FACTS OF THE CASE

  1. Multiple writ petitions (including Genesis Enterprises, Kabun Enterprises OPC Pvt Ltd, Aayme Sourcing Creations OPC Pvt Ltd and others) were filed by members of the Gumber family challenging actions taken by the GST Department (CGST Delhi East) during a search and seizure operation on 22nd July 2025 at the family’s residence in Noida and various business premises.
  2. Petitioners alleged that GST officials conducted unlawful and unauthorized searches at their residential and business premises, seized CCTV footage, coerced withdrawal of refunds, and compelled payments under duress.
  3. Petitioners sought relief including non‑use of CCTV footage, de‑sealing of business premises, and restoration of Input Tax Credit (ITC) and refund amounts reversed under coercion.
  4. The GST Department denied illegality, asserting that authorities acted with valid “reasons to believe” under Section 67 of the Central Goods and Services Tax Act, 2017 and that investigations revealed a network of allegedly fictitious suppliers and firms created to wrongfully generate ITC and refunds. 

ISSUES INVOLVED

  1. Whether the search and seizure conducted by GST authorities were unlawful, arbitrary, or violative of statutory safeguards.
  2. Whether the seizure and potential use of CCTV footage from the petitioners’ residential premises violated privacy rights.
  3. Whether the authorities complied with the procedural requirements and pre‑conditions of “reasons to believe” under Section 67 of the CGST Act.
  4. Whether the court should intervene at the stage of ongoing investigation.

PETITIONER’S ARGUMENTS

• Search and seizure were unauthorized, defective, and violative of fundamental rights, particularly privacy, because CCTV footage from a residential premise was seized.

• Panchanamas were defective and did not record material facts properly.

• Coercion was used to make payments and withdraw refund claims, impacting rights and business operations.

• GST actions violated statutory limits in Section 67 and also breached safeguards under Bhartiya Nagarik Suraksha Sanhita, 2023 and established judicial precedents. 

RESPONDENT’S ARGUMENTS

• The GST Department acted within statutory authority under Section 67 CGST Act with valid “reasons to believe” due to alleged fraudulent and fictitious transactions.

• Seizure and search operations were necessary for investigation into possible tax evasion, fake ITC claims, and fictitious firms.

• Alleged violation of privacy was misplaced because seized CCTV footage was not accessed without following proper SOP, and statutory safeguards are available during investigation. 

COURT’S ORDER / FINDINGS

  1. The High Court analysed Section 67 of the CGST Act and noted that the power to search, inspect and seize can be exercised only if a senior officer has recorded “reasons to believe” based on material indicating suppression of transactions, excess claim of ITC, or evasion of tax.
  2. The Court emphasised statutory safeguards in Section 67, including return of unrelied seized materials, rights to copies of seized documents, and inventory requirements.
  3. The Court observed that intervention at the stage of an on‑going investigation is generally not justified unless there is clear abuse of authority.
  4. The Court reviewed relevant precedents (e.g., R.J. Trading Co. v. Commissioner of CGST, Delhi North & Ors., showing basic jurisdictional facts must exist before Section 67 powers are exercised).
  5. The preliminary finding was that there was no outright unauthorized search, and the GST Department had reasons to believe that irregularities existed to justify search, seizure, and investigative steps. 

IMPORTANT CLARIFICATIONS

Section 67 of CGST Act governs search and seizure powers and requires pre‑recorded “reasons to believe” before action.
 Seized documents not relied upon in proceedings must be returned within prescribed periods.
 Rights to privacy and due process are recognised but are subject to statutory investigative powers in tax statutes.
Court stressed no interference at investigation stage unless authority action is clearly unlawful. 

SECTIONS INVOLVED

• Section 67 — Power of Inspection, Search and Seizure under the Central Goods and Services Tax Act, 2017.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS15092025CW138212025_155439.pdf 

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