FACTS OF THE CASE (Professional Language)

A group of firms controlled by the Gumber family, including 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, filed writ petitions challenging search and seizure actions carried out by officials of the Central Goods and Services Tax (CGST) Department at their business and residential premises on 22nd–24th July 2025.

The Petitioners alleged that the search and seizure actions were conducted in an unlawful manner, including improper recording of the panchnama, wrongful seizure of CCTV footage from the family residence violating privacy rights, coercion and duress in payments and withdrawal of refund applications, unauthorized entry into business premises, and abuse of powers under Section 67 of the Central Goods and Services Tax Act, 2017 (the Act) and Section 103 of the Bhartiya Nagarik Suraksha Sanhita, 2023 (“BNSS, 2023”).

They sought directions against use of the seized CCTV footage, de‑sealing of business premises, restoration of Input Tax Credit (ITC), and other reliefs. 

ISSUES INVOLVED

  1. Whether the search and seizure operations under Section 67 of the CGST Act, 2017 were lawful and supported by “reasons to believe”.
  2. Whether seizure of CCTV footage from the residential premises violated privacy rights.
  3. Whether entry into business premises and sealing was authorized.
  4. Whether alleged coercion/duress in reversal of ITC/refund applications warranted interference by the High Court at the investigation stage. 

PETITIONER’S ARGUMENTS

The Petitioners contended that:
• The panchnama of the residence search was defective and failed to record seizure of CCTV footage properly, thereby violating privacy rights of the Gumber family.
• Payments made and refund applications withdrawn were under coercion and duress.
• Business premises were entered without lawful authority, claiming that tenants improperly provided keys and locks were broken unlawfully.
• The seizure and use of CCTV data violated constitutional privacy guarantees and exceeded powers conferred by law.
• Search and seizure powers under Section 67 and BNSS 2023 were misused without proper reasons to believe.

RESPONDENT’S ARGUMENTS

The GST Department countered that:
• Search and seizure were conducted lawfully under Section 67 of the Act with proper recording of “reasons to believe” of large‑scale tax evasion through fictitious firms and fraudulent ITC claims.
• Evidence indicated suppliers and entities linked to the Gumber family were non‑operative, non‑genuine and created to generate fake ITC.
• CCTV devices and hard disks were seized but not accessed without due process, and the department would follow appropriate SOP before viewing.
• Sealing of business premises was carried out in presence of independent witnesses and tenant who provided access voluntarily; no unlawful entry was established.
• Allegations of coercion/duress were matters for deeper inquiry and not suitable for judicial intervention at investigation stage.

COURT ORDER / FINDINGS

The Delhi High Court held:

  1. Lawful exercise under Section 67: The court emphasized that search and seizure powers under Section 67 require “reasons to believe” recorded by a proper officer. The chart and preliminary investigation provided a prima facie basis for belief that wrong ITC claims and fictitious firms existed, thus legitimizing the authorized search.
  2. Privacy protection: The court recognized privacy concerns. It directed that CCTV footage from the residential premises must not be accessed or used by GST officials except in presence of a family member and authorized representative, and only relevant data may be extracted, with the remainder returned.
  3. Entry into business premises: Access provided by the tenant with keys was lawful. The court noted that if access is denied by persons being investigated, officers may break locks only after recording requisite reasons to believe under Section 67(4).
  4. Conduct of investigation: WhatsApp communications were discouraged, and official email communication must include name and designation of officers for traceability. Coercion and duress allegations require deeper examination in appropriate proceedings.
  5. No interference at investigation stage: The court declined to interfere with the ongoing investigation, leaving remedies open. 

IMPORTANT CLARIFICATION

The High Court did not quash or declare the search illegal but upheld lawful exercise of powers under Section 67 CGST Act.
 It provided privacy protective directions regarding handling of personal CCTV footage.
 Allegations of coercion and duress were left to be addressed in appropriate adjudication or show‑cause proceedings. 

SECTION(S) INVOLVED

  • Section 67 – Power of inspection, search and seizure under The Central Goods and Services Tax Act, 2017.
  • BNSS 2023 (Section 103) – Applicable Code for search and seizure procedure and rights.

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

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