TaxTMI 
TaxTMI 
2025 (9) TMI 1633
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....i, SSC and Mr. Akash Panwar, JSC with Ms. Anoushka Bhalla, Ms. Tracy Sebastian, Mr. Sahil Khurana, Mr. Akshay, Mr. Hitesh Nandal, Mr. Pranav, Ms. Shelley, Advs (9910296585). JUDGMENT PRATHIBA M. SINGH, J. 1. This hearing has been done through hybrid mode. Factual Background 2. The present petitions have been filed by the following firms/ entities: Writ Petition No. Firm Name Name of Proprietor Partner(s)/Director(s) W.P.(C) 13821/2025 M/s Genesis Enterprises Mr. Vikas Gumber and Mr. Abhishek Gumber W.P.(C) 13880/2025 M/s Kabun Enterprises (Opc) Private Limited Mr. Vikas Gumber W.P.(C) 14183/2025 M/s Aayme Sourcing Creations (Opc) Private Limited Mr. Anurag Gumber W.P.(C) 14186/2025 M/s A V Enterprises Mr. Abhishek Gumber and Ms. Somya Gumber W.P.(C) 14188/2025 M/s Modern Creation Mr. Ankit Gumber and Ms. Jhanvi Gumber W.P.(C) 14210/2025 M/s Glitz International Mr. Vikas Gumber and Mr. Anurag Gumber W.P.(C) 14230/2025 M/s Fiore Enterprises (Opc) Private Limited Mr. Vikas Gumber W.P.(C) 14232/2025 M/s Bexley Creation Enterprises (Opc)Private Limited Mr. Vikas Gumber W.P.(C) 14045/2025 ....
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....ent. 8. In view of the above infractions and illegalities, which are alleged against the GST Department, the reliefs sought by the Petitioners are, inter alia, as under: (i) To not use the CCTV footage from the residence, which has been seized by way of a hard disk of the cameras, and the memory cards seized by the officials of the GST Department. (ii) For de-sealing of the business premises at M/s Genesis Enterprises business premises, at 28, West Guru Angad Nagar Extension, Ground Floor, Gali No.13, Delhi-110092, so that the Petitioners can resume normal business operations. (iii) For reversing the Input Tax Credit (hereinafter 'ITC') which was available in the electronic ledger of the firms, and the individuals of the family to refund the amounts which were paid by Mr. Vikas Gumber, under coercion and duress. 9. The submission of Mr. Gupta, ld. Counsel for the Petitioner is that, the chronology of events which led to payments being made, and withdrawal of refund applications shows that enormous pressure was put on the Petitioners' family members, especially when there was a family function in the Gumber family, on 2nd August 2025. 10. It is fu....
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....t conducting any business. The family members, and others related to the Gumber family were involved in incorporating fictitious firms, and passing on Input Tax Credit. The investigation of the premises was conducted in accordance with law. Additionally, pursuant to Section 67(2) of the Act, proper 'reasons to believe' have been recorded at the level of Joint Commissioner to conduct the investigation. 16. Further, it is submitted that during the investigation, and on the basis of the data which has been retrieved, various firms at different levels have been found which are fictitious and are incorporated/ created, and are run by persons connected with the Gumber Family. A chart of such firms at different Levels (hereinafter 'Chart') and the allegations against them as per the GST department, is set out below: During the course of investigation, the names of following suppliers have come to fore in respect of the exporter firms and their analysis is as detailed below: Sl.No. Name & address of supplier Analysis report LEVEL 1: 1 Vyom Enterprises (07AAYFV9330Q1ZX) SHOP NO-3 PROP NO-8/1, GEETA COLONY, Delhi, 110031 Partner: Piyush Singh Rahul Sharma Par....
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....xy Enterprises (partnership firm of Anurag Gumber, registered in Noida) • Supplier firm has made supplies only to firms owned by Gumber family. • The supplier firm failed to produce themselves in response to Summons. • The supplier is registered on the premises owned by Gumber family 5 Felicia Export (07AAJFF5886E1Z4) PROPERTY NO 1, BLOCK 5, GALI NO 4, Geeta Colony, New Delhi, East Delhi, Delhi, 110031 Partner: Rahul Sharma Piyush Singh • The firm is found to be non-existent on the date of inspection 22.07.2025 • The said L1 supplier has made supplies to Glitz International, Backbone Overseas, Aayme Sourcing Creations (OPC) Pvt Ltd and Bexley Creation Enterprises (OPC) Pvt Ltd, all firms owned by Gumber family. • The supplier firm failed to produce themselves in response to Summons. • The firm failed to file GSTR-3B for the month of May, 2025 involving tax liability of Rs. 91,00,000/- whereas shown supplies in GSTR-1. 6 Swaraj Traders (07AFDFS2985L1ZE) G/F, U-160, SHOP NO-2, SHAKARPUR, Upadhyay Block, Delhi, 110092 Partner: Ashish Shukla Rahul Sharma • The said ....
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....ses (Vikas & Abhishek Gumber) • Goldwing Enterprises has obtained 02 refunds, collectively amounting to Rs.62,40,000/-, vide Refund Order dated 23.10.2024 and 27.06.2024 11 SKY ENTERPRISES (07AFFFS9430L1ZI) first floor, x/110, old no 250/2, partap gali, Gandhi Nagar, New Delhi, North East Delhi, Delhi, 110031 • The said L-1 supplier has made supplies only to M/s Backbone Overseas firm owned by Shri Vikas Gumber • The supplier firm failed to produce themselves in response to Summons. • The supplier is registered on the premises owned by Gumber family LEVEL 2: 1 Premium Touch Enterprises (07ABFFP9997F1ZI) GROUND, 667/11, DAYANAND MARG, Mandawali, Delhi, 110092 Partner: Arvind Kumar Singh Bhagya Narayan Yadav • The L-2 supplier has made supplies only to two above mentioned L-1 suppliers namely M/s Felicia Export and M/s Vyom Enterprises which in turn shown supplies to firms owned/controlled by Gumber family. • The L-2 supplier had not filed GSTR-3B for the month of May-2025 whereas filed GSTR-1 for the period involving tax liability of Rs. 50,61,420/- 2 MILENIUM ENTERPRISES (07ACCFM50....
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....td and Bexley Creation Enterprises (OPC) Pvt Ltd, all firms owned by Gumber family. • The supplier firm was initially registered at M-121, Jagat Ram Park, Laxmi Nagar, a premise owned by Gumber family and the rent agreement & NOC has been signed by Vikas Gumber. 7 Experts Trading (07AAKFE9945Q1ZF) 5/4/1, GEETA COLONY, Gandhi Nagar, Delhi, 110031 Partner: Saurabh Gihar Rahul Sharma • The said L2 supplier has made supplies to Sky Enterprises and Felicia Exports who in turn have made supplies only to firms owned by Gumber family. • The firm was initially registered at X110/1, Pratap Gali, Gandhi Nagar, a premises owned by Gumber family. The rent agreement has been signed by Vikas Gumber. • One more firm by the name Zeanath Enterprises is registered at the current address and Saurabh Gihar is one of the partners in said firm. • The L-2 supplier had not filed GSTR-3B for May, 2025 whereas shown outward supplies in GSTR-1 for the period showing involving tax liability of Rs. 90,75,800/-. • The L-2 supplier had availed ITC of Rs. 97,28,752/- in GSTR-3B against inward supplies in GSTR-2B involving ITC of....
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....I NAGAR, New Delhi, East Delhi, Delhi, 110092 Partner: BHAGYANARAYAN YADAB BASANT PASWAN • The firm has made supplies to only to M/s Centurian Enterprises discussed above. • The firm is registered at the premises owned by Gumber family. • The firm has NIL inward supplies in GSTR-2B and yet shown outward supplies in GSTR-1 & GSTR-3B. LEVEL-4 TIMOR ENTERPRISES (07AAVFT5103A1ZC) Already discussed in LEVEL-3 above 17. According to Mr. Khatri, ld. SCC on behalf of the GST Department, the above mentioned details, of the maze of firms, which have been created, has been revealed during the course of investigation, and the investigation ought to be permitted to go on, without any hindrance. 18. Ld. SSC, on behalf of the GST Department further argues that, insofar as violation of privacy is concerned, there is no apprehension, since the hard drive of the CCTV and the memory cards which are set out in the panchnama drawn at the resident premises, at A-122,Sector 105,Noida,Uttar Pradesh-201301 (hereinafter 'first panchnama') have not been opened by the GST Department, and the same would not be opened without following the prope....
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....r, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of State tax to things: Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act. (3) The documents, books or things referred to in sub-section (2) or any other documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made ther....
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....and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of Section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the word "Commissioner" were substituted. (11) Where the proper officer has reasons to believe that any person has evaded or is attempting to evade the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him and shall grant a receipt for the same, and shall retain the same for so long as may be necessary in connection with any proceedings under this Act or the rules made thereunder for prosecution. (12) The Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling....
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....er Officer has 'reasons to believe' that there is evasion or, an attempt to evade, reasons shall be recorded for retaining the seized goods or other things including documents, and a receipt of the same shall also be executed. 30. Under Section 67(12) of the Act, a trap purchase can also be made by the Commissioner or any officer authorized by him. 31. The above provisions have been interpreted in various decisions which are discussed below: 31.1 In R.J. Trading Co. v. Commissioner of CGST, Delhi North & Ors. 2021 SCC OnLine Del 3757, a Coordinate Bench of this Court had observed that the basic jurisdictional facts ought to exist before the power under Section 67 of the Act is exercised. The observations in the said judgment are as under: "9.3. What is crystal clear upon a perusal of the provisions of sub-sections (1) and (2) of section 67 is that the expression "reasons to believe" controls the exercise of powers under the said provisions. Therefore, unless the basic jurisdictional facts exist, in a case, the power conferred under sub-sections (1) and (2) of section 67 cannot be exercised....... XXXX 13. The officers concerned should bear in min....
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....ment. Such a belief, be it said, may not be based on mere suspicion : it must be founded upon information." 12. The interpretation of the expression "reasons to believe" in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I Calcutta [(1961) 41 ITR 191 (SC); (1961) 2 SCR 241.] is instructive in interpreting the said expression as used in section 67 of the CGST Act as well. 13. The sufficiency of the reasons is not amenable to judicial review. So long as there is material or information, which supplies a rational basis for forming a belief that the conditions as stipulated under section 67(1) of the CGST Act are satisfied, the search or inspection authorized under the said section cannot be faulted. 14. In Income-tax Officer, I Ward, Distt. VI, Calcutta v. Lakhmani Mewal Das [(1976) 103 ITR 437 (SC); AIR 1976 SC 1753.], the Supreme Court had, in the context of Section 147 of the Income-tax Act, 1961, observed (page 448 in 103 ITR): "8.... the reasons for formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus....
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....he said purpose is served, the books or documents or things seized under sub-section (2) cannot be restrained and are required to be released. 42. The second proviso, although couched as a proviso, is an integral part of sub-section (2) of Section 67 of the Act. The same clearly reflects that the legislative intent of empowering seizure of documents or books or things is for enabling their use in aid of the proceedings under the Act. Thus, seizure of such documents or books or things is conditional upon the proper officer's opinion. That the same are "useful for or relevant to" such proceedings." 31.4 It is pertinent to note that this judgement has not been interfered with, by the Supreme Court. In SLP 31886/2024 titled Commissioner of CGST v. Deepak Khandelwal vide order dated 14th August, 2024, the SLP was dismissed in the following terms: "Delay condoned. No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The special leave petitions are, accordingly, dismissed. Pending application(s), if any, shall stand disposed of." 31.5 Recently, in Civil Appeal No. 11798/2....
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....wed while taking action, the same must be strictly adhered to" 32. Applying the above-mentioned legal precedents, and in the context of the stipulations contained in Section 67 of the Act, the Court has to consider the factual conspectus of the present case. The clear submission on behalf of the GST Department is that the 'reasons to believe' are recorded in the original file of the GST Department by the proper officer. As per the note handed over by Mr. Khatri, ld. SCC, the various steps taken by the GST Department are as under: (i) Reasons to believe: Based on intelligence received by Commissioner, CGST Delhi East, vide email dated 21st July 2025, it was revealed that five firms, controlled by the Gumber family, had filed refund claims in the Laxmi Nagar Division, which appeared prima facie improper and consisting of a supply chain of suppliers, appearing to be created to pass on fake ITC. Subsequently, a discreet verification was conducted at the principal place of business of these firms, and it was revealed that there was no business activity, and these firms were merely created for availing fraudulent ITC. Further, enquiries suggested that relevant goods, document....
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....amily, which necessitated the inspection, search and seizure. Prima facie, in the background of the facts captured in the note, as also the chart extracted above, of the different entities, it cannot be held that the proceedings conducted under Section 67 of the Act were violative, or contrary to law. In fact, to unearth the alleged evasion, surprise inspection, search, and seizure was rightly resorted to by the GST Department. 34. The Court has, at this stage, perused some of the documents which have been placed on record, including the two panchnamas. The first panchnama reveals that there were various digital devices which were seized in the presence of Mrs. Bharti Gumber, wife of Mr. Vikas Gumber. The details of the two memory cards which have the CCTV footage are as under: 8 32 GB Memory Card Sandisk Ultra 2424DX EXYOP C 9 32 GB Memory Card Sandisk Ultra 3446DY GSHOE6 35. It is pertinent to note that the GST Department has categorically asserted that the said two memory cards have not been accessed by the GST Department. 36. At this stage, ld. Counsel for the Petitioner submits that even the hard disk is of the CCTV footage from the residence. ....
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....of the ground floor. After entering the gate of the ground floor, it was found that the premises consist of a hall of approx 50 sq yards, a room of approx 20*10 feet, a washroom of approx. 3*10 feet. Then, the officers along with us, the panchas, searched the premises in presence of Smt Kamlesh." 38. A perusal of the second panchnama shows that the officials of the GST Department were given access into the premises by the tenant residing on first floor i.e, Smt. Kamlesh, who had handed over the keys to the officials of the GST Department. The Court is not convinced that the access to the business premises was unlawfully obtained, as is clear from the second panchnama, wherein the tenant who had a bunch of keys, had provided access to the officials of the GST department. It appears that the Gumber family was aware of the fact that the officials wanted to search the said premises and they were given access by the Tenant. 39. However, some of the concerns which are raised by the Petitioners such as right to privacy of the family being violated, etc., deserve to be addressed. Clearly, any family related CCTV footage which is with the GST department and violates privacy of family ....