Non-Disclosure of Sensitive Information by DGGI for Search Operation not Amounts to Violation of Natural Justice Principles: Calcutta HC [Read Order]

The Calcutta High Court, in its recent judgement has held that the non-disclosure of sensitive information gathered by Directorate General of Goods and Services Tax Intelligence (DGGI) forming the basis of search operation is not violative of principles of natural justice.

According to Justice Rajarshi Bharadwaj's single bench, the petitioners shouldn't be given access to private information that the Intelligence Department has obtained as part of a search operation. Withholding sensitive information does not violate the principles of natural justice. The integrity of investigative procedures and confidentiality depend heavily on the source of information gathered by the Intelligence Department of Revenue.

Deltatech Gaming Limited, the petitioner made a representation before the Additional Assistant Director, Directorate General of Goods and Services Tax Intelligence, Kolkata and the Joint/Additional Commissioner, CGST & CX Kolkata North Commissionerate for handing over the relied upon documents which were used for preparing the show cause notice but till date the documents which were relied upon are not issued to the petitioner.

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The department argued that requesting the relied-upon documents would only result in interdepartmental intelligence reports, which are the information's sources and cannot be given to the petitioner because disclosing the source or identity of such sensitive information would jeopardize third parties' commercial interests and national security, which is illegal.

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According to the department, the investigative report is essentially the show-cause notice. The show-cause notice is a thorough and independent document that summarizes all of the important information that emerged from the inquiry. For all intents and purposes, the show-cause notice should be regarded as the investigation report as there isn't an independent investigation report separate from it.

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It was said that the show cause notice included all of the investigation's specifics. The petitioners have previously received all Relied Upon Documents (RUDs) in order to maintain transparency. According to the show-cause notice, there will be no violations of the natural justice or fair play principles and the adjudication proceedings will be founded on the documents provided to the petitioner.

The bench relied on the decision of Supreme Court in the case of T. Takano v. Securities and Exchange Board of India reported in (2022) in which it was emphasized the importance of safeguarding sensitive information obtained during investigations.

The Court observed that a variety of market-sensitive information, such as specifics of financial transactions and communications with other organizations, may be included in such reports. Such information disclosure may violate the rights of third parties, cause the securities market to become unstable, and have an impact on investor interests.

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The Court made it clear that, especially when delicate third-party interests are at stake, the principles of natural justice do not grant a right to indiscriminate or irrelevant disclosures. Furthermore, it was heldthat as the department had already given the petitioner access to all of the cited documents, the withholding of sensitive material in this case was appropriate and did not violate natural justice principles.

To Read the full text of the Order CLICK HERE

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