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Section 67 and section 71 of India’s Central Goods and Services Tax Act, 2017, serve different purposes. Section 67 provides for inspection, search and seizure when specified reasons to believe exist; a search under section 67(2) additionally requires a belief that relevant goods or records are secreted in a place. Section 71 allows an authorized officer to access a registered person’s business premises for audit, scrutiny, verification and revenue checks. It is not, by itself, the section 67 power to search for secreted material and seize it.
What is the difference between section 67 and section 71?
The key distinction is the statutory purpose and threshold. Section 67 addresses specified suspected tax-evasion circumstances and, separately, search and seizure of goods or records believed to be secreted. Section 71 provides access to a registered person’s place of business for audit, scrutiny, verification and checks necessary to safeguard revenue. Its text does not set out section 67’s reasons-to-believe tests.
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| Issue | Section 67: inspection, search and seizure | Section 71: access |
|---|---|---|
| Purpose | Inspect specified places in listed suspected evasion circumstances; search for and seize goods or records believed relevant and secreted. | Access a registered business place for audit, scrutiny, verification and revenue checks. |
| Threshold | Reasons to believe are required. For search and seizure, the belief must concern relevant goods or records secreted in a place. | Access must be for the purposes stated in section 71; the section does not state section 67’s suspicion tests. |
| Authorization | A proper officer not below Joint Commissioner rank may act personally or authorize another central-tax officer in writing, as applicable. | The officer exercising access must be authorized by a proper officer not below Joint Commissioner rank. |
| Scope | Inspection at specified business or other places; search for goods, documents, books or things. | Access to a registered person’s business place to inspect accounts, documents, computers, programs, software and other available things. |
| Seizure | Section 67(2) authorizes seizure, subject to statutory protections; if goods cannot practicably be seized, dealing with them may be prohibited without permission. | Section 71 is an access and inspection provision; it does not itself grant section 67’s search-and-seizure power. |
| Records and time limits | Seized materials are subject to retention, copying and return provisions; seized goods have a separate return deadline if no notice is issued. | Specified records must be made available on demand within fifteen working days, unless a further period is allowed. |
Calling section 71 access a “search” can blur an important legal distinction. The powers may both involve officers examining business records, but the statutory basis, trigger and consequences are not interchangeable.
When can officers inspect under section 67(1)?
For inspection under section 67(1), a proper officer not below Joint Commissioner rank must have reasons to believe that a listed circumstance applies. The provision covers, among other cases, a taxable person’s suppression of a transaction or stock, a claim to input tax credit beyond entitlement, or a contravention of the Act or rules intended to evade tax. It also addresses suspected untaxed goods and evasion-prone recordkeeping at transport, warehouse, godown or other relevant places.
The qualifying officer may authorize another central-tax officer in writing to inspect the relevant place. The statutory trigger is not simply that an audit or routine records check is taking place: it is the specified section 67(1) belief about the circumstances covered by that subsection.
What makes a section 67 search different?
Section 67(2) deals with search and seizure, not merely inspection under another name. The proper officer not below Joint Commissioner rank must have reasons to believe that goods liable to confiscation, or documents, books or things useful or relevant to proceedings, are secreted in a place. The qualifying officer may search and seize personally or authorize another central-tax officer in writing.
If seizing goods is impracticable, the officer may issue an order prohibiting a person from dealing with them without permission. Documents, books or things seized may be retained only for as long as necessary for examination or proceedings. These powers are accompanied by specific protections:
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- Copies of seized records: A person may take copies or extracts in the presence of an authorized officer, unless the proper officer considers that doing so may prejudice the investigation.
- Unrelied-upon material: Documents, books or things not relied on for the notice must be returned within thirty days after the notice is issued.
- Provisional release: Seized goods may be provisionally released on the statutory terms.
- Return of seized goods: If no notice concerning the goods is issued within six months, they must be returned. For sufficient cause, the period may be extended by up to a further six months.
- Search procedure: The Act applies the Code of Criminal Procedure’s search-and-seizure provisions so far as may be, subject to the modification stated in the Act.
What can officers access or request under section 71?
Section 71(1) allows an officer authorized by a proper officer not below Joint Commissioner rank to access a registered person’s place of business for audit, scrutiny, verification and checks necessary to safeguard revenue. The officer may inspect books of account, documents, computers, computer programs, software—whether installed in a computer or otherwise—and other things available at the place that may be required for those purposes.
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On demand, the person in charge must make specified records available. These include records declared as prescribed, a trial balance, audited annual financial statements where required, applicable cost-audit and income-tax-audit reports, and other relevant records. The usual period is fifteen working days from the demand; a further period may be allowed by the specified officer, audit party or nominated accountant.
Section 71’s access authority is purpose-limited. If officers seek to search for material believed to be secreted and seize it, section 67’s separate conditions and safeguards are relevant; section 71 alone does not supply that power.
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Which forms and inventory rules apply to a section 67 operation?
Rule 139 of the Central Goods and Services Tax Rules, 2017, prescribes Form GST INS-01 for authorization and Form GST INS-02 for a seizure order. It also requires an inventory of seized goods or records, including their description and identifying details where applicable, signed by the person from whom they are seized. The rules also address provisional release and perishable or hazardous seized goods in rules 140 and 141.
Do these 3 things before closing this tab:
1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsThese form and inventory requirements concern the section 67 procedure; they should not be mistaken for a general section 71 access checklist.
What should a business do when officers arrive or demand records?
- Clarify the stated authority and purpose. Ask whether the visit is being conducted under section 67 or section 71, and request the applicable written authorization or order. Under section 67, written authorization is relevant when another officer is authorized to inspect, search or seize.
- Identify the scope of the request. For section 71, establish which audit, scrutiny, verification or check is being conducted and which records or systems are requested. For section 67, distinguish inspection from a search and any seizure.
- Keep a record of what happens. Note the officers present, the documents requested, any records or goods taken, and copies of forms or inventories provided. If materials are seized, check the inventory and its identifying descriptions.
- Track the applicable deadlines. Record the date of any section 71 demand and the date of a section 67 notice or seizure. The provisions use different clocks for record production, return of unrelied-upon material and return of goods.
- Get case-specific advice where needed. A live search, seizure or disputed demand can turn on the facts, applicable rules and current law; consult a GST lawyer or chartered accountant for advice tailored to the matter.
The statutory framework summarized here is the Central Goods and Services Tax Act and Rules. State GST enactments and amendments, later instructions, and binding court decisions may affect a particular matter. The CBIC circular index lists Instruction No. 01/2022-23 [GST-Investigation], dated 25 May 2022, concerning tax deposits during search, inspection or investigation; the index entry alone does not establish the instruction’s detailed directions.
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