Unlawful GST Search and Seizure at Assessee's Residential and Business Premises: Delhi HC Upholds Action u/s 67 with Privacy Safeguards [Read Order]

Genesis Enterprises, petitioner-assessee, reported that the CGST Department conducted an unauthorized search on 22nd July 2025 at the Gumber Family’s residence in Noida, seizing electronic gadgets, documents, and other devices. On 24th July 2025, the officers visited Marengo Asia Hospital in Faridabad and issued summons to Shri Vikas Gumber and the partners of several firms.

The assessee filed the petitions, challenging the alleged violations by the GST Department during the search and seizure.

The petitioner counsel said the GST Department violated rules during searches. They claimed the panchnama was incomplete, CCTV footage was seized, payments were made under pressure, and refund applications were withdrawn forcibly.

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They sought reliefs including not using the CCTV footage, de-sealing Genesis Enterprises’ Delhi premises, and reversing Input Tax Credit and refunds paid under coercion. They argued the family faced undue pressure and the business premises were entered unlawfully.

The departmental counsel said GST officers had reasons to believe the family created fake firms and misused Input Tax Credit, so the searches were lawful. He added that CCTV footage was not accessed and the tenant had given keys to the premises. He also said the petitioners and related firms had claimed over Rs. 4 crores in Input Tax Credit and filed further refund applications of about Rs. 5 crores using fake ITC. The investigation was ongoing, and no privacy violation had occurred.

Justice Prathiba M Singh and Justice Shail Jain heard the counsels for the parties. The petitioner sought the Court’s intervention during the investigation stage. Initially, allegations were raised against GST Department officials, but it was conceded that the search itself was not unauthorized.

The Court noted that Section 67 of the CGST Act empowered officers, not below the rank of Joint Commissioner, to inspect, search, and seize if they had reasons to believe that a taxable person suppressed transactions, claimed excess input tax credit, evaded tax, or failed to declare goods or premises.

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A pre condition for inspection, search, or seizure was the existence of ‘reasons to believe’ by a senior officer. Officers could break locks if access was denied, copy seized documents, and provisionally release goods under Section 67(6). Proper inventory and safeguards under the Code of Criminal Procedure applied.

The Court referred to precedents, in R.J. Trading Co. v. Commissioner of CGST (2021), it was held that jurisdictional facts must exist before powers under Section 67 could be exercised. In Santosh Kumar Gupta v. Union of India (2023), it was clarified that inspection could not be illegal if a purchased entity was non-existent, provided the reasons to believe were rational.

In Deepak Khandelwal v. Commissioner of CGST (2023), it was observed that Section 67 aimed to detect tax evasion, not recover tax, and seized documents had to be returned once their purpose was served. The Supreme Court dismissed the SLP against this. In ITC Limited v. State of Karnataka (2025), the Court stated adherence to due process and natural justice during inspections.

The Court noted that the GST Department had recorded ‘reasons to believe’ in its file. Intelligence revealed that five firms controlled by the Gumber family filed suspicious refund claims with no real business activity. Relevant goods, documents, and electronic evidence were likely at their residential premises.

The Department conducted searches under Section 67(2). Memory cards and electronic devices were seized but not accessed except in the petitioner’s presence. Business premises were searched with witness presence, keys were provided by the tenant, and seized goods were handed over to the tenant. Petitioner was given the opportunity for de-sealing and provisional release.

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The petitioner withdrew refund applications post-inspection and voluntarily offered payments. The High court observed that access to premises was lawful, directed residential CCTV data to be accessed only in the presence of a family member and authorized representative, and only relevant data could be copied.

GST officials were generally required to obtain access from the person being investigated, and communications had to be official and traceable. Allegations of coercion in payments required further proceedings. Refund applications would be subject to Show Cause Notice outcomes.

The bench left other remedies open, allowed the Department to continue investigations of other entities, and clarified that its observations were not binding on other proceedings. The writ petition and pending applications were disposed of.

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