Facts of the Case

A batch of writ petitions, including 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, were filed before the Delhi High Court challenging extensive GST Department search and seizure operations conducted on 22–24 July 2025 at the residential premises of the Gumber family and multiple business locations in Delhi and Noida. The petitioners alleged that the searches were unauthorized, the seizure of CCTV footage from a private residence violated privacy rights, premises were sealed unlawfully, refunds were withdrawn under duress, and payments were extracted and Input Tax Credit (ITC) reversed under coercion. The petitioners asserted that the actions of the GST authorities exceeded statutory powers under Section 67 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) and contravened instructions and judicial precedents.

Issues Involved

  1. Whether the search and seizure conducted under Section 67 of the CGST Act were without jurisdiction or violative of statutory safeguards.
  2. Whether seizure of CCTV footage from a family residential premises violated the right to privacy.
  3. Whether allegations of coercion, duress, and improper reversal of ITC/withdrawal of refunds warranted judicial interference under Article 226 of the Constitution.
  4. Whether the Court should interdict the GST investigation at its nascent stage or permit it to continue.

Petitioners’ Arguments

Petitioners contended that:

  • Panchnamas for searches were defective and did not properly record critical facts.
  • Seizure of CCTV footage from the shared residential premises of the Gumber family violated privacy rights of family members.
  • Business premises were forcibly entered and sealed without lawful authority.
  • Refund applications were withdrawn under coercion and duress, and payments were made under pressure, leading to unlawful reversal of Input Tax Credit.
  • Actions of the GST Department exceeded powers conferred under Section 67 and violated applicable CBIC instructions and settled judicial precedents.

Respondent’s Arguments

The GST Department submitted that:

  • A competent officer had recorded valid “reasons to believe” for alleged large‑scale tax evasion and fraudulent activities involving multiple interconnected entities controlled by the Gumber family.
  • The searches and seizures were authorized under Section 67(2) CGST Act and carried out in compliance with statutory safeguards.
  • Investigations revealed numerous non‑operational and fictitious suppliers used to pass on fake ITC and claim inadmissible refunds.
  • Seized CCTV footage and devices had not been accessed and would be examined only in accordance with law and SOPs.
  • Allegations of coercion and duress involved disputed questions of fact not amenable to adjudication in writ jurisdiction at the investigation stage.

Court Order / Findings

The Delhi High Court, after an extensive examination of the statutory scheme and jurisprudence relating to Section 67 CGST Act, held that:

  • Search and seizure powers under Section 67 are intrusive but statutorily sanctioned where “reasons to believe” exist that evasion of tax or fraudulent activities are occurring.
  • The evidence placed on record by the Department indicated creation of multiple fictitious entities, circular transactions, non‑filing of returns, and fake ITC claims, justifying search and seizure.
  • The sufficiency of reasons recorded cannot be examined in writ jurisdiction at the investigation stage.
  • Judicial interference at the nascent investigation stage would be wholly unwarranted unless clear jurisdictional error or mala fides are demonstrated.
  • Allegations of coercion, duress, privacy violation, and procedural impropriety involve disputed questions of fact and are to be agitated in appropriate proceedings after investigation completion. Consequently, all writ petitions were dismissed.

Important Clarification

The High Court clarified that:

  • Powers under Section 67 of the CGST Act are meant to unearth tax evasion and may include inspection, search, and seizure.
  • Courts will not interdict GST investigations on mere allegations of procedural impropriety unless there is clear evidence of jurisdictional error or mala fide action.
  • Allegations relating to coercion, ITC reversal, and refund withdrawal should be raised after the investigation is complete in appropriate forums, not in writ petitions at the investigation stage.

Sections Involved

  • Section 67, Central Goods and Services Tax Act, 2017 (Inspection, Search & Seizure)
  • Article 226, Constitution of India (Writ Jurisdiction)

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

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