Delhi High Court Upholds GST Department's Investigation into Alleged Tax Evasion by Gumber Family
Court Issues Directions to Safeguard Privacy Concerns and Communication Protocols During Search and Seizure Operations
In a significant judgment, the Delhi High Court has upheld the Central Goods and Services Tax (CGST) Department's investigation into alleged tax evasion involving the Gumber family, proprietors of multiple firms including Genesis Enterprises. The court, presided by Justices Prathiba M. Singh and Shail Jain, issued a series of directions aimed at addressing privacy concerns and ensuring proper communication protocols during search and seizure operations.
The case arose from allegations against the Gumber family, who were accused of creating a complex network of fictitious firms to fraudulently claim Input Tax Credit (ITC) under the CGST Act, 2017. The GST Department's search and seizure operations, conducted at the family's residential and business premises, were challenged by the petitioners on grounds of privacy violations and coercion in payment and refund withdrawal.
The court emphasized the necessity of having "reasons to believe" recorded by a senior officer, not below the rank of Joint Commissioner, as a prerequisite for conducting surprise inspections, searches, and seizures. It found that the GST Department had sufficient grounds to carry out its actions, given the prima facie evidence of tax evasion.
Addressing privacy concerns, the court directed that any CCTV footage seized from the residential premises should only be accessed in the presence of the petitioners or their authorized representatives, with irrelevant footage being returned to them. The judgment also highlighted the importance of proper communication protocols, discouraging the use of WhatsApp for official communications unless in exceptional circumstances.
Furthermore, the court noted that allegations of coercion and duress in payments required deeper examination in appropriate proceedings. It allowed the petitioners to revive their refund applications subject to the outcome of ongoing Show Cause Notice proceedings.
The judgment marks a crucial step in ensuring lawful conduct during tax investigations, balancing the need for thorough investigation with the protection of individual rights. The GST Department is now free to continue its probe into the network of firms associated with the Gumber family, as per the legal framework.
Bottom Line:
GST - Investigation under Section 67 of the CGST Act, 2017 - Legality of search, seizure, and privacy concerns examined - Directions issued regarding handling of seized CCTV footage, search procedures, and communication protocols.
Statutory provision(s): Central Goods and Services Tax Act, 2017 Sections 67, 67(2), 67(4), 67(6), Bharatiya Nagarik Suraksha Sanhita, 2023 Section 103
