Inspection Versus Search Under GST

Inspection Versus Search Under explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

They arrive on the same form. They are not the same power, and the officer who conducts one under authority for the other is acting outside the authorisation.

Inspection — s.67(1): on reasons to believe that there is suppression, excess credit or contravention to evade tax, the Joint Commissioner authorises an officer to inspect any places of business. Search — s.67(2): either pursuant to an inspection or otherwise, on reasons to believe that goods liable to confiscation or documents or books or things useful or relevant to proceedings are secreted in any place, the Joint Commissioner authorises an officer to search and seize, or may himself do so. The distinguishing word is "secreted", and the two satisfactions are separate.

The two sub-sections side by side

"Secreted" is the operative word

Section 67(2) is not triggered because something is relevant. It is triggered because relevant things are secreted.

Secreted carries the sense of hidden, concealed, kept out of the way — deliberately placed where they would not ordinarily be found or would not ordinarily be produced.

Which means:

• Books kept in the accounts department, in the ordinary place for books, are not secreted.
• Records maintained electronically on the company's servers and accessible to the department on demand under s.71(2) are not secreted.
• Records at a declared additional place of business are not secreted merely because they are not at the principal place.
• Documents already produced in response to a summons or a records demand cannot simultaneously be secreted.

The ICAI handbook treats this as central, distinguishing "circumstances when articles are secreted" from "non-secreted circumstances". Where nothing is concealed, the correct route is s.71 access or a s.70 summons for production, not a search. Challenging reasons to believe →

"Either pursuant to an inspection... or otherwise"

Two consequences follow from those words.

A search does not require a prior inspection. The Joint Commissioner may authorise a search directly.

An inspection does not automatically authorise a search. The words are permissive, not converting. Where an inspection reveals grounds for a search, a fresh satisfaction must be recorded and a fresh authorisation issued. An officer who begins inspecting and continues by opening what was not offered has crossed from one power into another, and the authorisation should be checked against what is actually being done.

Exhausted by exercise

An authorisation is spent when it has been acted upon.

The handbook makes the point under the heading "exhausted by exercise": an INS-01 authorises a visit to a stated place for a stated purpose. Once that visit is concluded, the authorisation has done its work. A second visit to the same premises requires a fresh authorisation, resting on a fresh satisfaction.

The related point is "no follow-up correspondence". Section 67 authorises a physical proceeding — entry, examination, seizure. It is not a source of authority to issue subsequent letters demanding documents, explanations or reconciliations. Those demands must find their own power: s.70 for production, s.71 for records, s.61 or s.65 for verification, or s.73/74/74A for a demand.

A letter that cites "in continuation of the inspection dated ..." and asks for a three-year reconciliation is asking under a power that has been exhausted. The right response is not refusal but a polite request that the provision under which the information is sought be stated — which, under s.160(2), also matters: responding on merits to an invalid proceeding can be treated as acquiescing in its validity.

Why the distinction has practical bite

Evidence. Material gathered by searching under an inspection-only authorisation is vulnerable, and the objection must be taken at the time and in writing to be worth anything later.

Seizure. Nothing may be seized under s.67(1). Seizure requires the s.67(2) satisfaction and an INS-02 order, with an inventory signed by the person from whom the seizure was made under Rule 139(5).

Sealing and breaking open. Section 67(4) gives the power to seal or break open to "the officer authorised under sub-section (2)" — that is, the officer authorised to search, not the officer authorised to inspect.

Prohibition orders. The proviso to s.67(2), read with Rule 139(4), permits an INS-03 prohibition order where seizure is not practicable. It too belongs to the search power.

Key takeaways

• Inspection rests on suppression, excess credit or contravention to evade tax; search rests on things being secreted.
• Records kept in the ordinary place, or already produced, are not secreted.
• A search may be authorised without a prior inspection, and an inspection does not convert into one.
• An authorisation is exhausted by exercise; a second visit needs a fresh INS-01.
• Section 67 does not support follow-up correspondence; each demand needs its own provision.
• Seizure, sealing and prohibition orders all belong to the s.67(2) power, not to inspection.

Read next

• Section 67(1): Inspection and the Reasons-to-Believe Test
• Challenging "Reasons to Believe" in a GST Search
• Rule 139 and the INS Forms: The Search and Seizure Procedure
• Section 71: Access to Business Premises and the Six-Item List

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Inspection, Search, Seizure and Arrest under GST (July 2025).