Gauhati HC: GST Officers Cannot Keep Business Premises Sealed After Search Ends

Decision in brief

The Gauhati High Court held that Section 67(4) is not an independent power to keep a business premises sealed. It assists an authorised officer in carrying out a search under Section 67(2) when access to a premises, cupboard, electronic device, box or receptacle is denied.

The record did not show that the petitioner had denied access. The search was completed, specified records and electronic items were seized, and custody of many of those items was then left with the petitioner. Keeping the entire office sealed for about four months was therefore held to be illegal, unauthorised and contrary to Section 67(4).

The Court directed de-sealing of the office, quashed the prohibition order in FORM GST INS-03, and still protected the investigation by permitting officers to take fresh custody of necessary records through a proper seizure order.

Background and facts

The petitioner was a tax consultant carrying on practice through Sharma and Associates at Bokajan in Assam. On 1 April 2026, the State GST authorities searched the office under an authorisation issued in FORM GST INS-01.

During the search, the officers seized documents, digital signatures and electronic items and issued an order in FORM GST INS-02. The annexure listed records and items marked as Exhibit 1 to Exhibit 105.

A separate prohibition order in FORM GST INS-03 covered two desktop computers, six laptops, 426 files, a printer, batteries, an inverter, air conditioners and a refrigerator. The department also sealed the entire office and retained the keys.

Allegations raised by the Department

The Department alleged that the petitioner was involved in issuing fake tax invoices and passing ineligible input tax credit. Its affidavit referred to an alleged tax impact of Rs. 6,68,77,172.44 and argued that access to the office and equipment should remain restricted to prevent tampering with evidence.

The Court did not decide whether those allegations were true. Its task was narrower: to examine whether the method used by the officers, particularly continued sealing of the office under Section 67(4), was authorised by the statute.

This distinction is important. A serious allegation does not remove the requirement that search, seizure and prohibition powers must be exercised within the wording of the law.

What Section 67(2) permits

Section 67(2) authorises a proper officer of the required rank, or an officer authorised in writing, to search and seize goods liable to confiscation and documents, books or things that may be useful or relevant to proceedings under the GST law.

The Court described Section 67(2) as the central provision governing search and seizure. It also noted that different rules apply to goods, documents, books and things, and that the statutory conditions attached to each category cannot be ignored.

Where goods cannot practically be seized, the first proviso allows a restriction against removing or dealing with them. That mechanism does not automatically authorise sealing the whole business premises after the search has ended.

Meaning and limit of Section 67(4)

Section 67(4) allows an authorised officer to seal or break open a door, cupboard, electronic device, box or receptacle in which relevant material is suspected to be concealed, but the section expressly connects that power to a situation where access is denied.

The High Court held that this power operates together with Section 67(2). It exists to help officers conduct the search and reach material that is being withheld or concealed behind denied access.

It is not a continuing power to control the premises after the search and seizure exercise has finished. The Court held that once the search culminates in seizure, the Section 67(4) power ends for that search.

No evidence that access was denied

The Court found no statement in the official documents or the Department affidavit showing that the petitioner had refused access to the office, files, computers or other equipment.

Instead, the material indicated that officers were allowed to search and identify the relevant items. They completed the seizure process and even handed custody of listed records and things back to the petitioner with restrictions on dealing with them.

Because the statutory condition of denied access was missing, continued sealing could not be justified under Section 67(4).

A business premises cannot become a storage place

The High Court made a practical distinction between using temporary force or sealing to carry out a search and using the entire premises as a place to retain seized material.

It held that Section 67(4) is not meant to convert the taxpayer office into a departmental store room. After deciding what should be seized, the authorised officer must follow the legal process governing custody, retention, return and copying of the material.

Administrative difficulty in removing records or equipment cannot by itself create a power to keep a functioning office shut for months.

Goods, documents, books and things are different

The judgment carefully examined the categories used in Section 67. The Court said that goods, documents, books and things have different roles and should not be treated as interchangeable expressions.

Books may include physical or electronic sales registers, purchase ledgers, cash books and inventory records. Things may include storage devices, hard drives, barcode scanners or similar physical objects that do not fall within the other categories.

Ordinary office equipment such as air conditioners, a refrigerator, an inverter and batteries could not be treated as relevant things merely because they were present at the searched office. If treated as goods, they could be seized only when the legal requirements for confiscation were satisfied.

Why FORM GST INS-03 was quashed

Under Rule 139(4), FORM GST INS-03 is used where it is not practicable to seize goods and the owner or custodian is directed not to remove, part with or otherwise deal with them without permission.

The Court found that the items covered by the prohibition order were not goods liable to confiscation in the facts of this case. The list included computers, laptops, files and ordinary office appliances used in the consultancy practice.

The prohibition order dated 1 April 2026 was therefore set aside and quashed.

Final directions of the High Court

• The office sealing was declared illegal, unauthorised and contrary to Section 67(4).
• The authorities were directed to de-seal the premises and hand possession back to the petitioner by 12 August 2026.
• If records marked Exhibit 1 to Exhibit 105 were still needed, officers could take custody through a fresh seizure order and provide a copy to the petitioner.
• The authorities were required to consider a request for copies or extracts of seized documents unless allowing copies could prejudice the investigation.
• The FORM GST INS-03 prohibition order was quashed because the listed goods were not liable to confiscation.
• No order as to costs was made.

The investigation was not stopped

The Court did not terminate the GST investigation or order unconditional release of every document and device. It expressly recognised that some records might still be required for examination, inquiry or proceedings.

Its solution balanced the investigation with the statutory limits: officers could take lawful custody of necessary material, but they could not continue controlling the entire office through an unauthorised seal.

The ruling therefore protects both sides. It preserves legitimate investigation while confirming that investigation powers must follow the procedure established by the GST law.

Practical impact for businesses

The decision can help a business assess whether sealing during a GST search has continued beyond the purpose permitted by Section 67(4). The key factual questions are whether access was denied, whether the search is still ongoing, what material was seized and which formal orders were issued.

Businesses should not obstruct a lawful search. At the same time, they should keep a complete record of the authorisation, seizure memo, prohibition order, inventory, custody arrangement and every request for access or copies.

Where officers have completed the search but the premises remains sealed, the legal basis and continued necessity should be requested in writing without delay.

Action checklist after a GST search

• Obtain and preserve copies of FORM GST INS-01, FORM GST INS-02 and FORM GST INS-03, wherever issued.
• Record the date and time when the search started, ended and when any seal was placed or removed.
• Check whether the search record states that access was denied and compare that statement with available evidence.
• Prepare a detailed list of goods, records, digital devices and ordinary office equipment affected by the action.
• Request copies or extracts of seized documents under the applicable provision and keep proof of the request.
• Ask for a written seizure order if officers take fresh custody of any item.
• Do not remove, alter or use restricted material contrary to a lawful order.
• Seek case-specific advice promptly if sealing continues after completion of the search.

Who can use this ruling

The judgment is relevant to registered persons, business owners, professionals and advisers dealing with GST search, seizure, office sealing or FORM GST INS-03 prohibition orders.

It can be particularly useful where the department has completed the search, access was not refused, and the whole premises remains closed only because seized material was left inside.

The ruling is from the Gauhati High Court and arose under the Assam GST law, but the relevant wording of Section 67 closely follows the corresponding CGST provision. Application in another State will still depend on the governing law, jurisdiction and facts.

Important caution

This decision does not say that GST officers can never seal a door, cupboard or electronic device. Section 67(4) permits that action when its conditions are met, particularly where access needed for the search is denied.

It also does not prevent lawful seizure, retention of relevant records, investigation of fake invoices or proceedings relating to alleged ineligible ITC. The Court only restrained action that went beyond the statutory power used in this case.

A taxpayer should never break a departmental seal or disregard a written order on the strength of an article. The full judgment and the specific search record should be reviewed before any legal step is taken.

Key takeaway and conclusion

In Sri Surendra Sharma v. State of Assam, the Gauhati High Court confirmed that Section 67(4) is a search-enabling power, not a power to shut a business indefinitely.

Where access was not denied and the search and seizure had ended, keeping the office sealed for about four months was unlawful. The Department could preserve evidence through proper seizure and custody procedures, but it could not use the business premises itself as storage.

For businesses and professionals, the case underlines two practical duties: cooperate with a lawful search and preserve a complete written record so that any action exceeding the GST law can be examined promptly.