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Indirect Tax Laws and Practice · Inspection, Search, Seizure, Arrest and Prosecution

Release of Seized Goods and Rule 139 under GST

Updated 11 October 2026 · Fact-checked

Rule 139 lays down the procedure for inspection, search and seizure under section 67: authorisation in INS-01, seizure order in INS-02, inventory, and prohibition order in INS-03. Seized goods can be released provisionally on a bond (INS-04) and bank guarantee for tax, interest and penalty, or on payment of those amounts.

Understand Release of Seized Goods and Rule 139

Section 67 of the CGST Act gives the department power to inspect, search and seize. The CGST Rules then set out how the officer must do it. In the supplied text of the Rules, the procedure on inspection, search and seizure appears as Rule 139 and the release of seized goods as Rule 140. Know both together.

The process starts with an authorisation. A proper officer not below the rank of Joint Commissioner, who has reasons to believe a place is to be visited, issues an authorisation in FORM GST INS-01 to a subordinate officer. That officer then inspects, searches or seizes.

Where goods, documents, books or things are liable to seizure under section 67(2), an order of seizure is made in FORM GST INS-02. The officer must prepare an inventory (description, quantity or unit, make, mark or model where applicable) and get it signed by the person from whom the items are seized.

Sometimes seizing is not practical, for example bulky stock. Then the officer serves an order of prohibition in FORM GST INS-03. The owner or custodian must not remove, part with or deal with the goods without the officer's prior permission. The officer may also leave the goods in the owner's custody for safe upkeep, with the same restriction.

A business cannot stay stuck for long. Section 67(6) lets seized goods be released provisionally on a bond and security, or on payment of applicable tax, interest and penalty. Under Rule 140, the bond is for the value of the goods in FORM GST INS-04, and the security is a bank guarantee equal to the applicable tax, interest and penalty payable. If the person fails to produce the goods at the appointed date and place, the security is encashed.

Key rules to remember

Authorisation for inspection/search/seizure
Proper officer (not below Joint Commissioner) → FORM GST INS-01 → subordinate officer
Rule 139(1). Issued where there are reasons to believe a place is to be visited under section 67.
Order of seizure
Goods, documents, books or things liable to seizure under section 67(2) → FORM GST INS-02
Rule 139(2). Made by the proper officer or an authorised officer.
Order of prohibition
Seizure not practicable → FORM GST INS-03
Rule 139(4). Owner or custodian cannot remove or deal with goods without prior permission.
Inventory
Description, quantity or unit, make, mark or model (where applicable); signed by the person from whom seized
Rule 139(5). Covers goods, documents, books or things.
Provisional release: bond
Bond for the value of the goods in FORM GST INS-04
Rule 140(1). Bond is on value of goods, not on tax.
Provisional release: security
Bank guarantee = applicable tax + interest + penalty payable
Rule 140(1). Applicable tax includes central tax, State/UT tax and cess, if any.
Failure to produce goods
Security encashed and adjusted against tax, interest, penalty and fine, if any
Rule 140(2).
Time limit for notice after seizure
Notice within 6 months of seizure, extendable by up to 6 months for sufficient cause; otherwise goods returned
Section 67(7) and its proviso.

How to solve Release of Seized Goods and Rule 139 questions

For any question on seizure or release, move through the procedure in order and match each step to its form and condition.

  1. 1Identify the stage: authorisation, inspection or search, seizure, custody, or release.
  2. 2Check who acts: the authorising officer must be not below Joint Commissioner; a subordinate officer carries out the action.
  3. 3Name the correct form: INS-01 authorisation, INS-02 seizure, INS-03 prohibition, INS-04 bond.
  4. 4Decide whether seizure is practicable. If not, apply the order of prohibition.
  5. 5Confirm the inventory was prepared and signed by the person from whom items were seized.
  6. 6For release, state both parts: bond for the value of goods and bank guarantee for tax, interest and penalty. Mention that payment of those amounts is the alternative under section 67(6).
  7. 7Add the consequence of default: failure to produce goods leads to encashment of the security.
  8. 8Close with the six-month notice rule if the facts mention time passing after seizure.

Quickest way: Form-and-stage checklist

When to use it: Use for MCQs and short-note questions where you must match a step with its form or condition.

  1. Recall the chain: 01 authorise, 02 seize, 03 prohibit, 04 bond.
  2. Release = bond on goods value + bank guarantee on tax, interest and penalty.
  3. Default = security encashed.
  4. Time check = six months to issue notice, extendable by six more.

Common mistakes in Release of Seized Goods and Rule 139

  • Saying the bond is for the amount of tax, interest and penalty.

    Bond and security are treated as one thing.

    Fix: The bond is for the value of the goods. The bank guarantee covers tax, interest and penalty.

  • Mixing up INS-02 and INS-03.

    Both relate to goods under section 67(2).

    Fix: INS-02 is a seizure order. INS-03 is a prohibition order used when seizing is not practicable.

  • Leaving out cess from the security amount.

    Students think only of CGST and SGST.

    Fix: Applicable tax includes central tax and State or UT tax, plus cess under the Compensation Act, if any. Add all of it in numerical answers.

  • Saying any officer can authorise a search.

    The rank requirement is forgotten.

    Fix: Authorisation comes from a proper officer not below Joint Commissioner, who then authorises a subordinate officer.

  • Forgetting the inventory.

    Focus stays on the seizure order.

    Fix: Always mention the inventory signed by the person from whom the items are seized.

  • Ignoring the alternative of paying tax, interest and penalty for release.

    Only the bond route is memorised.

    Fix: Section 67(6) allows release on bond and security, or on payment of applicable tax, interest and penalty.

Worked examples

Example 1

Officers of the CGST department seized goods of Kaveri Traders worth ₹10,00,000 under section 67(2). The applicable tax (CGST ₹90,000 + SGST ₹90,000), interest ₹10,000 and penalty ₹1,00,000 are payable. Kaveri Traders seeks provisional release. State the bond and security required.

Show the solution
  1. Rule 140(1) requires a bond for the value of the goods in FORM GST INS-04.
  2. Value of goods = ₹10,00,000, so the bond is for ₹10,00,000.
  3. Applicable tax = ₹90,000 + ₹90,000 = ₹1,80,000.
  4. Security as bank guarantee = tax + interest + penalty = ₹1,80,000 + ₹10,000 + ₹1,00,000 = ₹2,90,000.

Answer: Bond of ₹10,00,000 in FORM GST INS-04 and a bank guarantee of ₹2,90,000. Alternatively, Kaveri Traders may pay the tax, interest and penalty under section 67(6).

Example 2

During a search of Rohan Warehousing's godown in Pune, a large stock of steel was found, which the officer considered liable to confiscation but too bulky to move. Explain what the officer can do and the owner's obligations, and what happens if the goods are later provisionally released but not produced when asked.

Show the solution
  1. Seizure is not practicable, so Rule 139(4) applies. The officer serves an order of prohibition in FORM GST INS-03.
  2. Alternatively, under Rule 139(3), the officer may entrust the goods to the owner or custodian for safe upkeep.
  3. In both cases the owner must not remove, part with or deal with the goods without the officer's prior permission.
  4. If goods are released provisionally on a bond (INS-04) and bank guarantee, and the person fails to produce them at the appointed date and place, Rule 140(2) applies.
  5. The security is encashed and adjusted against tax, interest, penalty and fine, if any, payable on those goods.

Answer: The officer issues an INS-03 prohibition order or leaves the goods in the owner's custody. The owner cannot deal with them without permission. On failure to produce the goods after release, the bank guarantee is encashed and adjusted against dues.

Exam tips

  • Learn the four forms INS-01 to INS-04 as a sequence; MCQs often test form matching.
  • In numerical questions, show the bond and the security separately with their bases.
  • In case scenarios, check the rank of the officer and whether an inventory was prepared.
  • Add the six-month notice rule from section 67(7) when facts mention a delay after seizure.

Practice questions from Inspection, Search, Seizure, Arrest and Prosecution

Release of Seized Goods and Rule 139 in other exams

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

Release of Seized Goods and Rule 139: frequently asked questions

Which rule covers release of seized goods under GST?

Release on a provisional basis is covered by Rule 140 of the CGST Rules, supported by section 67(6) of the Act. Rule 139 covers the procedure of inspection, search and seizure. Study them together.

What security is needed to release seized goods?

You execute a bond for the value of the goods in FORM GST INS-04. You also furnish a bank guarantee equal to the applicable tax, interest and penalty payable.

Can seized goods be released without a bond?

Section 67(6) gives an alternative: release on payment of applicable tax, interest and penalty. Otherwise, the bond and security route applies.

What if no notice is issued after seizure?

If no notice is given within six months of seizure, the goods must be returned to the person from whom they were seized. The proper officer may extend this by up to six more months for sufficient cause.