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GST Authorities can’t Arbitrarily Confiscate Godown: Gujarat HC

  • Jun 2, 2020 | Divita S Gupta

The High Court of Gujarat has held that Goods and Services Tax authorities cannot confiscate godowns/warehouses without having a substantial reason to believe that the goods stored within the godown/warehouse premises are liable to be confiscated.

A writ application was submitted by an applicant after GST officers exercised their authority under Section 67 of the Central Goods and Service Tax (CGST) Act and raided and sealed a godown in the State of Gujarat. This godown/warehouse was allegedly storing agricultural produce like cotton bales and cotton yarn. The applicant stated that tax officers who seized the godown ought to have undertaken the search and seizure by breaking open the lock as prescribed under Section 67(4) of the Central Goods and Service Tax (CGST) Act, and searched and confiscated any goods that violate the laws under the Goods and Services Tax. The applicant stated that the godown was being rented by five business entities to store their goods and as such should not be sealed by tax authorities for any violations made by the renting parties.

The applicant content that if GST authorities found any suspicious goods at the premises, they ought to have seized the goods under violation. But there is no valid reason to continue keeping the godown/warehouse sealed.

The division bench at the Gujarat High Court has held that the GST authorities can continue proceedings and investigations against the five dealers whose goods have been confiscated, but they do not have the authority to seize and seal premises that are being rented to a business entity.


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Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.