2024 (12) TMI 1288 - HC - GST

Intelligence Department justified in withholding sensitive search operation documents from petitioner under natural justice principles

Deltatech Gaming Limited Versus Union of India & Ors.

The Calcutta HC disposed of a writ petition challenging non-disclosure of relied upon documents by respondent authorities. The petitioner's representation ... Non-disclosure of relied upon documents to the petitioner by the respondent authorities - representation dated 15th February, 2024 has not been acted upon by the respondent authorities till date - withholding sensitive information in the interest of national security and third-party commercial interests - HELD THAT:- Perused the writ petition as well as the judgment of the Bombay High Court. This Court holds that sensitive information gathered by the Intelligence Department, forming the basis of a search operation, should not be disclosed to the petitioners. It is determined that withholding such sensitive information does not violate the principles of natural justice. The source of information collected by the Intelligence Department of Revenue is crucial for maintaining confidentiality and the integrity of investigative processes. In T. TAKANO VERSUS SECURITIES AND EXCHANGE BOARD OF INDIA & ANR. [2022 (2) TMI 907 - SUPREME COURT] the Hon'ble Supreme Court emphasized the importance of safeguarding sensitive information obtained during investigations. The Court recognized that such reports may encompass a wide range of market-sensitive information, including details of financial transactions and interactions with other entities. Disclosure of such information could infringe upon third-party rights, destabilize the securities market, and affect investor interests. The Court, therefore, clarified that the principles of natural justice do not entail a right to indiscriminate or unrelated disclosures, particularly where sensitive third-party interests are involved. The investigative authority must balance the noticee's right to disclosure with the imperative to protect third-party rights and maintain market stability. Based on these precedents and considerations, this Court concludes that the withholding of sensitive information in the present case is justified and does not breach the principles of natural justice as all the relied upon documents have already been handed over to the petitioner by the respondent authorities. Petition disposed off. Issues:- Non-disclosure of relied upon documents to the petitioner by the respondent authorities.- Justifiability of withholding sensitive information in the interest of national security and third-party commercial interests.- Interpretation of the show-cause notice as the investigation report itself.- Balance between the right to disclosure and protection of sensitive information during investigations.Analysis:1. The petitioner sought the relied upon documents used for a show cause notice but had not received them, leading to a dispute over disclosure. The petitioner's counsel argued for the provision of these documents, citing a relevant Division Bench Judgment of the Bombay High Court.2. The respondent authorities contended that certain documents, considered inter-departmental intelligence reports, could not be shared as they contained sensitive information crucial for national security and third-party commercial interests. They argued that revealing such sources could jeopardize the safety of the country and commercial interests.3. The respondent authorities maintained that the show-cause notice itself constituted the investigation report, and all necessary documents had been provided to the petitioner for transparency. They emphasized that the adjudication would be based on the furnished documents, ensuring fairness in the proceedings.4. The petitioner was accused of being vague in their requests for specific documents, leading to delays in the adjudication process. The respondent's counsel argued that the petitioner's conduct indicated an attempt to evade or prolong the proceedings.5. The Court, after considering the arguments and relevant legal precedents, held that withholding sensitive information, especially gathered by the Intelligence Department, was justified to maintain confidentiality and integrity in investigative processes. The Court referenced the importance of safeguarding sensitive information in investigations, as highlighted by the Supreme Court in a previous case.6. Drawing from the legal principles discussed, the Court concluded that the non-disclosure of certain documents did not violate the principles of natural justice, especially since all relied upon documents had already been provided to the petitioner. The judgment was in favor of the respondent authorities, and the writ petition was disposed of accordingly.7. The Court directed all parties to comply with the order issued, emphasizing the importance of maintaining confidentiality and following the decision downloaded from the official website of the Court.