Surprise Inspection, Search, and Seizure, Including of Electronic Devices and Residential CCTV Footage Permissible If Properly Justified by “Reason to Believe”

Surprise Inspection, Search, and Seizure, Including of Electronic Devices and Residential CCTV Footage Permissible If Properly Justified by “Reason to Believe”

Issue: To determine the legality and procedural safeguards required for GST authorities to conduct surprise searches under Section 67 of the CGST Act, and specifically their power to seize personal electronic devices and residential CCTV footage during investigations of suspected tax fraud.

Facts:

• The petitioner, Genesis Enterprises (and linked entities/family), alleged unlawful search and seizure by the CGST Department at their residential and business premises.
• The CGST Department contended that proper “reason to believe” was recorded, and the search was warranted due to the alleged creation of a maze of non-existent firms to claim fake Input Tax Credit (ITC).
• The petitioner also challenged the department’s method of communication (using WhatsApp/informal messages) and the manner in which sealed premises were accessed.

Decision:

The Delhi High Court upheld that surprise search and seizure actions under Section 67 are valid if “reason to believe” is properly documented, but mandated strict statutory safeguards for accessing seized electronic evidence and for all communication. The Court permitted safeguarded inspection of the seized electronic devices.

Key TakeDowns:

• Reason to Believe is Key: The validity of the search hinges on the proper documentation of “reason to believe”, which requires a rational link between available materials and the belief of tax evasion, not mere suspicion.
• Safeguards for Digital Data (CCTV/Electronic Devices): Seized electronic evidence, including residential CCTV footage, cannot be accessed except in the presence of at least one family member and one authorized representative. Access must be confined only to relevant content, with all other data returned to the petitioners.
• Formal Communication Mandate: All communications from revenue officials must be through prescribed official email channels, explicitly stating the officer’s details for traceability. Use of WhatsApp or informal messaging is not permissible except in exceptional or emergency situations. * Access to Premises: If access to sealed business premises requires breaking locks (under Section 67(4)), it must be done formally. Access obtained via a tenant’s keys is only proper if done with the knowledge and consent of the person/entity being investigated.
• Coercion Claims: Claims of coercion in forcing tax payments or refund withdrawals cannot be conclusively decided in writ jurisdiction but must be pursued during the subsequent adjudication process.Source :- JUDGEMENT