A GST officer just walked into your warehouse. Here's what actually protects you

A client's warehouse got a surprise visit last month. Officers walked in mid-afternoon, and the team had no idea what to do first.

That's normal. Most businesses go through an entire GST life cycle without ever seeing Section 67 in action, and then it lands on a random Tuesday with people standing at the gate asking for the owner.

What you do in the first 30 minutes shapes the next 3 years of the case. Here's what the law actually requires, where officers overstep, and what to do instead of panicking.

What Section 67(1) actually lets an officer do

Section 67(1) of the CGST Act doesn't let any GST officer decide to search your premises on a whim. The power sits with a specific rank, triggered by specific grounds.

The officer authorising the inspection has to be a Joint Commissioner or above. Not an Inspector, not a Superintendent, not even an Assistant Commissioner. If the person waving papers at your gate is junior to that, they're not the one who authorised the search. They're executing someone else's authorisation, and that authorisation still has to trace back to a Joint Commissioner.

That officer also needs "reasons to believe" one of two things:

Ground A. A taxable person has suppressed a transaction, understated stock, claimed input tax credit beyond entitlement, or otherwise contravened the Act in a way likely to evade tax.

Ground B. A transporter, or the owner or operator of a warehouse or godown, is holding goods that escaped tax, or is keeping accounts or goods in a way likely to cause evasion.

Two separate grounds, two separate categories of person. A warehouse operator gets searched under Ground B, not Ground A, and the distinction matters for the next section.

The document you can ask for, and the one you can't

Ask for a copy of the search authorisation itself, Form GST INS-01, issued under Rule 139(1). Take it before the search proceeds, not after. It names the officer who authorised the search, states the rank, and records which of the two grounds applies. Check the identity cards of the officers on the ground against the names on that form.

What you won't get, and shouldn't expect, is the underlying file note where the Joint Commissioner actually wrote down why they believed Ground A or B applied. That reasoning exists somewhere in the department's internal record, but it isn't handed over at the gate. Courts have been clear that "reasons to believe" is a subjective threshold, and the way to test whether it was met is a writ petition after the fact, not a negotiation with the inspecting team while they're standing in your warehouse.

So the practical move isn't demanding to see the reasoning. It's securing the authorisation document itself, confirming the rank and the ground it cites, and keeping that copy for whatever challenge comes later.

DIN protects you against a CGST search. A state search is a different story

The Document Identification Number requirement started with Circular No. 122/2019 and was extended by Circular No. 128/47/2019-GST to cover search authorisations, summons, and arrest memos issued by central tax officers. Since December 2019, a CGST communication without a valid, verifiable DIN is treated as invalid, full stop.

In 2025, CBIC narrowed this slightly. Circular No. 249/06/2025-GST says a DIN isn't needed on communications generated through the GST portal that already carry a verifiable Reference Number (RFN), since the RFN does the same job. That circular still binds CGST officers only.

Here's the part the LinkedIn checklist gets half right: a missing DIN doesn't automatically kill a state GST inspection, and that's not a technicality, it's because the DIN circular was never binding on state officers in the first place. It's a CBIC instruction issued under Section 168(1) for central tax administration. A state GST department is bound by it only if the state has issued its own parallel circular adopting it.

The Gujarat High Court confirmed exactly this in M/s NRM METALS (INDIA) PRIVATE LIMITED & ANR. Versus UNION OF INDIA & ORS. - 2025 (6) TMI 582 - GUJARAT HIGH COURT, upholding summons and a provisional attachment order issued by state GST officers without a DIN, because no corresponding circular existed under the state Act. Other High Courts have gone the other way on similar facts, so this is genuinely unsettled ground depending on which state you're in and what that state's own circulars say. Check your state's GST department instructions before assuming a missing DIN gets you anywhere.

Where officers can and can't show up

The authorisation is tied to specific premises, not to you as a person generally. Section 67(1) permits inspection at the place of business of the taxable person under Ground A, or the place of business of the transporter, or the warehouse or godown of the operator named under Ground B.

An authorisation naming your registered warehouse doesn't extend to your director's home, a sister concern at a different address, or a vendor's premises down the road, unless that location is independently named in its own authorisation. If officers want to widen the search beyond what's written on the INS-01, that's a fresh authorisation problem, not something that happens by walking further down the corridor.

What to actually do while they're inside

Don't scramble to tidy up records once officers are on site. That instinct reads as suppression even when it's innocent, and it can turn a compliance gap into a fraud allegation under Section 74.

Hand over what exists, as it exists. Invoices, e-way bills, purchase orders, contracts, bank statements if asked. If a document genuinely isn't available on the spot, say so and note when it can be produced, rather than reconstructing it under pressure.

One area worth knowing about specifically: cash and bullion. Officers sometimes seize cash found on the premises as though it were unaccounted stock. It generally isn't theirs to take. In Deepak Khandelwal Proprietor M/s. Shri Shyam Metal Versus Commissioner Of CGST, Delhi West & Anr. - 2023 (8) TMI 929 - DELHI HIGH COURT, the court held that cash doesn't fall within the definition of "goods" for GST purposes and can't be seized under Section 67 unless there's a direct, demonstrable nexus between that cash and tax evasion. If cash gets seized during your inspection, ask what the stated nexus is, and get it recorded in the panchnama.

Everything seized should be listed in a panchnama, signed by an independent witness, with a copy left with you. Read it before you sign it.

Spot recovery isn't how GST liability gets determined, and CBIC has said so itself

Liability under GST is determined through adjudication under Section 73 (ordinary short payment, no suppression) or Section 74 (fraud, wilful misstatement, or suppression), with a show cause notice, a reply period, and a hearing. None of that happens on the floor of a warehouse during a 4-hour inspection.

CBIC's own Instruction No. 01/2022-23 [GST-Investigation], dated 25 May 2022, tells officers exactly this: recovery of tax during search, inspection, or investigation should happen only if the taxpayer chooses to pay voluntarily, and the choice has to be genuinely free of coercion. The instruction directs officers not to insist on payment during the visit, not to collect signed cheques or DRC-03 forms under pressure, and to allow deposits to be made after normal business hours if the taxpayer wants to pay at all.

If a payment gets pushed through under pressure during a search, courts have repeatedly treated it as involuntary and ordered refunds. The Karnataka High Court has gone further, holding that a DRC-03 payment made without a prior determination of tax liability isn't "voluntary" in any meaningful sense. If your team is asked to pay or sign anything on the spot, the answer is that liability will be assessed through the normal Section 73 or 74 process, and any payment will follow that process, not precede it.

What happens after the officers leave

The search itself isn't the case. It's the evidence-gathering step that usually leads to a show cause notice weeks or months later, under Section 73 or Section 74 depending on what the department believes it found.

That gap between the search and the SCN is your window. Use it to reconstruct a clean, dated record of what was seized, what was said, and what documents exist to support your position on the underlying transactions. If goods were seized, track the 6-month clock under Section 67(7): the department has to issue a notice within 6 months of seizure or return the goods, and that period can be extended only once, for a further 6 months, for sufficient cause recorded in writing.

If you're staring down a GST inspection right now

Get the INS-01, note the officer's rank, and keep every document that gets seized or discussed on record. If anyone pushes for a signed payment on the spot, that's the moment to call your advisor, not after.

We help businesses across Bangalore, Hyderabad, Vishakhapatnam and Vijayawada respond to GST search and inspection notices, and represent them through the SCN and adjudication process that follows.