Facts of the Case

The petitioners, comprising M/s Genesis Enterprises, Kabun Enterprises OPC Pvt. Ltd., Aayme Sourcing Creations OPC Pvt. Ltd., A V Enterprises, Modern Creation, Glitz International, Fiore Enterprises OPC Pvt. Ltd., Bexley Creation Enterprises OPC Pvt. Ltd. and Backbone Overseas (collectively Gumber family firms and associated entities), challenged actions by the Central GST Department (CGST).

The petitioners alleged that in July 2025, officers of the CGST conducted an unauthorised search and seizure at their residential premises in Noida and business premises in Delhi. The search allegedly violated procedural safeguards and individual privacy rights. The petitioners further contended that seizure of CCTV footage and electronic devices was illegal, and that certain payments and withdrawals of refund applications were made under duress and coercion.

Issues Involved

  1. Whether the search and seizure operations by CGST officials were authorised and justified under Section 67 of the CGST Act.
  2. Whether the seizure of CCTV footage and electronic devices infringed petitioners’ right to privacy.
  3. Whether entry into the business premises via tenant access was lawful.
  4. Whether allegations of coercion and duress regarding financial payments and withdrawals had legal basis.

Petitioners’ Arguments

  • The petitioners contended that the search and seizure were carried out without proper authority, violating statutory mandates.
  • The seizure of personal CCTV footage from the residence amounted to a violation of privacy and fundamental rights.
  • Entry into the business premises was allegedly obtained unlawfully through a tenant, without proper consent.
  • Payments and withdrawal of refund applications were made under coercion and duress. 

Respondent’s (CGST) Arguments

  • The CGST Respondent asserted that reasons to believe regarding tax evasion and fake Input Tax Credit (ITC) refunds existed, justifying the search and seizure under Section 67 of the CGST Act.
  • The seizure of documents and devices was properly recorded and essential for ongoing proceedings relating to alleged fraud.
  • Access to the business premises was justified as the tenant provided keys with apparent knowledge of the petitioners.
  • The refund withdrawals and payments were voluntary, and not made under duress.

Court’s Analysis & Findings

The Delhi High Court (Single Bench of Justice Prathiba M. Singh and Justice Shail Jain) examined procedural compliance with Section 67 of the CGST Act. The Court held:

1. Lawful Search & Seizure

  • The existence of “reasons to believe” — necessary for initiation of search — was affirmed based on data showing non‑genuine supplier firms, non‑filing of returns, and suspicious refund claims.
  • The Court held that the CGST officers properly recorded reasons to believe and that the search was not illegal.
  • Reliance was placed on earlier decisions recognising that “reasons to believe” need only rational basis, not subjective or arbitrary motive.

2. Privacy Concerns

  • The Court addressed privacy concerns by directing that:
    • Seized CCTV footage may be accessed only in the presence of a family member or authorised representative.
    • Only relevant portions may be copied; remainder must be returned.
      This protected privacy without impeding lawful investigation.

3. Business Premises Access

  • Access via tenant who provided keys was held lawful where tenant’s actions reflected petitioners’ awareness of the search, thus negating unlawful entry claims.

4. Allegations of Coercion / Duress

  • The Court found that allegations of coercion require deeper examination in appropriate proceedings and cannot be determined at this stage.
  • The refunds and payments remain subject to outcome of Show Cause Notice proceedings.

Important Clarifications

  • “Reasons to believe” under Section 67 need rational connection to evidence and are not invalidated merely because evidence is circumstantial or complex.
  • Routine use of owner’s private CCTV footage must respect privacy safeguards; copying must be limited and supervised.
  • Access through tenant keys is not per se unlawful where petitioners were aware and did not deny entry.

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

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