Introduction

The Goods and Services Tax (GST) law in India was introduced to create a single, unified tax system and to improve compliance across the country. To ensure the law is followed and to prevent tax fraud, GST officers are given the power to inspect business premises, search for documents, and seize goods when necessary. However, these actions are not allowed without reason or process. The powers of search and seizure are governed by strict legal provisions and can only be exercised in specific situations. This blog explains what search and seizure under GST means, how it works, and what rights and responsibilities are involved — in simple, easy-to-understand language.

What Is a Search under GST?

A search means the act of visiting a place and trying to find hidden or undisclosed goods, documents, or accounts. Under GST, officers can carry out a search if they believe that a person is hiding goods or records to avoid paying tax. It is a physical verification process conducted by an authorized officer to gather evidence of non-compliance or tax evasion.

Search is not done casually. It requires the officer to have a strong reason to believe that some illegal activity related to GST is taking place. That belief must be backed by facts or evidence, and permission must be obtained from a senior authority before proceeding.

What Is a Seizure under GST?

Seizure means taking legal control or custody of goods, documents, or things that are found during a search. These items are believed to be important for further investigation or are suspected to be connected with tax evasion.

Once an officer decides that certain items are relevant, they are seized and taken under official custody. These may include invoices, computers, sale records, stock, or even cash in some cases. The seized items are recorded and kept safely until the legal proceedings are complete or until the officer decides whether they can be returned.

Legal Authority for Search and Seizure

The power to conduct search and seizure is granted under Section 67 of the CGST Act, 2017. According to this law, a Joint Commissioner or a higher-ranking officer must have “reasons to believe” that:

• A person has suppressed transactions to avoid tax.
  
  
• Goods or documents relevant to tax are hidden somewhere.
  
  
• A taxable supply has been made without proper invoices.
  
  
• A person is keeping goods or accounts at a place not declared officially.

Once the Joint Commissioner is convinced that such a situation exists, they can authorize a subordinate officer in writing to conduct the search and seize relevant material.

When Can a Search Be Ordered?

A search can only be ordered when specific conditions are met. It is not a routine check or audit. It is used only when there is serious suspicion that tax is being evaded or that records are being manipulated. Common situations that may lead to a search include:

• Input Tax Credit (ITC) claimed using fake invoices.
  
  
• Sales or stock not recorded in the books.
  
  
• Multiple GST registrations with the same address.
  
  
• Goods moved without proper documents like e-way bills.
  
  
• Non-existent businesses created for fraud.
  
  
• Repeated failure to respond to GST notices or summons.

In these cases, GST officers are allowed to search not only business places but also homes or warehouses if needed.

What Is the Procedure for Search under GST?

Search operations must follow a strict procedure laid down under the law. Here's how it usually happens:

1. Approval from Higher Authority: The officer must get written permission from the Joint Commissioner or someone above them.
   
   
2. Search Warrant: A proper search warrant must be issued. It mentions the place to be searched and the name of the authorized officer.
   
   
3. Presence of Two Independent Witnesses: The officer must conduct the search in front of two local witnesses to ensure transparency.
   
   
4. Display of Identity: Officers must show their identity cards and authorization letters to the person in charge.
   
   
5. Panchanama or Report: A detailed report is made during the search that includes a list of items found and seized. This report is signed by the witnesses, officer, and the person from whom the goods are seized.
   
   
6. Sealing and Custody: Seized goods or documents must be sealed and stored safely. A copy of the list is given to the person concerned.

All of this must be done during reasonable working hours unless there are exceptional circumstances.

What Is the Procedure for Seizure under GST?

Once something is found during the search that the officer believes is important for further inquiry, the following steps are taken:

• A formal order of seizure is issued in writing.
  
  
• The officer prepares a detailed inventory of the items being seized.
  
  
• The items are sealed properly to prevent tampering.
  
  
• A copy of the seizure order is handed over to the taxpayer.
  
  
• If required, the officer may also attach bank accounts or immovable property.

It’s important to note that seizure does not mean confiscation. The goods or records are not permanently taken away unless the taxpayer is found guilty after proper legal process.

How Long Can Seized Goods Be Held?

The CGST Act allows the GST department to keep seized goods for up to six months. If no notice is issued within this period under Section 74 or related provisions, the goods must be returned. However, this period can be extended by another six months if reasons are recorded in writing by the proper officer.

This time limit ensures that the investigation moves quickly and the taxpayer is not kept waiting for too long.

Inspection under GST: How It Is Different

Before taking serious steps like search and seizure, officers may first carry out an inspection. Inspection is a lighter form of checking where officers visit a business place and review documents or stock without actually seizing anything.

Section 67(1) of the CGST Act also encompasses inspection. If the officer possesses the following information:

• The person is suppressing sales.
  
  
• Tax has not been paid properly.
  
  
• Goods are being stored at a place not declared under GST.

During inspection, officers can enter the premises and ask for records, but they cannot take them away unless it becomes a full search operation.

Difference Between Inspection, Search, and Seizure

Understanding the difference between these three terms is important.

• Inspection is the first step. Officers check records or stock without taking anything.
  
  
• Search is the second step. Officers look for hidden or suspicious items with proper approval.
  
  
• Seizure is the third step. Officers take control of goods or documents that are considered evidence of wrongdoing.

Each step is more serious than the previous one and involves higher levels of legal procedure and oversight.

Rights of the Taxpayer During Search and Seizure

Even though officers have strong powers under GST, the law also protects the rights of taxpayers during these operations. Every person subject to search or seizure has the following rights:

• Right to See Authorization: The taxpayer can ask to see the officer’s ID card and written authority for the search.
  
  
• Right to Witness Presence: The search must be done in front of two independent local witnesses.
  
  
• Right to Copy of Seizure List: A signed copy of the list of seized items must be given to the taxpayer.
  
  
• Right to Remain Silent: The taxpayer can choose not to answer questions without legal advice.
  
  
• Right to Be Treated Respectfully: Officers must behave professionally and not misuse their authority.
  
  
• Right to Legal Help: A taxpayer can consult a legal advisor, though not during questioning.

These rights ensure that the process is fair and that businesses are not harassed without cause.

FAQ

1. What is meant by a search under GST?

   A search under GST means when a tax officer enters a business place to look for hidden goods, documents, or other items. This is done only when the officer has strong reasons to believe that the taxpayer is not following GST laws.

2. Can GST officers conduct a search without permission?

   No, GST officers cannot start a search on their own. They must first get written approval from a senior officer like the Joint Commissioner, and only then can they carry out a search as per Section 67 of the CGST Act.

3. What is the difference between inspection and search under GST?

   Inspection is a basic check of records or stock without taking anything away. A search is more serious and allows officers to look for and take hidden goods or documents when they suspect tax evasion.

4. What happens if GST officers find fake invoices during a search?

   If fake invoices are found, the department can seize them and take legal action. The taxpayer may face penalties, cancellation of registration, and even criminal charges depending on the seriousness of the case.

5. For what period of time may the department retain the seized items?

   The GST department can keep seized goods for up to six months. If they don’t issue a notice within that time, they must return the goods. This period can be extended if needed, but only with valid reasons.

6. Can goods be released after seizure without closing the case?

   Yes, goods can be released if the taxpayer provides a bond and a bank guarantee for the estimated tax and penalty. However, the case will continue until it is decided by the department.

7. Are witnesses required during a GST search?

   Indeed, the inquiry must be accompanied by two local witnesses who are independent. This guarantees transparency and impartiality, and a written record (panchanama) is signed by the taxpayer, the officer, and the individual.