Facts of the Case

Modern Creation, 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 various business premises in Delhi, including premises connected with Modern Creation.

The petitioner alleged that the search and seizure were conducted unlawfully, that CCTV footage from the residential premises was seized in violation of the right to privacy, that business premises were entered without authority, and that payments were extracted and refund applications withdrawn under coercion and duress.

The GST Department asserted that intelligence inputs revealed a complex network of interconnected and fictitious firms created and controlled by the Gumber family, including Modern Creation, for availing and passing on fraudulent Input Tax Credit and for claiming inadmissible GST refunds.

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 reversal of ITC 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 violated privacy rights of family members, that the business premises were entered without lawful authority, and that coercive methods were adopted to force payments through DRC-03 and withdrawal of refund applications. It was argued that the GST authorities exceeded the scope of powers under Section 67 of the CGST Act and acted contrary to CBIC instructions and settled judicial precedents.

Respondent’s Arguments

The GST Department submitted that “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 multiple layers of non-operational and fictitious suppliers connected with Modern Creation, with circular transactions, nil inward supplies, and refund claims based on fake ITC. The Department stated that seized CCTV memory cards and electronic devices had not been accessed and would be examined strictly in accordance with prescribed SOPs and safeguards.

Court Order / Findings

The Delhi High Court analysed the scheme and safeguards of Section 67 of the CGST Act and reiterated that search and seizure powers, though intrusive, are statutorily sanctioned 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 supplying to Modern Creation.

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

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 interdict 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 raised in appropriate proceedings after completion of investigation.

Final Outcome

The writ petition filed by Modern Creation 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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