Indirect Tax Laws · Inspection, Search, Seizure and Arrest

Procedure for Inspection, Search and Seizure under the CGST Rules

Updated 5 October 2026 · Fact-checked

The CGST Rules lay down how an officer acts under section 67. Authorisation is issued in FORM GST INS-01. Seized goods get an order of seizure in FORM GST INS-02 with a list. If removal is impractical, an order of prohibition in FORM GST INS-03 is served. Goods can be released on bond and security under Rule 140. Seized goods and documents are retained only as the Act allows.

Understand Procedure for Inspection, Search and Seizure (Rules)

Section 67 of the CGST Act gives the power to inspect, search and seize. The CGST Rules give the procedure. The power is strong, so the law wants a written trail: who authorised, what was taken, and on what terms it can be released.

Inspection is a visit to a place of business to check records and goods. Under section 67(1), the Joint Commissioner (or an officer above him) must have reasons to believe that a taxable person has suppressed supplies or stock, has claimed input tax credit in excess of entitlement, or has contravened the law to evade tax. The same section also covers a person engaged in the business of transporting goods, or an owner or operator of a godown or warehouse, who is keeping goods that have escaped tax or has kept goods or accounts in a manner likely to cause evasion of tax. On that basis he authorises inspection in writing.

Search and seizure is a deeper step under section 67(2). It needs reasons to believe that goods liable to confiscation, or documents, books or things useful for or relevant to proceedings, are secreted in a place. Seizure is taking those goods or documents into custody.

The starting point is authorisation. An officer cannot act on his own wish. A Joint Commissioner or an officer above him must authorise in writing, and reasons to believe are needed for both inspection and search. Rule 139 prescribes this authorisation in FORM GST INS-01. Think of it as the officer's warrant to enter and act.

After a seizure the officer prepares an order of seizure in FORM GST INS-02 along with a list of what was seized. If goods cannot practicably be moved, he can instead serve an order of prohibition in FORM GST INS-03. The owner then must not remove, part with or deal with the goods without permission. These steps fall under Rule 139.

Seized goods can usually be released provisionally against a bond (FORM GST INS-04). Under Rule 140, the owner executes a bond in INS-04 for the value of the goods and furnishes security (for example, a bank guarantee) equal to the applicable tax, interest and penalty. Rule 140 also covers release of perishable or hazardous goods on payment of the applicable tax, interest and penalty. Rule 141 gives the procedure in respect of seized goods or conveyances, including FORM GST INS-05, the order for disposal of perishable or hazardous goods, which cannot wait for the full process. Documents are retained only as long as necessary for examination and for proceedings, and the person can take copies or extracts in the presence of an authorised officer.

One timeline matters. Under section 67(7), seized goods, other than perishable or hazardous goods, must be returned if no notice is issued within six months of the date of seizure. The notice is the one under section 73 or 74, or under section 74A for notices relating to FY 2024-25 onwards (section 74A was inserted by the Finance (No. 2) Act, 2024). So refer to section 73, 74 or 74A as applicable. The Commissioner may extend the six months by up to six more months for sufficient cause.

Key rules to remember

Authorisation for inspection or search (Rule 139): FORM GST INS-01; Issued in writing on authority of a Joint Commissioner or above. Reasons to believe are needed for inspection under section 67(1) (suppressed supplies or stock, excess ITC, contravention to evade tax) and for search and seizure under section 67(2) (goods liable to confiscation, or documents, books or things useful for proceedings, are secreted).
Order of seizure (Rule 139): FORM GST INS-02 with list of goods and documents seized; Prepared when goods or things are actually seized. Remember the list goes with the order.
Order of prohibition (Rule 139): FORM GST INS-03; Used when it is not practicable to seize or move the goods. The owner may not remove or deal with them.
Bond and security for release of seized goods (Rule 140): FORM GST INS-04, with security; Lets the owner take back seized goods while proceedings continue. The bond is for the value of the goods, with security (for example, a bank guarantee) equal to the applicable tax, interest and penalty. Rule 140 also covers release of perishable or hazardous goods on payment of the applicable tax, interest and penalty.
Disposal of perishable or hazardous goods (Rule 141): FORM GST INS-05; Order for disposal of perishable or hazardous goods. Rule 141 gives the procedure in respect of seized goods or conveyances, including this INS-05 order. Perishables cannot wait for the full process.
Time to issue notice after seizure of goods: Goods (other than perishable or hazardous) must be returned if no notice under section 73, 74 or 74A, as applicable, is issued within 6 months of the date of seizure; the Commissioner may extend by up to 6 more months for sufficient cause; Section 74A (inserted by the Finance (No. 2) Act, 2024) applies to notices for FY 2024-25 onwards. The rule does not apply to perishable or hazardous goods. Write it as a return-of-goods rule, not just a notice deadline.
Retention of documents: Retained only as long as necessary for examination and proceedings; Person may take copies or extracts in the presence of an officer. Do not quote a day-count unless your bare Act confirms it.

How to solve Procedure for Inspection, Search and Seizure (Rules) questions

Use this order for any case question on the procedure. It keeps your answer in provision-facts-conclusion form.

1Identify the act: inspection, search, seizure or prohibition on removal. Each has its own form.
2Check who is acting and whether a valid written authorisation (FORM GST INS-01) exists on the authority of a Joint Commissioner or above.
3Check the reasons to believe. For inspection: suppressed supplies or stock, excess ITC, or contravention to evade tax (or, for a transporter or a godown or warehouse owner or operator, goods that have escaped tax or goods or accounts kept so as to cause evasion). For search and seizure: goods liable to confiscation, or documents, books or things useful for proceedings, are secreted.
4Decide what happened to the goods: seized (INS-02 with list), or not practicable to move (INS-03 prohibition order).
5Check release: provisional release on a bond (INS-04) for the value of the goods, with security equal to the applicable tax, interest and penalty, under Rule 140. Perishable or hazardous goods can also be released under Rule 140 on payment of the applicable tax, interest and penalty. If they are to be disposed of, the order is in INS-05 under Rule 141, which gives the procedure for seized goods or conveyances.
6Check timelines: for goods other than perishable or hazardous, they must be returned if no notice under section 73, 74 or 74A, as applicable, is issued within six months of seizure. Section 74A applies to notices for FY 2024-25 onwards. The Commissioner may extend by up to six months for sufficient cause.
7For documents, state that retention is only as long as necessary and that copies or extracts can be taken.
8Write a conclusion: is the action valid, and what can the taxable person do?

Quickest way: Form-and-trigger table in your head

When to use it: Use it for MCQs and short-note questions where you only need to name the form or the next step.

Think of the chain: INS-01 authorise, INS-02 seize, INS-03 prohibit, INS-04 bond, INS-05 disposal of perishable or hazardous goods.
Ask: has an officer of the right rank authorised in writing, on reasons to believe? If not, the action is flawed.
Ask: can the goods be moved? Yes means seizure order. No means prohibition order.
Ask: is the owner asking for goods back? Bond and security (Rule 140). Are perishable or hazardous goods being disposed of? INS-05 order (Rule 141).
Ask: how long since seizure, and are the goods perishable? If not perishable, six months from seizure with no notice under section 73, 74 or 74A, as applicable, means return the goods. The Commissioner can extend by up to six more months for sufficient cause.

Common mistakes in Procedure for Inspection, Search and Seizure (Rules)

Saying any GST officer can order a search.
Students mix up inspection of goods in transit with search powers.
Fix: Remember that authorisation comes from a Joint Commissioner or above, in writing. He needs reasons to believe, for inspection under section 67(1) and for search and seizure under section 67(2).
Thinking reasons to believe are needed only for search.
Students treat inspection as a routine visit.
Fix: Section 67(1) also requires reasons to believe for inspection: suppressed supplies or stock, excess ITC, or contravention to evade tax.
Mixing up INS-02 and INS-03.
Both relate to goods and both sound like seizure.
Fix: INS-02 is an actual seizure with a list. INS-03 is a prohibition on removal when seizure is impractical.
Quoting a fixed day-count for retaining documents.
Students blend the goods timeline with the documents rule.
Fix: State that documents are retained only as long as necessary for examination and proceedings, and mention the right to take copies. Quote numbers only for the goods timeline.
Forgetting the full goods rule: six months, extendable by six, and not for perishables.
Students remember only the first period.
Fix: Write: goods other than perishable or hazardous must be returned if no notice under section 73, 74 or 74A, as applicable, is issued within six months of seizure. The Commissioner may extend by up to six months for sufficient cause.
Attributing the bond and release procedure to Rule 139.
Students lump all INS forms under one rule.
Fix: Rule 139 covers authorisation, seizure and prohibition (INS-01 to INS-03). Rule 140 covers the bond and security (INS-04). Rule 141 covers the procedure for seized goods and conveyances.
Ignoring the owner's right to provisional release.
Students treat seizure as final.
Fix: Always add that goods can be released on bond and security, and mention INS-04.
Writing the answer without the facts of the case.
Students recite the rule and stop.
Fix: Apply each rule to the facts: rank of officer, type of goods, whether movable, and time elapsed.

Worked examples

Example 1

A Deputy Commissioner of GST receives information that a trader has hidden unaccounted goods in a godown. He wants to search the godown at once and seize the goods. Advise whether he can do so and on what basis.

Show the solution

Provision: search and seizure under section 67(2) needs a written authorisation, issued in FORM GST INS-01, on the authority of an officer of Joint Commissioner rank or above. That officer must have reasons to believe that goods liable to confiscation, or documents, books or things useful for proceedings, are secreted.
Facts: the Deputy Commissioner is below the rank of Joint Commissioner, so he cannot issue the authorisation himself. He has information, which can be placed before a Joint Commissioner.
Application: if the Joint Commissioner has reasons to believe and authorises him in INS-01, he can search the godown.
If goods are then seized, he must prepare an order of seizure in FORM GST INS-02 along with a list of the goods.

Answer: He cannot search on his own. He must get a written INS-01 authorisation from a Joint Commissioner or above, who must have reasons to believe that the goods or documents are secreted. After that he can search and, on seizing, issue INS-02 with a list.

Example 2

During a search, an officer finds a large quantity of heavy machinery that is liable to confiscation but cannot practicably be moved. He also takes certain account books. The owner asks for the machinery to be released and wants copies of the books. Explain the procedure.

Show the solution

Machinery: since it is not practicable to move, the officer can serve an order of prohibition in FORM GST INS-03 (Rule 139). The owner then must not remove, part with or deal with it without permission.
Release: the owner can ask for provisional release by executing a bond in FORM GST INS-04 and furnishing security (Rule 140).
Time limit: heavy machinery is not perishable or hazardous. If no notice under section 73, 74 or 74A, as applicable, is issued within six months of seizure, the goods are to be returned. The Commissioner may extend this by up to six more months for sufficient cause.
Books: the officer may retain the account books only as long as necessary for examination and proceedings. The owner can take copies or extracts in the presence of an authorised officer.

Answer: The machinery is covered by an INS-03 prohibition order, and the owner can seek provisional release on an INS-04 bond with security under Rule 140. If no notice under section 73, 74 or 74A, as applicable, is issued within six months of seizure (extendable by the Commissioner by up to six more months for sufficient cause), the goods must be returned. The books can be retained only as long as necessary, and the owner can take copies or extracts in an officer's presence.

Exam tips

Learn the INS form numbers as a chain of five: INS-01 to INS-05. Examiners often test one form in an MCQ.
In case questions, check the rank of the officer first, and then whether reasons to believe exist. Authorisation must come from a Joint Commissioner or above, for inspection under section 67(1) as well as search and seizure under section 67(2).
Write the answer in provision, facts, conclusion form and mention the form number each time.
Cite the right rule: Rule 139 for authorisation, seizure and prohibition, Rule 140 for bond and security, Rule 141 for the procedure on seized goods.
Do not quote a day-count for documents unless you are sure. Write the principle: only as long as necessary, with copies allowed.
Link the topic with section 67 and with release of seized goods. Questions often combine all three.

Practice questions from Inspection, Search, Seizure and Arrest

Procedure for Inspection, Search and Seizure (Rules) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Procedure for Inspection, Search and Seizure (Rules): frequently asked questions

Which form is used for authorisation of inspection or search under GST?

FORM GST INS-01 is used. It is issued in writing on the authority of a Joint Commissioner or above. That officer must have reasons to believe, for inspection under section 67(1) or for search and seizure under section 67(2).

What is the difference between a seizure order and a prohibition order?

A seizure order in FORM GST INS-02 is issued when goods are actually taken into custody, with a list. A prohibition order in FORM GST INS-03 is used when goods cannot practicably be moved. The owner must then not remove or deal with them.

How long can seized goods be held without a notice?

For goods other than perishable or hazardous goods, they must be returned if no notice under section 73, 74 or 74A, as applicable, is issued within six months of seizure. The Commissioner may extend this by up to six more months for sufficient cause. The rule does not apply to perishable or hazardous goods.

How long can seized documents be retained under GST?

Documents can be retained only as long as necessary for examination and for proceedings under the law. The person from whom they are seized can take copies or extracts in the presence of an authorised officer. Check your bare Act for any outer limit before quoting one.