2025 (9) TMI 804 - HC - GST

Authority allows forensic analysis of seized CPU with safeguards; inspection 11-12 Sep 2025; IT fee Rs1,00,000 each, shared equally.

Puneet Batra Versus Union Of India & Ors.

HC permitted analysis of the seized CPU by the GST Department subject to safeguards preventing access to third-party client data and without addressing ... Challenge to search at the office of the Petitioner conducted by the GST Department and the consequent seizure of the Central Processing Unit (CPU) and other documents - HELD THAT:- The Court refrains from making any observations in respect of the role of the Petitioner, or whether he was active in running the business of the client or not. The only direction that the Court is inclined to pass at this stage, without going into the merits of this matter, is to permit the CPU to be analysed by the GST Department, subject, however, to various precautions and conditions. The said precautions and conditions are important and significant, inasmuch as the GST Department ought not to be given access to the data related to any third-party clients of the Petitioner. It is further noted that the CPU was seized during the raid which was conducted on the firm, in which the Petitioner’s parents are partners. The inspection of the CPU of the Petitioner, in the presence of the persons as directed above, shall take place on 11th September 2025 and 12th September 2025 from 11:00 am onwards on both days - The fee of the IT officials of the Delhi High Court is fixed at lumpsum Rs.1,00,000/- each, which shall be shared equally by the Petitioner and the GST Department. List for hearing on 30th October 2025. ISSUES PRESENTED AND CONSIDERED 1. Whether a search and seizure at the office of an advocate, including seizure and forensic access to a CPU, is permissible without the presence of the advocate given attorney-client privilege and confidentiality obligations. 2. Whether the investigating authority must demonstrate prima facie material or reasons to believe that the advocate is personally involved in alleged illegality (and not merely representing a client) before subjecting the advocate to investigative measures under the CGST framework. 3. The permissibility and appropriate procedure for use of sealed cover material by the investigating authority in court and the extent to which the advocate is entitled to disclosure or a redacted summary of such material before being required to respond. 4. The proper safeguards, procedure and scope for forensic examination of a seized CPU belonging to an advocate to (a) protect third-party/client confidentiality, and (b) permit legitimate investigation into files related to the subject matter. 5. The nature of post-examination disclosure by the investigating authority: requirements for an affidavit specifying allegations, steps envisaged, role of the advocate as revealed by seized data and forensic findings. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legality of search/seizure at an advocate's office and access to CPU without advocate's presence Legal framework: Searches and seizures by GST authorities proceed under Section 67 of the CGST Act, 2017, subject to constitutional and common law protections including confidentiality and attorney-client privilege attaching to communications between client and lawyer. Precedent treatment: The Court considered reliance placed on Supreme Court authority concerning the limited and controlled use of sealed cover material and the need for meaningful disclosure to the person affected; the approach to sealed covers and restricted disclosure was followed in principle. Interpretation and reasoning: The Court emphasized that documents provided by a client to his lawyer are 'purely confidential in nature' and protected by attorney-client privilege, and that an advocate should not be subjected to harassment by investigative agencies absent material showing personal involvement in illegality. The Court refrained from adjudicating merits as to whether the advocate was personally involved, but held that accessing an advocate's computer in the advocate's absence risks serious breach of confidentiality and is impermissible save in exceptional circumstances. Ratio vs. Obiter: Ratio - investigative access to an advocate's CPU/computer should not occur without the advocate's presence and safeguards; authorities must show prima facie material if treating an advocate as more than counsel. Obiter - cautionary language on harassment and the general sensitivity of searches at advocates' offices. Conclusion: Search/seizure and access to an advocate's CPU without the advocate's presence is impermissible absent exceptional circumstances and prima facie material; safeguards must be mandated if access is to be allowed. Issue 2 - Requirement of prima facie material / reasons to believe before investigating an advocate Legal framework: Section 67 CGST Act authorises search where there are reasons to believe; principles of fair investigation require that intrusion on privilege and professional confidentiality be justified by sufficient material. Precedent treatment: The Court required the investigating authority to place on record the reasons for treating the advocate as more than counsel - consistent with the statutory requirement of 'reasons to believe' and established safeguards surrounding searches involving professionals. Interpretation and reasoning: The Court held that the GST Department must show some prima facie material to substantiate allegations that an advocate is actively running a client's business rather than merely representing it. In absence of such material being demonstrated in open court (with appropriate protections), coercive actions and intrusive searches targeted at an advocate are not to proceed. Ratio vs. Obiter: Ratio - requirement that investigating agency produce material justifying treatment of an advocate as participant in alleged illegality before imposing investigative measures beyond routine questioning. Conclusion: Investigating authority must place prima facie material/reasons to believe on record (subject to appropriate protective measures) before subjecting an advocate to invasive investigatory steps under Section 67. Issue 3 - Use of sealed cover material and disclosure obligations to the advocate Legal framework: Courts may permit sealed cover filings to protect sensitive investigative material, but principles of natural justice and the need to enable meaningful rebuttal require that affected persons be given sufficient information (often by way of redacted summaries) to respond. Precedent treatment: The Court relied on the approach in the cited Supreme Court authority (as relied on by counsel) that sealed cover material cannot be the sole basis for determining allegations without providing the affected party an opportunity to rebut; that principle guided the Court's directions regarding redaction and disclosure to counsel. Interpretation and reasoning: The Court balanced the investigating authority's need to protect identities/statements against jeopardising the investigation, with the advocate's right to know the case against him. The Court directed production of material in sealed cover to the Registry, permitted in-court inspection, and required that the investigating authority file an affidavit in redacted form to be supplied to senior counsel so rebuttal can be effective; non-redacted material must be shown to the Court. Ratio vs. Obiter: Ratio - sealed cover material may be placed before the Court, but the affected advocate must receive a redacted affidavit summarising allegations and forensic findings to enable response; non-redacted material must be available to the Court. Obiter - suggested practice of providing redacted summaries as a matter of fairness. Conclusion: Sealed cover filings are permissible with court supervision, but investigating agencies must provide redacted disclosures sufficient for counsel to mount a defense; the full material must be available to the Court for adjudication. Issue 4 - Safeguards, procedure and scope for forensic examination of seized CPU Legal framework: Forensic examination of electronic devices involves invasive intrusion into potentially privileged communications; such examination must be narrowly tailored, supervised, and include procedures to protect unrelated third-party data and privilege. Precedent treatment: The Court implemented stringent procedural safeguards and directed a narrowly-defined forensic protocol rather than allowing unfettered access; this approach reflects judicial reluctance to permit unsupervised forensic searches of counsel's devices. Interpretation and reasoning: The Court specified persons to be present during examination (the advocate, two lawyers or one lawyer and a forensic expert for the advocate, two senior High Court IT officials, and one forensic expert for the Department), defined the data points to be determined (last access, nature of files accessed during initial inspection, deletions/copying with timestamps), required cloning of entire hard drive with a copy to the advocate, and mandated identification and extraction of only files related to the client and related entities. Post-procedure sealing of the CPU and restriction on further access without court order were also directed. The Court fixed fees for IT officials and scheduled inspection dates. Ratio vs. Obiter: Ratio - forensic examination of an advocate's CPU is permissible only under strict, court-directed safeguards: presence of advocate/representatives, independent IT/forensic experts, cloning and provision of clone to advocate, selective extraction of client-related files, sealing thereafter. Obiter - general advisories about non-opening of advocates' devices in absence of advocate and the risk of breach of privilege. Conclusion: Forensic access to an advocate's CPU is allowed subject to comprehensive safeguards: supervised access, limited scope, cloning and disclosure to advocate, identification and export of only client-related files, and judicial control over further access. Issue 5 - Post-examination disclosure obligations and steps to be filed by investigating authority Legal framework: Investigating agencies must, when relying on forensic findings to take further steps against a person, state the basis of allegations with adequate specificity to satisfy principles of fair hearing and enable contestation. Precedent treatment: The Court required the investigating authority to file an affidavit (in redacted form for counsel and in non-redacted form to the Court) specifying allegations arising from the data, proposed steps, the role of the advocate as discerned from statements (redacted to protect sources), and the forensic findings outlined in the directions. Interpretation and reasoning: The Court sought to ensure transparency and accountability of the investigation while protecting ongoing inquiries and third-party identities. By mandating an affidavit that itemises allegations and proposed actions, the Court created a procedural bridge between evidence recovered and any coercive action, allowing the advocate a fair opportunity to respond before further measures are taken. Ratio vs. Obiter: Ratio - investigating authority must file a specific affidavit post-forensic analysis setting out allegations based on seized data, intended investigative steps, and the advocate's alleged role, with appropriate redactions provided to counsel and full disclosure to the Court. Conclusion: Post-examination, the investigating authority is obligated to file and serve a redacted affidavit to counsel and place non-redacted material before the Court, describing allegations and next steps based on recovered data; no coercive measures shall be taken against the advocate in the interim.