Case Title, Court, Petition No., Category, Sections

AIMLAY Private Limited & Ors. v. Commissioner of Central Tax (Delhi West) & Ors.
Delhi High Court
W.P.(C) 6836/2024
Category: Search & Seizure – Return of Seized Goods & Devices; Provisional Attachment of Bank Accounts
Relevant Provisions: Sections 67(2), 67(3), 67(5) of the CGST Act, 2017

Facts (Paras 1–7, 9–17)

The petitioners challenged two sets of actions by the Department. First, they assailed provisional attachment orders dated 20.11.2023 and 16.04.2024 issued by the Commissioner, Central Tax (Delhi West), which froze the bank accounts of Petitioner No. 1 and its directors. Second, they sought release of electronic devices and documents—laptops, CPUs, mobile phones—seized during a search operation carried out on 16.11.2023 under Section 67(2) of the CGST Act.

The Court, by an earlier order dated 20.03.2024, had permitted the petitioners to approach the Commissioner seeking limited permission to operate the frozen bank accounts. The Commissioner subsequently passed a detailed speaking order dated 16.04.2024 rejecting the request. In the present proceedings, petitioners expressly stated that they were not pressing the challenge to the bank attachment at this stage (para 8).

The claim then narrowed to the statutory entitlement under Sections 67(3) and 67(5) for copies of seized documents/data and for return of seized devices within the prescribed period. Petitioners complained that despite providing a 1 TB hard disk for data replication, the authorities insisted on further storage devices and delayed release of data. They sought a mandamus directing return of seized devices and immediate supply of data copies.

Questions / Issues Before the Court

1. Whether the petitioners are entitled under Section 67(5) to obtain copies/extracts of all documents and digital data seized during search?

2. Whether the Department can retain laptops, CPUs, and mobile phones beyond the period prescribed in Section 67(3), i.e., more than 30 days after issuance of notice?

3. Whether the Department is justified in demanding additional hard disks despite petitioners already providing a storage device?

Observations (Paras 10–17)

The Court observed that Section 67(5) explicitly grants the taxpayer the right to obtain copies/extracts of documents seized under Section 67(2). Therefore, withholding data replicas or insisting on unreasonable technical conditions would violate statutory rights.

Further, Section 67(3) mandates that seized documents and things must be returned within 30 days from the date of issuance of notice. The authorities cannot retain electronic devices indefinitely. The Court emphasized that retention is permissible only for as long as required and never beyond the statutory ceiling.

The Commissioner had already agreed to provide data copies on mutually convenient dates. Thus, the only remaining question was compliance and ensuring that the petitioners were not forced into unnecessary additional hardware requirements. The Court directed the Commissioner to “examine the aspect” and ensure that data is not withheld merely on account of device-size demands.

The respondents disputed the petitioners’ grievance but admitted that the counter-affidavit was not yet on record.

Judgment / Holding (Paras 13–18)

The Court held that:

1. Seized devices may be retained only until required and never beyond 30 days from issuance of notice, as mandated by Section 67(3).

2. The Commissioner must ensure immediate provision of data copies from seized laptops, CPUs, and mobile phones under Section 67(5).

3. The Commissioner must re-examine the demand for additional hard disks and ensure that data is not withheld on technical pretexts.

4. Since the petitioners were not pressing the challenge to provisional attachment of bank accounts, no orders were passed on that aspect.

5. Matter listed on 20.08.2024 for further hearing after the respondents place their counter-affidavit on record.

In effect, the Court protected statutory safeguards against excessive seizure, upheld the taxpayer’s right to access their own business data, and reiterated that retention powers under Section 67 are strictly time-bound.

Summary of Cases Referred

(No external case law citations were mentioned in the order. Hence, the table reflects that no precedents were relied on.)

Between Fine Lines – Trade/Industry Takeaways

This order signals the judiciary’s strict scrutiny of search-and-seizure powers under GST. Businesses often face operational paralysis when laptops/servers are seized. The Court reiterates that authorities cannot withhold devices indefinitely nor deny access to seized data. Copies must be supplied promptly, and devices must be returned within 30 days of notice issuance. This ruling will assist taxpayers facing prolonged data-seizure delays and unreasonable departmental requirements for multiple storage devices.

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.”