HC Upholds Right to Copies of Seized Data Once Cloning is Complete.

HC Upholds Right to Copies of Seized Data Once Cloning is Complete.

Issue

Does a taxpayer have an enforceable right under Section 67(5) of the CGST Act to obtain copies of data from seized electronic devices, and can the department deny this right indefinitely by citing potential prejudice to the investigation, especially after the data has been cloned?

Facts

• The GST Department conducted a search and seized multiple electronic devices (laptops, hard drives, etc.) and physical records from the petitioner’s office premises.
• The petitioner requested the return of the devices or, alternatively, copies of the seized digital data and documents, arguing that the department had already cloned the data and withholding the information was causing severe prejudice to their business operations.
• The Revenue department opposed this, alleging that the petitioner was non-cooperative and that providing copies could be prejudicial to the ongoing investigation.
• It was established before the court that the process of downloading and cloning the data from the seized devices was substantially complete.

Decision

• The High Court ruled decisively in favour of the assessee.
• It affirmed that Section 67(5) provides a clear statutory right to the person from whom documents or devices are seized to make copies in the presence of an authorized officer.
• This right can only be denied if the officer records specific reasons in writing explaining how providing copies would genuinely prejudice the investigation. A vague assertion is not sufficient.
• Since the data cloning was largely finished, the court found little justification for withholding copies. It directed that the proprietor of the petitioner firm appear before the authorized officer, and the department must provide copies of all seized documents and digital data.
• The court also reinforced the petitioner’s corresponding duty to cooperate fully with the investigation.

Key Takeaways

• Right to Copies is Statutory, Not Discretionary: The right to obtain copies of seized documents and data under Section 67(5) is a legal entitlement for the taxpayer, not a matter of the department’s discretion.
• Denial Requires Written Justification: Tax authorities cannot vaguely cite “prejudice to the investigation.” Any denial of this right must be backed by specific, cogent reasons recorded in writing.
• Post-Cloning, Prejudice is Harder to Prove: Once the department has secured the data by cloning or downloading it, it becomes very difficult for them to argue that providing a copy to the taxpayer would compromise their investigation. The primary evidence is already in their possession.
• Balancing Rights and Duties: The court’s decision expertly balances the taxpayer’s right to access their own data (to continue business operations) with their duty to cooperate with the authorities during an investigation.