Facts of the Case:
In this case, the petitioner was subjected to search proceedings by the GST authorities under Section 67(2) of the CGST/AGST Act, 2017. The search of his office premises was conducted on 30.03.2026 pursuant to an authorization in Form GST INS-01. During the search, the authorities seized various books, documents, digital signatures and electronic items. A Order of Seizure in Form GST INS-02 dated 01.04.2026 was accordingly issued, recording the seized items as Exhibits 1 to 105. Significantly, after seizure, the custody of the seized books, documents and things was handed over to the petitioner, subject to a direction that he would not remove, part with or otherwise deal with them without prior permission of the authorities.
On the same day, the GST authorities also issued an Order of Prohibition in Form GST INS-03, restraining the petitioner from removing or dealing with certain goods, including desktop computers, laptops, files, printer, batteries, inverter, air conditioners and refrigerator. The petitioner contended that these articles were not goods in which he was engaged in making taxable supplies and were merely office equipment used in connection with his tax consultancy business. Following this, the authorities sealed the entire office premises, pasted a notice stating that the premises had been sealed by the State GST Department, and allegedly took away the keys without issuing an acknowledgment.
The petitioner challenged the continued sealing of his office under Article 226 of the Constitution, contending that the power under Section 67(4) is not an independent or standalone power to seal premises. According to him, the provision merely enables the authorized officer to seal premises, almirahs, electronic devices or other receptacles where access is denied during the course of search proceedings. Since the petitioner had fully cooperated with the search and had provided access to the documents, electronic devices and other articles, there was no occasion for exercising the power of sealing. He further contended that keeping the premises sealed for more than four months was unreasonable, irrational and contrary to the GST Act.
The petitioner also submitted that the sealing was not actually undertaken for the purpose contemplated under Section 67(4), but apparently to retain the seized books, documents and goods within the premises. He argued that although sealing might have been understandable for a short period because of administrative difficulty in removing the seized material, continuing the seal for more than four months after completion of search and seizure had no statutory basis. He therefore sought de-sealing of the premises and permission to use his office.
On the other hand, the GST authorities opposed the petition on the ground that the petitioner was allegedly involved in fraudulent activities resulting in large-scale tax evasion by various entities. The Department contended that the premises should remain sealed until completion of the investigation. It was also argued that Section 67(7) contemplated return of seized goods where no notice was issued within six months and, therefore, the petitioner should await expiry of the statutory period.
Issue:
Whether the GST authorities could exercise the power under Section 67(4) of the CGST/AGST Act, 2017 to seal a taxpayer’s premises and continue to keep the premises sealed even after the search and seizure proceedings had been completed.
Held That:
The Gauhati High Court held that the power under Section 67(4) is not an independent power to seal premises indefinitely. The provision is ancillary to the power of search under Section 67(2) and can be exercised only in connection with the search proceedings, particularly where access to the premises, almirah, electronic device, box or receptacle is denied. The Court categorically observed that the power under Section 67(4) can be exercised only upon initiation of search proceedings and so long as the search proceedings are continuing. Once the search proceedings culminate in seizure of the goods, documents, books or things, the power under Section 67(4) ceases in respect of that search.
The Court further found that the Department’s own case did not establish that the petitioner had denied access to his premises. The authorities were empowered to undertake search and seizure in the manner prescribed under the GST Act and Rules, but any action going beyond those statutory limits would constitute an illegal exercise of power. The Court therefore held that seizure of the goods through Form GST INS-03, handing over custody of seized documents/books/things to the petitioner and, most importantly, continuing to keep the office premises sealed after completion of search and seizure could not be sustained in law.
While granting relief, the Court took note of the fact that the investigation was still continuing and that the seized books, documents and other things might be required for examination or further proceedings under the GST Act. Therefore, instead of interfering with the investigation itself, the Court adopted a balanced approach. It directed the Department to de-seal the office premises and restore possession to the petitioner, while permitting the authorities, at the time of de-sealing, to take custody of the seized books, documents and things if they continued to be necessary for the investigation. In that event, the Department was directed to issue a fresh Order of Seizure and provide a copy thereof to the petitioner.
The Court also directed the authorities to consider the petitioner’s request for copies of the seized documents, subject to the qualification that copies or extracts need not be supplied if the authorities were of the opinion that doing so could prejudicially affect the investigation. Further, the Court set aside and quashed the Form GST INS-03 Order of Prohibition dated 01.04.2026, since the goods covered by that order were not goods liable to confiscation.
Accordingly, the Court held that the sealing of the petitioner’s office for approximately four months was illegal, unauthorized and contrary to Section 67(4) and directed the GST authorities to de-seal the premises and hand over possession to the petitioner forthwith and, in any event, not later than 12.08.2026.
Case Name: Sri Surendra Sharma v. The State of Assam and Ors dated 10.08.2026
Citation No. 2026 Taxo.online 2491
