GST Officers Cannot Keep Tax Consultant's Office Sealed After Search Ends: Gauhati High Court

The Gauhati High Court on 10 August held that GST authorities cannot keep business premises sealed after completing a search when the owner had not denied them access.

Justice Devashis Baruah directed the Assam GST Department to de-seal the office of Sri Surendra Sharma, a tax consultant operating under the name Sharma and Associates in Bokajan, Assam. The Bench held:

“...the goods mentioned in the Annexure to the Order of Prohibition in FORM GST INS-03 can under no circumstances be said to be goods liable for confiscation as the things mentioned therein are laptops, desktops, 426 files, Refrigerators, Air conditioners, Inverter, Batteries etc which are not liable for confiscation under Section 120 of the Act of 2017 in the facts of the present case.”

GST authorities searched Sharma's office on 1 April 2026 after obtaining authorisation under the GST law. During the search, the officers seized various documents, electronic devices and other items and issued a seizure order.

The authorities also issued a prohibition order covering two desktop computers, six laptops, 426 files, a printer, batteries, an inverter, air conditioners and a refrigerator. Sharma submitted that he used these items to run his tax consultancy and did not trade in them. After the search, the GST authorities sealed the entire office and took away its keys.

Sharma submitted that the sealing disrupted his work and caused serious difficulties as he had more than 200 clients. He also pointed out that the office had remained sealed for more than four months. The GST Department opposed the petition, alleging that Sharma was involved in passing fake Input Tax Credit through fake invoices and that the alleged tax evasion exceeded Rs. 6.68 crore. The Department argued that the premises should remain sealed until it completed the investigation.

The High Court, however, found no material to show that Sharma had denied the officers access to his premises during the search. It examined the power of GST officers to seal premises during search proceedings and held that the authorities can exercise this power only when a person denies them access to the premises or other specified places. They cannot use the power to keep premises sealed merely to retain seized documents or other items.

Further, the Bench held that the power to seal premises is connected with the search process and ends once the search and seizure proceedings are completed. It also held that the items covered by the prohibition order, including the laptops, desktops, files, refrigerator, air conditioners, inverter and batteries, could not be treated as goods liable to confiscation in the facts of the case. It observed:

“..the impugned action on the part of the Respondent Authorities, more particularly the Respondent No. 4 in seizing the goods in FORM GST INS-03; handing over the custody of the seized documents/books/things to the Petitioner after carrying out the seizure and keeping the office premises under seal after the completion of search and seizure cannot be sustained in law”.

The Court held that the Department therefore acted illegally by sealing Sharma's office and keeping it sealed for four months. It directed the Department to de-seal the office and hand over possession to Sharma by 12 August 2026. It, however, gave the authorities liberty to take custody of the seized documents and other items again if they remained necessary for the investigation, subject to issuing a fresh seizure order.

The Bench also directed the authorities to consider providing copies of the seized documents to Sharma, unless doing so could adversely affect the investigation.

Accordingly, the Court quashed the prohibition order issued on 1 April 2026.

For Petitioner: R.S. Mishra, Advocate

For Respondent: B. Choudhury, Standing Counsel