Case: Dhruv Krishan Maggu v. Principal Director General, DGGI (HQRS.) & Anr.
Court: Delhi High Court
Petition No.: W.P.(C) 7517/2020
Date of Decision: 12 December 2022
Category: Search & Seizure – Retention of Documents / Laptops
Relevant Provisions: Sections 67(2), 67(3), 67(7), 74(1), 74(2), 74(10) of the CGST Act, 2017
FACTS (Paras 1–6)
The matter arose from a search conducted by DGGI on 28.08.2019, during which the Petitioner’s laptop, computer, documents and other digital materials were seized (para 2). The investigation stemmed from an alert issued by Allahabad Bank regarding unusually large and immediate withdrawals of IGST refund amounts credited into four newly opened bank accounts (para 3). Subsequent investigation revealed that all entities operated from a common address and were non-existent; PAN/Aadhaar holders had allegedly lent their credentials to one Mukesh Kumar (para 4).
The counter affidavit alleged that 23 fake firms had been floated using identities of labourers and hawkers, resulting in siphoning of more than Rs. 63 crores of IGST refunds (para 4). The Petitioner and his family members were alleged to be involved (para 5). He sought unconditional release of the seized digital devices and documents (para 5).
The Petitioner argued that Section 67(7) mandated return of seized material within six months if no notice was issued; he also claimed that data backup had already been taken and devices should be returned (para 6).
QUESTIONS / ISSUES (Derived from Paras 6–8)
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Whether the six-month limitation in Section 67(7) applies to seized laptops, documents and digital devices?
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Whether retention of “documents, books or things” can continue for the entire period permissible under Section 74 proceedings?
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Whether DGGI was obligated to release the seized devices once data copy was allegedly taken?
OBSERVATIONS (Paras 7–12)
The Court clarified that Section 67(7) applies only to “goods” seized, not to documents or devices (para 10). Seizure of “documents, books or things” is governed exclusively by the second proviso to Section 67(2), which permits retention as long as required for examination or for any inquiry/proceedings under the Act (para 10).
The Court emphasised that the investigation concerns fraudulent IGST refunds involving fraud, wilful misstatement, or suppression, falling clearly within the ambit of Section 74 (para 11).
Under Section 74(10), the proper officer has five years from the relevant date to pass an adjudication order. Under Section 74(2), the show-cause notice must be issued at least six months before expiry of this five-year period.
The Court harmonised Sections 67(2)–second proviso, 67(3), 74(2) and 74(10) to hold that the department may retain seized “documents/books/things” for four and a half years plus thirty days from the date of erroneous refund (para 11).
Since this statutory period had not expired, the petitioner had no vested right to seek release of seized laptops or documents (para 11).
JUDGMENT / VERDICT (Paras 11–13)
The High Court held that the statutory time period for retention had not yet lapsed, and therefore, there was no basis for directing release of the laptop, computer or documents seized on 28.08.2019. It rejected the Petitioner’s reliance on Section 67(7) by reiterating that the provision applies exclusively to goods, not to documents or digital devices (para 10). The writ petition was accordingly dismissed, with a direction that authorities must adhere to statutory timelines (paras 11–13).
SUMMARY OF CASES REFERRED (Tabular Form)
| Case Referred | Court / Citation | Principle / Verdict | Relevance |
|---|---|---|---|
| Micra Overseas v. DGGI (W.P.(C) 3304/2019) | Delhi HC | Petition withdrawn; concerning defreezing of bank accounts of same group firms | Shows prior involvement of petitioner’s family; cited in factual matrix (para 6) |
BETWEEN THE FINE LINES – PRACTICAL TAKEAWAYS FOR INDUSTRY
Businesses must understand that electronic devices and documents seized during GST investigations are not treated as “goods” under the CGST Act. Therefore, the six-month return rule does not apply. Where proceedings relate to suspected fraud or wrongful refund under Section 74, authorities may retain digital devices and records for up to 4.5 years, aligning with the statutory period for issuance of SCN. Entities facing GST searches should anticipate long-term retention of laptops and digital media and should separately request authenticated copies of seized data to avoid operational disruption.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
