Right to Privacy of Family Members Must Be Respected in GST Searches:  Delhi HC Issues Safeguards

“The hard disk or any memory cards which contain the CCTV footage of the residential premises shall not be accessed except in the presence of at least one member of the Gumber family and one authorised representative” —  Division Bench of the Delhi High Court upholding the legality of GST search and seizure operations conducted in July 2025 on various entities linked to the Gumber family, while issuing significant directions on privacy, procedural safeguards, and official communication protocols under the CGST Act, 2017 and BNSS, 2023.

The Court validated the departmental action under Section 67 of the CGST Act, finding that the "reasons to believe" were properly recorded, but also cautioned against procedural overreach. In doing so, it carved out critical privacy safeguards, particularly concerning the seizure of residential CCTV footage, the method of accessing locked business premises, and the use of informal communication platforms like WhatsApp during ongoing investigations.

Surveillance, Seizure, and the Sanctity of Residential Privacy: Court Upholds Search But Restricts Unchecked Access to Family Spaces

"Any family-related CCTV footage which is with the GST department and violates privacy of family members cannot be used or disseminated in any manner," the Court categorically held, directing that seized CCTV devices from the Gumber residence may only be accessed in the presence of a family member and their authorised representative, and that only relevant portions may be copied, with the rest to be returned to the family.

The Court’s directions arose from allegations made by the petitioners — a group of firms linked to the Gumber family — that during the 22nd July 2025 search, GST officials seized CCTV memory cards from their Noida residence without appropriate disclosure in the panchnama and in violation of their privacy. In response, the Court clarified:

"The officials of the GST Department have not yet accessed the seized devices, and the same would be opened only in the presence of the Petitioner."

Seizing Business Premises via Tenant’s Keys: Lawful Here, But Not a Norm

Addressing concerns regarding the search at M/s Genesis Enterprises, where officials used keys handed over by a tenant, the Court held that:

“Taking access through a tenant who may be having keys of the premises, may not be permissible, unless it is with the knowledge of the person/entity being searched.”

While the Court found the access lawful in the current facts, it issued a clear directive for future searches: if access is denied, GST officials must record “reasons to believe” under Section 67(4) and follow the proper procedure, including breaking locks only after justification is recorded.

Informal WhatsApp Communications Between GST Officials and Taxpayers Deprecated

In a sharp rebuke of informal modes of communication during sensitive GST investigations, the Court observed:

“All communications by the officials of the GST department, with the person/s or entities being investigated ought to be in the official prescribed mode… Whatsapp communication, may, in fact, make the officials of the GST Department subject to various allegations, which ought to be avoided.”

The judgment strictly directed that emails must mention the name and designation of the officer, and WhatsApp usage should be limited to exceptional or emergency situations only.

Coercion Allegations on ITC Reversals and Refund Withdrawals to Be Tested in Adjudication

The petitioners alleged that GST officials coerced the reversal of Input Tax Credit (ITC) and forced withdrawal of refund claims, particularly around a family event on 2nd August 2025. The Court noted the conflicting versions from both parties and refused to adjudicate these claims at the writ stage:

“Allegations of coercion or duress would need deeper examination in appropriate proceedings, as there are different versions by the Petitioners, as also by the officials of the GST Department.”

The Court made it clear that refund claims may be revived if the petitioners succeed in the Show Cause Notice proceedings, thereby preserving their right to contest the allegations through proper legal channels.

Validity of “Reasons to Believe” Upheld: Court Finds No Illegality in Search Operations

After scrutinizing the panchnamas, departmental notes, and submissions from both sides, the Bench was satisfied that the search operations were not vitiated by lack of jurisdiction or procedural lapses.

“Prima facie, in the background of the facts captured in the note, as also the chart extracted above, of the different entities, it cannot be held that the proceedings conducted under Section 67 of the Act were violative, or contrary to law.”

The Court also took note of the multi-layered web of allegedly fictitious firms, all of which appeared to have been linked with the Gumber family and created for availing fraudulent ITC, as per GST Department’s chart of Level 1 to Level 4 supplier entities.

Judicial Emphasis on Compliance with Due Process under CGST Act and BNSS

Citing established precedents, including R.J. Trading Co. (2021), Santosh Kumar Gupta (2023), and Deepak Khandelwal (2023, affirmed by SC in 2024), the Court reinforced the standard that “reasons to believe” must exist and be recorded prior to any search or seizure under Section 67 of the CGST Act.

The Court also emphasized that seizure powers under GST law are not for recovery, but to unearth tax evasion and collect evidence, quoting with approval:

“Search and seizure is an intrusive power, which needs to be wielded with utmost care and caution” – R.J. Trading Co. (2021)

Summing up the matter, the Court disposed of the batch of writ petitions with the following operative directions:

1. Residential CCTV Footage to be accessed only in the presence of a family member and authorised representative; only relevant content to be copied.

2. Business Premises Access should be sought from the investigated party; access via tenant is not ideal and must be justified if used.

3. All communications between GST officers and taxpayers must be through official channels with proper identification.

4. Allegations of coercion in payments or refund withdrawals to be tested during Show Cause Notice proceedings.

5. No further relief pressed by the petitioners; they retain the liberty to contest all issues during adjudication.

This judgment significantly impacts the future conduct of search and seizure operations under GST law, ensuring a balancing of investigative powers and personal privacy. While the Delhi High Court upheld the validity of surprise inspections, it simultaneously tightened the leash on procedural compliance, especially concerning residential privacy, communication norms, and access protocols.

By recognising that tax enforcement must not become a ground for arbitrary intrusion, the Court has reinforced the principle that even statutory powers must respect constitutional values.

Date of Decision: 15th September 2025 (Corrected & Released on 22nd September 2025)