GST Summons, Search, Seizure & Investigation under Sections 67 & 70 of the CGST / SGST Act, 2017

A Comprehensive Guide to Taxpayer Rights During Raid & Search, Summons Compliance, Right to Legal Counsel, Coerced DRC-03 Deposits, Statement Retractions, and Anticipatory Bail Protection against Section 132 Arrests

1. Executive Summary & Client Problem Statement

When the Directorate General of GST Intelligence (DGGI) or State GST Anti-Evasion wings descend upon a corporate office, factory, or residence under Section 67 of the CGST Act, business owners, key managerial personnel, and corporate directors are thrust into a high-stakes, intimidating regulatory interrogation. Unlike routine desk audits, a GST search and inspection is an aggressive, coercive operational procedure aimed at uncovering alleged tax evasion, circular trading, or bogus input tax credit (ITC) networks.

During search and summons proceedings, taxpayers face severe constitutional and commercial crises:

• Midnight Interrogations and Physical Intimidation: Taxpayers and their accountants are frequently detained in department offices for 18 to 36 continuous hours under the guise of recording statements under Section 70. Interrogations stretch late into the night, sleep is deprived, and aggressive physical or verbal intimidation is deployed to extract involuntary confessional statements admitting tax liability.
• Extortionate On-the-Spot Tax Deposits under Form GST DRC-03: In blatant violation of circulars issued by the Central Board of Indirect Taxes and Customs (CBIC), raiding teams threaten executives with immediate arrest under Section 132, seizure of all stock, and freezing of bank accounts unless immediate electronic payments running into crores of rupees are deposited on the spot via Form GST DRC-03.
• The Threat of Non-Bailable Arrest under Section 132: Under Section 132(1)(b), (c), or (d) read with Section 132(5), where the alleged tax evasion or fraudulent ITC utilization exceeds Rs. 5 Crore, the offense is cognizable and non-bailable. Officers routinely wield the threat of immediate arrest to compel corporate directors to accept arbitrary liability figures.
• Summons Harassment of Top Management: Summons under Section 70 are routinely issued directly to Managing Directors and Chief Executive Officers for routine book verification, bypassing junior accounting personnel and using the threat of penal prosecution under the Indian Penal Code / Bharatiya Nyaya Sanhita to paralyze executive leadership.

The Taxpayer's Constitutional Shield: Surviving a GST investigation requires unshakeable knowledge of statutory rights. A taxpayer has the right to legal counsel within visible distance, the right against self-incrimination under Article 20(3) of the Constitution, the right to retract coerced statements immediately via registered affidavit, and the right to challenge arbitrary summons and arrest threats before the High Court through anticipatory bail or Article 226 writ petitions.

2. Immediate "What to Do First": Emergency Client Action Protocol

During an active search or upon receipt of a summons under Section 70, execute the following emergency measures immediately:

A. Critical Documents to Gather Immediately

• Copy of the Search Authorization (Form GST INS-01): Verify and demand a copy of the written search authorization in Form GST INS-01 issued by an officer not below the rank of Joint Commissioner, confirming the exact address, DIN (Document Identification Number), and designated inspecting officers.
• Official Seizure Memo (*Panchnama*): Ensure that every document, laptop, mobile phone, hard disk, and account ledger seized during the search is meticulously inventoried in the Panchnama signed by two independent panch witnesses. Never sign a blank or generalized Panchnama.
• Summons Notice under Section 70: Scrutinize the summons notice for the mandatory Document Identification Number (DIN). A summons without a valid digital DIN generated on the CBIC portal is legally invalid and void ab initio under CBIC Circular No. 122/41/2019-GST.
• Audited Financials, Tax Invoices & Bank Realization Records: Assemble original tax invoices, transport bilties, e-way bills, and bank payment proof demonstrating genuine receipt of goods and actual inward supplies.
• Medical Records in Case of Physical Distress: If any director or employee experiences medical distress, hypertension, or physical exhaustion during interrogation, immediately request medical intervention and preserve government hospital emergency records to support subsequent statement retraction.

B. Fatal Tactical Mistakes to Avoid

• Ignoring Section 70 Summons: Under Section 70(2), every inquiry is deemed a "judicial proceeding" within the meaning of Sections 193 and 228 of the Indian Penal Code (IPC) / Sections 229 and 267 of BNS. Repeated failure to honor summons without written, documented legal excuses entitles the officer to initiate criminal prosecution or apply for non-bailable arrest warrants before the Chief Judicial Magistrate (CJM).
• Signing Pre-Drafted Confessional Statements under Duress: Interrogating officers frequently prepare typed statements saying: "I voluntarily admit that input tax credit was availed without movement of goods and I agree to pay the tax." Signing such confessions creates a fatal evidential handicap. If forced to sign under threat, the statement must be retracted via a formal sworn affidavit sent by Speed Post to the Commissioner within 24 to 48 hours of release.
• Submitting Unconditional DRC-03 Deposits During Raid: Depositing tax during a search under threat of arrest severely prejudices subsequent legal defense. If forced to deposit, ensure the Challan/DRC-03 description explicitly specifies: "Deposited Under Protest and Duress during search, without admission of liability, subject to adjudication."
• Appearing Without Competent Legal Briefing: While advocates are not permitted to sit beside the assessee during interrogation, the Supreme Court has affirmed the right to have an advocate present "at a visible distance" (beyond audible range). Appearing unprepared without legal consultation exposes the assessee to tactical traps and coercive admissions.

3. Statutory Architecture & Legal Provisions

The powers of inspection, search, seizure, and witness summons under GST are enacted in Sections 67, 70, and 71 of the CGST Act, 2017.

Section 67: Power of Inspection, Search and Seizure

"(1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that a taxable person has suppressed any transaction... or has claimed input tax credit in excess of his entitlement... he may authorize any other officer of central tax to inspect any places of business...

(2) Where the proper officer... has reason to believe that any goods liable to confiscation or any documents or books or things... will be useful for or relevant to any proceedings under this Act, he may search and seize such goods, documents or things.

(3) The documents, books or things referred to in sub-section (2)... shall be retained only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act."

Section 70: Power to Summon Persons to Give Evidence and Produce Documents

"(1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner... as is provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908.

(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a 'judicial proceeding' within the meaning of Section 193 and Section 228 of the Indian Penal Code."

CBIC Instruction No. 01/2022-23 (GST-Investigation) dated 25.05.2022:

Following nationwide reports of aggressive extortion during raids, the CBIC issued binding instructions to all GST formations:

• No recovery of tax can be made during search, inspection, or investigation proceedings.
• Taxpayers cannot be compelled or coerced into making voluntary tax deposits through Form GST DRC-03 during search.
• Interrogations must be conducted during reasonable business hours, and officers are strictly prohibited from holding taxpayers overnight or subjecting them to physical harassment.

Detailed Scrutiny of Section 67(10) & Applicability of the Code of Criminal Procedure / BNSS:

Under Section 67(10) of the CGST Act, 2017, all searches and seizures must be conducted strictly in accordance with the provisions of the Code of Criminal Procedure, 1973 (CrPC) / Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). This incorporates the mandatory statutory safeguards of Section 100 CrPC / Section 103 BNSS:

• The searching party must call upon two independent, respectable inhabitants of the locality to attend and witness the search.
• The search must be conducted in the presence of these panch witnesses, and the search inventory must be prepared and signed on the spot.
• Before commencing the search, the inspecting officers must offer themselves to be searched by the occupants to prevent the planting of incriminating digital drives or documents.

A search conducted with departmental drivers or peons acting as witnesses, or without offering personal search, is legally contaminated, weakening the prosecution's case before trial courts.

The Right Against Self-Incrimination under Article 20(3) of the Constitution:

While Section 70 compels a summoned person to state the truth and produce records, this statutory obligation is strictly subordinate to the fundamental right guaranteed under Article 20(3) of the Constitution of India: "No person accused of any offense shall be compelled to be a witness against himself." Where the investigation has reached an accusatory stage and the officer has openly threatened arrest under Section 132, the witness is entitled to invoke their constitutional privilege against answering questions designed to force an oral confession of guilt.

4. Supreme Court & Allahabad High Court Jurisprudence

5. Step-by-Step Procedural Roadmap

The lifecycle of a GST search, summons, and investigation proceeding is structured as follows:

• Stage 1: Arrival of Raiding Team & Search Execution
• Officers present Form GST INS-01 authorization and show departmental identity cards.
• Search conducted in the presence of two independent witnesses. Taxpayer demands copy of INS-01 and verifies Document Identification Number (DIN).
• Seizure of records, hard drives, and mobile devices executed under formal, detailed Panchnama.
• Stage 2: Issuance of Summons under Section 70
• Proper officer issues formal summons fixing date, time, and specific records required.
• Taxpayer verifies digital DIN on the CBIC portal. If valid, prepares documented response along with certified ledgers, tax invoices, and bank statements.
• Stage 3: Appearance & Interrogation Safeguards
• Summoned person appears before the Investigating Officer. Legal counsel accompanies the client, sitting within visible distance.
• Questioning conducted. The client answers truthfully based on recorded financial records, refraining from guessing or admitting speculative liability.
• Stage 4: Statement Retraction via Registered Affidavit
• If forced statements or coerced admissions were extracted under threat of arrest or overnight detention, client immediately consults senior counsel.
• A sworn affidavit retracting the statement in detail, setting out the circumstances of duress, is drafted, notarized, and dispatched via Registered Post / Speed Post to the Commissioner, Joint Commissioner, and Investigating Officer within 24 to 48 hours.
• Stage 5: High Court Writ or Anticipatory Bail Protection
• If investigating officers issue imminent arrest threats under Section 132 (tax exposure > Rs. 5 Crore) or summon top management repeatedly, counsel files an Anticipatory Bail application before the Sessions Court / High Court, or institutes a Writ Petition (Criminal/Tax) under Article 226 for protective directions.

6. Extensive Client FAQ Section

Q1. Can GST officers arrest me during a search or interrogation?

Answer: Under Section 69 of the CGST Act, 2017, the Commissioner has the power to authorize the arrest of any person if there are "reasons to believe" that the person has committed an offense specified in clauses (a), (b), (c), or (d) of Section 132(1)—primarily supplying goods without invoice, issuing invoices without supply of goods (fake invoicing), or fraudulently availing input tax credit. However, if the alleged tax evasion is below Rs. 5 Crore, the offense is bailable, and the Assistant/Deputy Commissioner is statutorily bound to grant bail on the spot under Section 69(3). Only where the alleged evasion exceeds Rs. 5 Crore is the offense non-bailable, requiring the officer to produce the arrested person before a Magistrate within 24 hours.

Q2. Can I have my lawyer present while GST officers record my statement under Section 70?

Answer: While the Supreme Court has held that an assessee does not have the right to have an advocate sit beside them to whisper answers during an administrative interrogation, the Court in the landmark ruling of D.K. Basu v. State of West Bengal and subsequent GST rulings affirmed that the assessee has a constitutional right to have an advocate present within visible distance (beyond audible range). Having your counsel visible through a glass partition or across the room prevents physical intimidation, torture, and forced overnight detention.

Q3. Can GST officers interrogate me all night and detain me in the office overnight?

Answer: Absolutely not. Under CBIC Instruction No. 01/2022-23 (GST-Investigation) dated May 25, 2022, and binding human rights jurisprudence, interrogations must be conducted during reasonable business hours. Keeping an assessee detained in a departmental office past midnight, interrogating them through the night, or depriving them of sleep constitutes an illegal restraint of personal liberty under Article 21 of the Constitution. Any confession extracted under such oppressive circumstances is legally involuntary and will be rejected by the courts.

Q4. What should I do if officers force me to make a payment under Form GST DRC-03 during the raid?

Answer: The CBIC has issued strict, categorical instructions prohibiting officers from recovering tax or demanding DRC-03 payments during search proceedings. If you are forced to make an electronic tax deposit under the threat of arrest or physical harassment, ensure that you endorse the deposit with the words: "Deposited Under Protest and Extreme Coercion during search without admission of liability." Immediately upon release, dispatch a formal protest letter to the Principal Commissioner and file a Writ Petition before the Allahabad High Court seeking a refund of the coerced deposit.

Q5. How do I retract a statement signed under duress during a GST interrogation?

Answer: Speed is vital. The retraction must be executed within 24 to 48 hours of your release from the department's custody. Execute a comprehensive sworn affidavit before an Oath Commissioner / Notary Public detailing the exact physical or mental coercion, sleep deprivation, or threats used to extract the signature. Send this affidavit via Speed Post and registered email to the Commissioner of GST, the Joint Commissioner (Anti-Evasion), and the Investigating Officer, and place it on record before the Chief Judicial Magistrate if remand proceedings are initiated.

Q6. Can I seek an exemption from personal appearance if I am a corporate director or senior executive?

Answer: Yes. Under Section 70, the summoned person is normally expected to attend in person. However, if the summons has been issued to the Managing Director, CEO, or female directors who do not manage day-to-day tax filing, you can file a formal representation through counsel requesting permission to appear through an authorized representative (such as the Chief Financial Officer, Tax Manager, or Chartered Accountant) who actually maintains the books of accounts, citing CBIC Circular No. 122/41/2019-GST and Allahabad High Court precedents protecting top corporate executives from routine summons harassment.

Q7. Can I apply for Anticipatory Bail if the GST department threatens to arrest me under Section 132?

Answer: Yes. The Allahabad High Court and the Supreme Court have settled that an application for Anticipatory Bail under Section 438 CrPC (now Section 482 of the Bharatiya Nagarik Suraksha Sanhita - BNSS) is maintainable in respect of offenses under Section 132 of the CGST Act. If you have received Section 70 summons and the investigating officers have openly threatened arrest during questioning for alleged fake ITC transactions exceeding Rs. 5 Crore, you can approach the Sessions Court or the High Court seeking anticipatory bail to protect your personal liberty while cooperating with the inquiry.

Q8. Does a summons notice need a Document Identification Number (DIN) to be valid?

Answer: Yes. Under CBIC Circular No. 122/41/2019-GST dated November 5, 2019, any summons, search authorization, inspection notice, or arrest memo issued by a central tax officer without a computer-generated Document Identification Number (DIN) is invalid and void ab initio, and shall be deemed to have never been issued. Taxpayers have the right to verify the authenticity of the DIN on the official government portal (cbic.gov.in) before submitting to any inquiry.

Q9. Can GST investigating officers seize my personal mobile phone, laptop, or private diary during a business search?

Answer: Under Section 67(2), officers can seize only such goods, documents, books, or things which they have "reason to believe" will be useful for or relevant to any proceedings under the Act. While business laptops and enterprise email accounts can be cloned or imaged, the indiscriminate seizure of personal smartphones belonging to family members, children, or non-executive directors violates the fundamental right to privacy under Article 21 (as established in K.S. Puttaswamy v. Union of India). If personal devices are seized, you can move an urgent application under Section 67(3) read with Section 67(5) for the immediate return of the devices or for providing electronic mirror copies (*hash values*), failing which a writ lies before the High Court.

Q10. How should an enterprise handle conflicting summons from both State GST and Central GST (DGGI) on the same issue?

Answer: Under Section 6(2)(b) of the CGST Act, where a proper officer under the State GST Act has initiated any proceeding on a subject matter, no proceedings shall be initiated by the proper officer under the Central GST Act on the same subject matter. Multiple simultaneous inquiries by both the Central DGGI and State Anti-Evasion wings constitute unlawful jurisdictional harassment (*forum shopping*). You must submit a formal written objection apprising both authorities of the prior initiated inquiry and file a Writ Petition before the Allahabad High Court to quash the duplicative summons and consolidate the investigation before a single designated jurisdictional authority.

SUMANJARI & CO. ADVOCATES

Chambers for Revenue Law, Land Title Defense, GST, Direct Tax & High Court Writ Litigation

Chamber D-311, High Court of Judicature at Allahabad, Lucknow Bench, Uttar Pradesh – 226010

Direct Consultation: +91 82990 86204  |  Web: sumanjariadvocates.com

Disclaimer: This publication is intended solely for client awareness and academic reference under the Advocates Act, 1961, and does not constitute formal legal solicitation.