Facts of the Case

Backbone Overseas, a partnership firm controlled by members of the Gumber family, filed a writ petition as part of a batch of connected matters led by Genesis Enterprises, challenging inspection, search and seizure operations conducted by the CGST Department in July 2025. Searches were conducted at the residential premises of the Gumber family at Noida and at business premises in Delhi connected with Backbone Overseas and other related entities.

The petitioner alleged that the search and seizure were conducted in an unlawful and arbitrary manner, that CCTV footage from the residential premises was seized in violation of the right to privacy, that payments were extracted under coercion and duress, and that refund applications and Input Tax Credit were reversed without authority of law.

The GST Department asserted that intelligence inputs and subsequent investigation revealed that Backbone Overseas was part of a complex network of interconnected and fictitious firms created and controlled by the Gumber family, engaged in availing and passing on fraudulent Input Tax Credit and claiming inadmissible GST refunds without actual supply of goods.

Issues Involved

Whether the search and seizure conducted under Section 67 of the CGST Act were without jurisdiction or violative of statutory safeguards, whether seizure of CCTV footage violated the right to privacy, whether allegations of coercion in ITC reversal and withdrawal of refund applications warranted writ interference, and whether the High Court should interdict GST investigation at a nascent stage.

Petitioner’s Arguments

The petitioner contended that the panchnamas were defective, that seizure of CCTV footage from a shared residential premises infringed the privacy rights of family members, and that coercive methods were adopted by GST officials to compel payments through DRC-03 and withdrawal of refund claims. It was argued that the actions of the GST authorities exceeded the powers conferred under Section 67 of the CGST Act and were contrary to CBIC instructions and judicial precedents governing search and seizure.

Respondent’s Arguments

The GST Department submitted that proper “reasons to believe” were duly recorded by a competent officer prior to authorisation of search under Section 67(2) of the CGST Act. It was contended that investigation revealed that Backbone Overseas had received supplies from non-genuine and non-operational Level-1 and Level-2 suppliers, including Felicia Export and Sky Enterprises, which existed only to pass on fake ITC. The Department further assured the Court that seized CCTV memory cards and electronic devices had not been accessed and would be examined strictly in accordance with prescribed SOPs and legal safeguards.

Court Order / Findings

The Delhi High Court analysed the statutory framework and safeguards under Section 67 of the CGST Act and reiterated that search and seizure powers, though intrusive, are legally permissible where “reasons to believe” exist. The Court found that substantial material had been placed on record indicating large-scale GST evasion through a maze of fictitious firms created and controlled by the Gumber family, including entities connected with Backbone Overseas.

The Court held that sufficiency of reasons recorded for authorising search cannot be examined in writ jurisdiction and that judicial interference at the investigation stage would be wholly unwarranted. Allegations of coercion, duress and privacy violation were held to involve disputed questions of fact not amenable to adjudication under Article 226, particularly in view of the Department’s categorical assurance that seized CCTV footage had not been accessed.

Important Clarification

The High Court clarified that Section 67 CGST Act empowers GST authorities to conduct inspection, search and seizure to unearth tax evasion and that courts will not interfere with investigations merely on allegations of procedural impropriety unless clear jurisdictional error or mala fides are demonstrated. Issues relating to alleged coercion, ITC reversal or refund withdrawal may be agitated in appropriate proceedings after completion of investigation.

Final Outcome

The writ petition filed by Backbone Overseas was dismissed. The Delhi High Court declined to interfere with the search and seizure proceedings conducted under Section 67 of the CGST Act and permitted the GST Department to proceed with the investigation in accordance with law. All pending applications, if any, were disposed of accordingly.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/PMS15092025CW138212025_155439.pdf


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