practical Safeguards
Introduction –
Inspection, search and seizure under GST is an issue no taxpayer wants to experience. The fear largely comes from lack of awareness—what the law permits the department to do, what protections a taxpayer has, and what actions are not legally sustainable during a search. Common questions arise such as whether cash found during search can be seized, whether tax can be recovered on the spot, and how far officers can go with documents, goods, CCTV, and statements.
This article sets out a practical, compliance-focused understanding of inspection, search and seizure under GST, keeping the focus on statutory powers, prescribed forms, and key safeguards a taxpayer should know.
Main Discussion –
1) Who can conduct GST search and why it can be conducted by Central or State teams
GST is administered through two departments—Central GST and State GST—each having enforcement agencies. These enforcement agencies are cross-empowered, meaning a search or seizure can be conducted by Central or State enforcement even if the taxpayer is registered under the other jurisdiction. Therefore, jurisdiction should not be treated as a comfort point at the time of enforcement action.
2) Core legal power: Section 67 for inspection and for search & seizure
Section 67 is the foundation for these actions:
- Section 67(1) provides power for inspection where a proper officer not below the rank of Joint Commissioner has reason to believe there is suppression of transactions, suppression of tax, excess availment of input tax credit, or contravention leading to tax evasion. Only then can authorization be issued for inspection.
- Section 67(2) provides power for search and seizure where there is reason to believe that goods liable for confiscation or documents/books/things relevant for proceedings are secreted at a place. Again, the officer not below Joint Commissioner must have reason to believe and can authorize a search and seizure.
- A critical compliance point is the meaning of “reason to believe.” It is not the same as reason to doubt or reason to suspect. It must be based on proper information and documentation. This is important because inspection/search is a strong investigation tool and can impact privacy and business liberty, so the threshold must be applied with caution.
3) Authorization must be specific: Form INS-01 and correct premises
Authorization is issued in Form INS-01, which specifies the officer authorized, the taxpayer, the premises, and whether it is for inspection or search. The named officer must conduct the action along with the team; authorization in one officer’s name cannot be executed by another officer without that officer being present.
Also, authorization is premises-specific. If a different premises (for example, a separate godown) is discovered, a separate authorization is required for that premises. The team cannot shift to another location merely because information emerges during search.
4) What can be seized: goods, documents, books and “things”
At the time of search, officers may seize:
- Goods that are liable for confiscation (confiscation is discussed with reference to Section 130), and
- Documents, books and things that are necessary for proceedings.
Seizure is documented through Form INS-02, specifying what is being seized.
If physical seizure is not practical due to volume, high value, or other reasons, an order of prohibition may be issued in Form INS-03, treating the taxpayer as custodian and restricting dealing in the goods until the prohibition is lifted. Practically, if prohibition is applied excessively (for example, on entire stock when the issue is only an alleged excess portion), the taxpayer should immediately challenge and request restriction only to the portion allegedly liable.
5) Cash/jewellery and on-the-spot recovery: key limitations
A key issue discussed is that money is not covered within “goods”, and “things” refers to items that provide information relevant to proceedings (such as storage devices). Therefore, cash or jewellery found during GST search is not to be seized under this power, and if unaccounted, the correct department for that aspect is different.
Similarly, Section 67 is not a recovery provision. It authorizes inspection/search, not on-the-spot tax recovery. Recovery follows separate provisions and is not meant to be enforced as a spot action merely because a search is ongoing.
6) Copies of seized records, CCTV, and statements during search
If documents/books/devices are seized and the taxpayer needs them for ongoing business, the taxpayer can request copies. The officer may allow copies and record it in the panchnama, or may refuse at discretion where sharing is not considered appropriate.
Regarding CCTV, there is no prohibition under law that allows officers to direct disconnection of CCTV cameras merely because a search is being conducted. Search is a legal process, and the discussion also refers to guidelines indicating videography may be conducted in sensitive premises, which supports that recording is not inherently barred.
On statements and spot summons, summons power is linked to Section 70, and the principle highlighted is that reasonable time should be given; “spot summons” and immediate statement recording during a search is a matter that can be challenged on legal and procedural grounds where it violates this principle.
Practical Impact / Expert View –
The purpose of inspection/search/seizure is to unearth potential tax evasion and gather evidence, not to convert the event into immediate recovery. The strongest protection for a taxpayer is awareness of procedural compliance: insist on proper authorization in INS-01, verify the named officer and the exact premises, ensure seizure is recorded in INS-02, and where physical seizure is impractical, ensure INS-03 is not applied in an overbroad manner. Equally important is maintaining calm, documenting events properly through panchnama, requesting copies of essential records, and avoiding hurried statements without reasonable time or clarity.
Conclusion – key takeaways –
- GST search can be conducted by Central or State enforcement due to cross-empowerment.
- Section 67 requires “reason to believe,” not suspicion; it must be based on information and documentation.
- Authorization is in Form INS-01 and is officer- and premises-specific; separate premises need separate authorization.
- Seizure is recorded in INS-02; prohibition/custody orders are in INS-03 and should not be applied excessively.
- Cash/jewellery are not to be seized under GST search powers, and search is not meant for spot tax recovery.
- You can request copies of seized records; CCTV disconnection has no stated legal prohibition; spot statements without reasonable time can be challenged.
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