Facts of the Case

This intra-court appeal, filed by a practising advocate as a third party, arose from an order dated 03.04.2023 of a learned Single Judge in WPA 16929 of 2022, which had directed the police to investigate fake companies committing GST fraud, including how many fake writ petitions had been filed to defraud the government. Pursuant to this direction, the Anti-Fraud Department of Kolkata Police and the GST Department issued a series of standard-format notices under Section 160 Cr.P.C. to advocates regularly appearing in GST/WBVAT/WBST matters, calling for information about their clients, referencing an FIR (No. 260 dated 30.09.2022) registered by Hare Street Police Station.

Issues Involved

  1. Whether the appeal filed by a third-party advocate against an order not directly affecting him was maintainable.
  2. Whether the Anti-Fraud Department's notices to advocates, seeking client information, breached advocate-client privilege and exceeded the scope of the Single Judge's directions.

Petitioner's Arguments

  • The appellant, a practising advocate, submitted that the notices issued under Section 160 Cr.P.C. calling for information regarding clients violated the privileged nature of attorney-client communication under Sections 126 and 129 of the Evidence Act.
  • The Single Judge's direction had been misconstrued by the Anti-Fraud Department into a blanket, standardised notice regime against all advocates handling GST matters, rather than an assessee-specific investigation.

Respondent's Arguments

  • The State raised a preliminary objection to maintainability of the appeal by a third party who was not a party to the writ proceedings.
  • It was submitted that pursuant to the interim directions in the writ petition, investigation had led to unearthing several fake companies involved in GST fraud, and criminal and other proceedings had been initiated.

Court Order / Findings

  • The Division Bench held the appeal maintainable since the appellant, though a third party, was directly and adversely affected by the notices issued pursuant to the impugned order.
  • Relying on State of Punjab v. Sodhi Sukhdev Singh and settled principles on Sections 126/129 of the Evidence Act, the Court held that client communications to an advocate are privileged, and the Anti-Fraud Department had misconstrued and misunderstood the scope of the Single Judge's direction by issuing standardised, generalised notices to all advocates instead of conducting an assessee-centric investigation, noting that the offending notices had already been withdrawn by the department after being sensitised.
  • The Court set aside the standardised Section 160 Cr.P.C. notices, clarified that the GST authorities must first conduct a thorough documentary study before channelising any investigation to be assessee-specific rather than a public notice-style dragnet against the entire assessee community, and disposed of the appeal with this clarification and liberty to investigate individual assessees in accordance with law.

Important Clarification

A court's direction to investigate suspected GST fraud does not authorise investigating agencies to issue blanket, standardised notices seeking privileged client information from advocates practising in tax matters; any GST fraud investigation must remain assessee-centric, grounded in documentary scrutiny by the GST authorities first, and must respect the privilege attaching to attorney-client communications under the Evidence Act.

Sections Involved

  • Section 160, Cr.P.C., 1973 — empowers a police officer to require attendance of witnesses for investigation.
  • Sections 126 & 129, Indian Evidence Act, 1872 — protect professional/privileged communications between an advocate and client.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee/advocates — the blanket notices were set aside, with liberty to the GST and police authorities to conduct a proper, assessee-specific investigation in accordance with law.

Case Details

  • Court: High Court at Calcutta
  • Case Number: MAT 1054 of 2023
  • CNR / Citation: MAT 1054 of 2023
  • Coram: Hon'ble T.S. Sivagnanam, Chief Justice & Hon'ble Hiranmay Bhattacharyya, J.
  • Date of Order: 14 June 2023

Link to Download the Order

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