Facts of the Case

The present batch of writ petitions was filed by Genesis Enterprises and several connected entities controlled by members of the Gumber family, challenging search and seizure operations conducted by the CGST Department in July 2025. The searches were carried out at residential premises of the Gumber family at Noida and at multiple business premises in Delhi, including the premises of Genesis Enterprises.

The petitioners alleged that the search and seizure were conducted unlawfully and in violation of statutory safeguards. It was contended that CCTV footage from the residential premises was seized, business premises were sealed illegally, refund applications were withdrawn under coercion, and payments were forced through DRC-03 during the course of investigation. The petitioners sought directions for de-sealing of premises, return of seized material, reversal of ITC allegedly reversed under duress, and restraint on use of CCTV footage.

The GST Department asserted that intelligence inputs revealed a complex network of fictitious firms created by the Gumber family for availing and passing on fraudulent Input Tax Credit and for claiming inadmissible refunds running into several crores of rupees. Searches were authorised after recording “reasons to believe” by a senior officer in terms of Section 67 of the CGST Act.

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 from residential premises amounted to violation of privacy, whether alleged coercion in withdrawal of refund applications and reversal of ITC warranted judicial interference, and whether the High Court should intervene at the investigation stage.

Petitioner’s Arguments

The petitioners contended that the panchnamas were defective, seizure of CCTV footage from a shared family residence violated the right to privacy, business premises were forcibly opened and sealed without authority, and payments and withdrawal of refund applications were made under coercion and duress. It was argued that the officers exceeded the scope of Section 67 CGST Act and violated CBIC instructions and settled judicial precedents governing search and seizure.

Respondent’s Arguments

The GST Department submitted that detailed intelligence inputs and preliminary verification revealed a maze of interconnected firms created and controlled by the Gumber family solely for passing on fake ITC and claiming fraudulent refunds. It was contended that “reasons to believe” were duly recorded by the competent authority prior to search, all actions were carried out strictly in accordance with Section 67, and the investigation was at a nascent stage. The Department categorically stated that seized CCTV footage had not been accessed and would be examined only in accordance with law and prescribed SOPs.

Court Order / Findings

The Delhi High Court undertook an extensive analysis of Section 67 of the CGST Act and the jurisprudence governing “reasons to believe”, search and seizure, including prior decisions of the Delhi High Court and the Supreme Court. The Court held that search and seizure powers under Section 67 are intended to unearth tax evasion and are not recovery proceedings.

On facts, the Court found that the Department had placed substantial material on record indicating creation of multiple layers of fictitious firms with circular transactions, nil inward supplies, non-filing of returns, and refund claims based on fake ITC. The Court accepted the Department’s submission that reasons to believe were duly recorded by a senior officer and that the investigation revealed prima facie large-scale tax evasion.

The Court held that at the investigation stage, judicial interference would be wholly unwarranted, especially where statutory preconditions for search were satisfied. Allegations of coercion and duress were held to be matters of evidence, which could not be adjudicated in writ jurisdiction at this stage. The Court also noted the categorical statement of the Department that seized CCTV footage had not been accessed, thereby negating the allegation of immediate privacy violation.

Important Clarification

The High Court clarified that powers under Section 67 CGST Act are intrusive but legally permissible where “reasons to believe” exist. Courts will not interdict investigations into alleged GST fraud involving fictitious entities and fake ITC unless clear jurisdictional errors or mala fides are established. Issues relating to alleged coercion, refund withdrawal or ITC reversal can be agitated in appropriate proceedings after culmination of investigation.

Final Outcome

All the writ petitions were dismissed. The Delhi High Court declined to interfere with the search and seizure operations conducted under Section 67 of the CGST Act and permitted the GST Department to proceed with the investigation in accordance with law. No relief was granted in respect of de-sealing of premises, return of seized material, reversal of ITC, or restraint on investigation. Pending applications, if any, were disposed of accordingly.

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


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