A GST Team at Your Premises —what the INS-01 must show, and why a payment made that day may not be "voluntary"

A GST team arriving at a shop, godown or factory changes the atmosphere within seconds. Staff are anxious, the proprietor is often away, and the instinct is to cooperate first and ask questions later. Cooperation is sensible — obstruction helps nobody. But cooperation and surrender are different things, and the difference usually turns on two pieces of paper handed over at the start and one form filled in before the team leaves.

The subject is topical again. On 5 August 2026, in M/s Bhima Enterprises v. Principal Chief Commissioner of GST & Central Excise (W.P.(MD) No. 9040 of 2024), the Madurai Bench of the Madras High Court consolidated the principles governing a search under Section 67 of the CGST Act, 2017. The provisions and CBIC instructions it relies on apply nationally.

Three powers, not one

Section 67 does not create a general power of raid. Under Section 67(1), a proper officer not below the rank of Joint Commissioner who has "reasons to believe" that a taxable person has suppressed transactions or stock, claimed input tax credit in excess of entitlement, or contravened the Act to evade tax, may authorise in writing another officer to inspect a place of business. Section 67(2) is separate: an officer of the same rank who has reasons to believe that goods liable to confiscation, or documents, books or things relevant to proceedings, are "secreted in any place" may authorise a search and seizure.

Rule 139 of the CGST Rules, 2017 supplies the forms: the authorisation in Form GST INS-01, a seizure order in Form GST INS-02, a prohibition order in Form GST INS-03. Rule 139(5) requires an inventory of what is taken, signed by the person from whom it is seized.

In Bhima Enterprises, the Court held that the authorisation must specifically bear out which power is conferred — these being distinct acts that cannot be rolled into one omnibus form — and that officers must act strictly within its scope. Whether the "reasons to believe" genuinely existed is open to judicial review: the expression requires material, not suspicion.

The DIN is mandatory, with narrow exceptions

By Circular No. 122/41/2019-GST dated 5 November 2019, the CBIC directed that from 8 November 2019 no search authorisation, summons, arrest memo, inspection notice or letter issued in the course of an enquiry shall be issued without a computer-generated Document Identification Number (DIN) quoted prominently in it. Circular No. 128/47/2019-GST dated 23 December 2019 extended this to all communications, including e-mails.

One recent refinement is easy to get wrong. By Circular No. 249/06/2025-GST dated 9 June 2025, the Board clarified that a communication generated through the GST common portal, which already carries a verifiable Reference Number (RFN), needs no DIN. A DRC-01 downloaded from the portal will therefore show an RFN, not a DIN. But an authorisation or summons physically handed over at your premises is not a portal document, and the DIN requirement continues to apply to it. Bhima Enterprises holds that display of the DIN is mandatory, that a technical failure to generate one must be recorded contemporaneously in the communication itself, and that the DIN, once generated within 15 days, must be shared with the noticee.

A search is the exercise of a statutory power, not a negotiation. The paperwork the department leaves behind is the record on which the matter is later decided.

What can be taken, and when it comes back

• Copies. Section 67(5) — the person from whose custody documents are seized may take copies or extracts before an authorised officer, unless that would prejudice the investigation.
• Unrelied documents. Section 67(3) — documents, books or things not relied upon for issuing a notice must be returned within a period not exceeding thirty days from the issue of that notice.
• Seized goods. Section 67(7) — if no notice is given within six months of seizure, the goods must be returned; the period is extendable, on sufficient cause, by not more than a further six months.
• Provisional release. Section 67(6) with Rule 140 — release on a bond in Form GST INS-04 for the value of the goods, plus a bank guarantee equal to the applicable tax, interest and penalty. Perishable or hazardous goods fall under Rule 141, released in Form GST INS-05 on proof of payment.

Bhima Enterprises adds a safeguard here: where goods are seized, the person searched must be informed in writing of the provisional release option. Many taxpayers never learn it existed until the goods have sat in a departmental godown for months.

The payment made on the day

This is where the largest amounts are lost, and the CBIC's own position is unambiguous. In Instruction No. 01/2022-23 [GST-Investigation] dated 25 May 2022, the Board recorded that recovery under Section 79 can follow only after notice and confirmation of the demand by an adjudication order — and therefore that "there may not arise any situation where 'recovery' of the tax dues has to be made by the tax officer from the taxpayer during the course of search, inspection or investigation". A taxpayer remains free to pay voluntarily, and the officer is expected to inform him of that facility through DRC-03.

The procedural template comes from the Gujarat High Court in Bhumi Associate v. Union of India (Special Civil Application No. 3196 of 2021, order dated 16 February 2021): no recovery by cheque, cash, e-payment or adjustment of input tax credit at the time of search or inspection; and if the assessee does wish to pay voluntarily, he should be advised to file Form DRC-03 the next day, after the visiting officers have left the premises. Rule 142(2) requires the taxpayer to inform the proper officer of the payment in Form GST DRC-03, on which the officer issues an acknowledgement in Form GST DRC-04.

Two consequences follow, both restated in Bhima Enterprises. A payment made outside that route — no written self-ascertainment, no DRC-04 — is not treated as voluntary, and a refund may be sought by writ petition. And the figures must match the statute: up to FY 2023-24, a pre-notice payment on one's own ascertainment under Section 74(5) is tax, interest under Section 50, and penalty of fifteen per cent of the tax; from FY 2024-25 the demand provision is Section 74A, under which Section 74A(8)(i) allows pre-notice payment of tax with interest and no penalty in non-fraud cases, while Section 74A(9)(i) prescribes the fifteen per cent penalty where fraud, wilful misstatement or suppression is alleged. A round figure paid across the counter rarely matches any of these. The Supreme Court, in Radhika Agarwal v. Union of India (2025 INSC 272, decided 27 February 2025), while upholding the arrest provisions with safeguards, held that coercing payment under threat of arrest is impermissible and that a person so compelled may approach the court for a refund.

What to do on the day, in order