GST Section 151 Does Not Authorise Physical Inspection Without Statutory Safeguards

Summary: Section 151 of the Central Goods and Services Tax Act, 2017, empowers the Commissioner or an authorised officer to require a person, by an order, to furnish information concerning matters covered by the Act. This article examines whether that provision can justify routine physical visits by State Tax officers to brick kilns, including counting bricks, examining coal stocks, recording labour deployment and collecting signatures from persons present at the premises. The author argues that Section 151, substituted with effect from 1 January 2022, provides a mechanism for calling for information but does not independently authorise entry, inspection or physical stock verification. The discussion distinguishes Section 151 from Sections 65, 67 and 71, which prescribe specific procedures and safeguards for audits, inspections and access to business premises. It examines the requirement of authorisation by an officer not below the rank of Joint Commissioner, the statutory conditions governing reasons to believe, and judicial principles requiring public authorities to exercise powers in the manner prescribed by law. Decisions of the Supreme Court and various High Courts are discussed concerning defective search authorisations, colourable exercise of power, privacy protections and coercive GST enforcement. The article also examines Section 152, which restricts the use of information obtained under Section 151 in proceedings without providing the person concerned an opportunity of being heard. Its central contention is that the department cannot bypass statutory inspection safeguards by describing physical verification as information collection under Section 151. The implications for GST demands based on unauthorised visit reports, particularly proceedings under Section 74, are also considered.

A POWER TO ASK, NOT A LICENCE TO ENTER
Section 151 of the GST Acts and the unauthorised physical visit: a study in jurisdiction

I. The Problem On The Ground

Any practitioner who handles brick kiln matters in western Uttar Pradesh will recognise the pattern. An officer of the State Tax department arrives at the kiln, usually without notice and often every month. He counts the rounds of bricks in the pathai, looks at the coal heap, notes the number of labourers, takes a signature from whoever is present at the site and leaves. Asked under what authority he has come, the answer is either silence or a reference to “Section 151”. Months later, the notes of these visits reappear as the foundation of a demand under Section 74, with turnover worked out on a coal ratio and the visit report cited as the material on record.

This article examines whether Section 151 can bear that weight. The submission is that it cannot. Section 151 is a power to call for information by a written order addressed to a person. It confers no right of entry, inspection, counting or stock taking. Every power of entry that the Act does confer is placed behind the authorisation of an officer not below the rank of Joint Commissioner. A visit made in the name of Section 151 is, therefore, a visit made without jurisdiction, and material gathered in it is subject to the statutory bar in Section 152.

II. What Section 151 Says Today

The provision as originally enacted was a power to collect statistics. By notification, the Commissioner could direct that statistics be collected on any matter dealt with by the Act, and the Commissioner or an authorised person could then require the concerned persons to furnish information or returns in the prescribed form.

That text no longer exists. Section 119 of the Finance Act, 2021 substituted the section with effect from 01.01.2022 (Notification No. 39/2021 Central Tax dated 21.12.2021). Under the heading “Power to call for information”, it now reads:

“151. The Commissioner or an officer authorised by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form and in such manner, as may be specified therein.”

The corresponding provision of the Uttar Pradesh Goods and Services Tax Act, 2017 stands in the same terms. Four things follow from the language itself.

(i) The power is exercised by an order. An oral direction at the factory gate is not an exercise of the power at all.

(ii) The order is addressed to a person, who is directed to furnish information. The obligation is placed on the taxpayer to supply; the officer is the recipient. The section does not authorise the officer to go and take the information himself.

(iii) The order must specify the time, form and manner of compliance. A requirement that compliance be within a specified time presupposes that the person is given time, which is the antithesis of an on-the-spot inspection.

(iv) The words entry, access, inspection, search, verification of stock and premises are all absent. When Parliament rewrote the section in 2021, it had the inspection and access provisions of the same Act before it and chose not to borrow a single word from them.

The amended section is, in truth, narrower than the old one in one respect that matters: it now requires a written order before anything at all can be demanded. A visit unsupported even by such an order fails on the very terms of Section 151, quite apart from the question of entry.

III. Where The Act Does Permit Entry, And On What Conditions

The Act is not silent on physical entry. It addresses it through specific provisions, each with its own safeguard.

(a) Section 65 (audit by tax authorities) permits audit at the place of business or in the office of the officer, but only after notice in FORM GST ADT-01 at least fifteen working days in advance (Section 65(3) read with Rule 101).

(b) Section 66 (special audit) operates through a chartered accountant or cost accountant nominated with the previous approval of the Commissioner.

(c) Section 67(1) permits inspection of any place of business only where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that the taxable person has suppressed a transaction of supply or stock, claimed excess input tax credit, or contravened the Act to evade tax. The authorisation is issued in FORM GST INS-01 under Rule 139.

(d) Section 71(1) gives an officer access to a place of business of a registered person, but only when he is “authorised by the proper officer not below the rank of Joint Commissioner”, and only “to inspect books of account, documents, computers, computer programs, computer software … and such other things as he may require” for audit, scrutiny, verification and checks.

The common thread is plain. The legislature has placed every entry into a taxpayer’s premises behind either a prior written notice or the authorisation of an officer of the rank of Joint Commissioner, and for inspection under Section 67 it has added the further condition of recorded reasons to believe. The scheme leaves no room for a routine entry by a field officer on his own motion.

That this applies to inspection and not merely to search was recently stated by the Karnataka High Court in M/s Bee Jay Engineers v. Commercial Tax Officer, W.P. No. 106642 of 2025, decided on 16.09.2025.* The Court held that an officer below the rank of Joint Commissioner cannot by himself inspect the premises of a taxable person without authorisation from the Joint Commissioner, and that the inspecting officer must at least inform the taxable person that such authorisation has been received. On the facts the authorisation existed and the petition failed, but the principle is of direct application to the kiln visit.

IV. A Thing To Be Done In A Certain Way Must Be Done In That Way Or Not At All

The rule in Taylor v. Taylor (1875) 1 Ch D 426, adopted by the Privy Council in Nazir Ahmad v. King Emperor, AIR 1936 PC 253, and followed by the Supreme Court in State of U.P. v. Singhara Singh, AIR 1964 SC 358 and Babu Verghese v. Bar Council of Kerala, (1999) 3 SCC 422, is that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all, and other methods of performance are necessarily forbidden.

Applied here, the rule is decisive. Physical inspection of business premises is a thing the GST Acts permit to be done in particular ways: under Section 67 on the Joint Commissioner’s reasons to believe, under Section 71 on his authorisation, or under Section 65 after notice. It cannot be done in a fourth way, through a section that does not mention it. The maxim expressio unius est exclusio alterius points to the same result.

There is a second rule of construction that supports the conclusion. A statute is read as a whole, and a construction that renders another provision of the same statute redundant is to be avoided. If Section 151 permitted a field officer to enter, count and record on his own authority, the Joint Commissioner’s authorisation in Sections 67 and 71 would serve no purpose, because no officer would ever need it. Parliament cannot be taken to have enacted safeguards in one chapter only to dissolve them in another.

V. The Joint Commissioner’S Satisfaction Is A Jurisdictional Fact

The requirement of reasons to believe is not a formality. In ITO v. Lakhmani Mewal Das, (1976) 3 SCC 757, the Supreme Court held that the reasons must have a rational connection with, or relevant bearing on, the formation of the belief, and must not be extraneous or irrelevant. In the context of search, ITO v. Seth Brothers, (1969) 2 SCC 324 held that the power does not confer arbitrary authority on revenue officers and that the Court may examine whether the conditions for its exercise existed. Dr. Partap Singh v. Director of Enforcement, (1985) 3 SCC 72 *stated the same approach for the enforcement of search powers under a fiscal statute.

The Allahabad High Court has applied that law with full rigour under the GST Acts. In M/s Excellentvision Technical Academy Pvt. Ltd. v. State of U.P., Writ Tax No. 554 of 2023, decided on 20.05.2024,* the INS-01 produced by the department carried no reasons to believe, two authorisations of different dates were found on record, and the Court regarded the document as created as an afterthought. All proceedings arising from the search were quashed, seized goods and documents were directed to be released, and amounts deposited were directed to be refunded.

If a search made under a defective INS-01 cannot survive, an inspection made with no INS-01 at all, under a section that does not permit inspection, stands on weaker ground still. The kiln visit under Section 151 is not a defective exercise of the Section 67 power; it is an exercise of a power that does not exist. In the language of administrative law, the officer is coram non judice.

VI. The Exercise Of Power

Where an authority invokes one power to achieve a result that the law allows only through another, more guarded, power, the action is a colourable exercise of power. The Supreme Court in State of Punjab v. Gurdial Singh, (1980) 2 SCC 471 described this as a fraud on power, where the power is used for a purpose other than the one for which it was conferred. Kalabharati Advertising v. Hemant Vimalnath Narichania, (2010) 9 SCC 437 clarified that malice in law does not need personal ill will; it is enough that a power is exercised for an unauthorised purpose or without lawful excuse.

A monthly physical visit recorded as a Section 151 action fits that description closely. The purpose is to secure what only Section 67 or Section 71 could lawfully secure, namely the officer’s presence on the premises and his own record of stock and production, while avoiding the one thing those sections insist on, which is the Joint Commissioner’s application of mind. The choice of label is not accidental; it is the very means by which the safeguard is avoided.

VII. The Constitutional Dimension

The right to carry on trade or business under Article 19(1)(g) can be restricted only by law, and the restriction must be reasonable. An entry into business premises that no statute authorises is not a restriction imposed by law; it is a restriction imposed without law, and fails at the first step.

The right to privacy recognised in K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1 extends to the premises and papers of a person. Earlier, in District Registrar and Collector v. Canara Bank, (2005) 1 SCC 496, the Supreme Court struck down a provision that allowed any person authorised by the Collector to inspect documents, including those held by banks, because it laid down no guidelines and required no reasons for the intrusion. The lesson for the present question is that an intrusion into private premises must rest on a law that itself contains safeguards. Sections 67 and 71 contain them; a practice of visiting under Section 151 by definition does not.

The High Courts have repeatedly addressed the misuse of physical presence on premises. In M/s Bhumi Associate v. Union of India, Gujarat High Court, decided on 16.02.2021, a Division Bench directed that no recovery in any mode be made during search or inspection, that even a voluntary payment in FORM GST DRC-03 be made only after the officers have left, and that officers disobeying the directions face disciplinary action. In Paresh Nathalal Chauhan v. State of Gujarat, (2020) 79 GST 105 (Guj), the continued presence of officers at a residence for eight days was held illegal. The Supreme Court in Radhika Agarwal v. Union of India, 2025 LiveLaw (SC) 255, decided on 27.02.2025,* held that coercing a taxpayer to pay under threat is impermissible, that such payments can be recovered through the writ court, and that the officers responsible should face departmental action.

These decisions concern searches, not visits under Section 151. Their relevance is this: if the courts insist on safeguards even where the officer holds a lawful authorisation, the absence of any authorisation at all cannot be treated more leniently.

VIII. Section 152: The Statutory Bar On Use

The same Finance Act of 2021 amended Section 152(1) with effect from 01.01.2022. The provision now reads, in so far as relevant:

“… no such information shall be used for the purpose of any proceedings under this Act without giving an opportunity of being heard to the person concerned.”

This is of real practical importance. Even if the department maintains that what its officer collected was information under Section 151, the Act itself forbids its use in any proceeding without a hearing to the person concerned on that information. A show cause notice under Section 73 or Section 74 that relies on visit reports which were never supplied, or which the taxpayer was never heard on, offends the statute directly, apart from the general principle of audi alteram partem. The department is therefore placed in a dilemma. If the material was gathered under Section 151, Section 152 governs its use. If it was gathered under Section 67 or Section 71, the department must produce the Joint Commissioner’s authorisation.

IX. Conclusion

Section 151 lets the department ask. It does not let the department walk in. Parliament has said, in specific provisions, when an officer may enter a taxpayer’s premises, and in each it has required either prior notice or the satisfaction of a Joint Commissioner. A practice of regular visits under the label of Section 151 sets that scheme aside by administrative convenience. The courts have consistently held that powers which intrude on property, privacy and trade must be exercised strictly in the manner the statute prescribes. The same discipline must apply to the brick kiln as to any other place of business, and the remedy, when it does not, lies in insisting on the statute itself.

Related TaxGuru reading: GST Finance Bill 2021 amendments; GST changes effective 1 January 2022; Finance Act 2021 GST analysis.