The team arrives with an authorisation, spends the day going through your records, prepares a seizure order, and leaves. On the way out an officer pastes a paper across the shutter — "Sealed by the GST Department" — and takes the keys. A week passes. Then a month. Staff cannot get in, clients cannot be served, and every enquiry gets the same answer: the investigation is still on.
The power to seal premises during a GST search comes from a single sub-section — Section 67(4) of the CGST Act, 2017, and in identical terms Section 67(4) of the Uttar Pradesh GST Act, 2017 — and it is a narrow one. A judgment of the Gauhati High Court delivered on 10 August 2026 has now spelt out how narrow.
What Section 67(4) actually says
The sub-section reads: "The officer authorised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied."
Three things follow from that wording, and each matters when a shutter is still sealed.
- It is not a standalone power. It belongs to "the officer authorised under sub-section (2)" — the officer carrying out the search. It exists to enable the search, not to survive it.
- It has a precondition. The power arises only where access is denied. If you opened the office, produced the records and handed over the almirah keys, the trigger for sealing never arose.
- It is about concealment. It is aimed at goods, accounts, registers or documents "suspected to be concealed" behind a door or inside a receptacle — not at the premises once everything has been found and listed.
An office under seal for four months
In Sri Surendra Sharma v. The State of Assam & 3 Ors (WP(C)/3035/2026, decided 10 August 2026), the petitioner was a tax consultant. On 1 April 2026 State GST officers searched his office on an authorisation in Form GST INS-01 dated 30 March 2026, issued an Order of Seizure in Form GST INS-02 the same day listing items as Exhibits 1 to 105, and issued an Order of Prohibition in Form GST INS-03 covering two desktops, six laptops, 426 files, a printer, batteries, an inverter, air conditioners and a refrigerator. They then sealed the office and took away the keys. It stayed sealed for over four months.
The department's answer on affidavit was not a technical one: it alleged that the consultant had passed on fake input tax credit involving evasion of about ₹6.68 crore, and said the premises had been sealed to prevent tampering with crucial evidence. Justice Devashis Baruah held that this did not save the sealing.
The holding, in one line: the power under Section 67(4) "can only be exercised upon initiation of the search proceedings and so long the search proceedings are continuing" — once the search has culminated in seizure, the power "ceases to exist in respect to the search conducted". Keeping the office sealed for four months was held to be "illegal, unauthorized, and contrary to the mandate of Section 67(4)", and the department was directed to de-seal and hand back possession by 12 August 2026.
The Court also recorded that nowhere in the department's documents or affidavit was there "a whisper" that access to the premises had been denied. That, and not the strength of the allegations, was the point on which the sealing failed.
Why the INS-03 could not hold the office either
A prohibition order is often treated on the ground as a general licence to freeze whatever is in the building. It is not. It comes from the first proviso to Section 67(2), given form by Rule 139(4) of the CGST Rules (Form GST INS-03), and its language is confined: where it is not practicable to seize any such goods, the officer may direct the owner or custodian not to remove, part with or otherwise deal with the goods.
Two limits follow. The proviso speaks only of goods — not of documents, books or things. And Section 67(2) permits seizure of goods only where they are "liable to confiscation", which under Section 130 turns on matters such as supplying or receiving goods with intent to evade tax, or failing to account for goods on which tax is payable. On that reasoning the Court held that laptops, desktops, 426 files, a refrigerator, air conditioners, an inverter and batteries — the working equipment of a consultancy, not its stock-in-trade — "can under no circumstances be said to be goods liable for confiscation", and quashed the Order of Prohibition.
Seized records are not meant to be parked with you
A second feature of the case recurs often. Having seized 105 exhibits, the officers handed their custody back to the taxpayer with a direction not to deal with them — and then sealed the office around them. The Court read that against the department: the second proviso to Section 67(2) requires seized documents, books or things to be "retained by such officer only for so long as may be necessary" for examination and for any inquiry or proceedings. Handing custody back suggested the material was no longer necessary; if it was, it belonged in the officer's custody, not behind a seal on someone else's shutter.
Two further sub-sections are worth keeping in view when records have been taken from your premises:
- Section 67(3) — documents, books or things that are not relied upon for issuing a notice must be returned within thirty days of the issue of that notice.
- Section 67(5) — the person from whose custody documents were seized is entitled to make copies or take extracts in the presence of an authorised officer, unless the proper officer is of the opinion that doing so would prejudicially affect the investigation. In this case the Court directed the department to consider a request for copies on exactly that basis.
Where goods have been seized, Section 67(6) read with Rule 140 allows provisional release on a bond in Form GST INS-04 with a bank guarantee for the applicable tax, interest and penalty; and Section 67(7) requires seized goods to be returned if no notice is issued within six months, a period the proper officer may extend on sufficient cause by six months at most. The department argued that the taxpayer should simply have waited out those six months. The Court's answer was that the grievance was about the sealing of the premises — and that is governed by Section 67(4) and by nothing else.
If your premises are still under seal
What the order does not do
It is worth being clear-eyed about the limits of a de-sealing order. The Court did not hold that the investigation was bad, that the allegations were unfounded, or that the seized material had to go back; it expressly gave the department liberty to take custody of the seized exhibits at the time of de-sealing, by issuing a fresh Order of Seizure relating back to 1 April 2026. What was struck down was the use of a seal on the premises as a long-term evidence store, and a prohibition order over goods that were never confiscable. Nor does a de-sealing writ answer the show-cause notice that may follow — that is a separate contest on the merits.
The judgment is of the Gauhati High Court, so in Uttar Pradesh it is persuasive rather than binding. But Section 67(4) is worded identically in the CGST Act and the UP GST Act, and the reasoning turns on the text of the provision rather than on anything local. If your premises are under seal, the answer usually lies in the department's own record — whether denial of access was noted, what the INS-03 annexure lists, and whose custody the seized material is in. Those are questions to examine with the papers in hand.
Are your business premises still sealed after a GST search?
If a GST or State Tax team has sealed premises in Lucknow or elsewhere in Uttar Pradesh, Dixit Legal can examine the INS-01, INS-02 and INS-03 together with the panchnama and advise on representation and, where required, a writ for de-sealing.
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