Advocate’s privilege cannot block a GST search where there is prima facie material of personal involvement, Delhi HC rules; unrelated client data must remain protected

The Petitioner, an Advocate associated with Bass Legal LLP, had rendered professional and legal services to M/s Martkarma Technology Pvt. Ltd. (“MTPL”), an online gaming company.

On 25 July 2025, pursuant to an authorization dated 24 July 2025 under Section 67(2) of the Central Goods and Services Tax Act, 2017 (“CGST Act”), the Department searched the premises of Bass Legal LLP, including the cabin used by the Petitioner.

Documents relating to MTPL and the Petitioner’s CPU were seized.

The Court initially restrained the Department from accessing the CPU without the Petitioner or his authorised representative being present.

Subsequently, the Court permitted controlled examination, cloning and parsing of the CPU in the presence of Court-appointed IT officials, the Petitioner’s representatives and GST officials, with safeguards to protect unrelated third-party client data.

During the proceedings, MTPL’s Board also recorded its consent to the production of its documents and electronic material before the GST authorities.

Whether the search of Bass Legal LLP, including the cabin used by the Petitioner, and the seizure of documents and the CPU were unauthorized or illegal merely because the Petitioner was an Advocate and the material seized could contain advocate–client communications?

Whether the Respondents had sufficient material and recorded valid “reasons to believe” to authorize the search under Section 67(2) of the CGST Act?

Whether advocate–client privilege absolutely barred investigation into the Petitioner’s own alleged involvement in MTPL’s affairs?

Whether the production of investigative material in a sealed cover, without furnishing copies to the Petitioner, was impermissible?

Whether the absence of a show-cause notice to MTPL, alleged deviations from departmental instructions and the Master Circular, or the Respondents’ alleged change of investigative position invalidated the search or summons?

The Court applied Section 67(2) of the CGST Act, under which an authorized officer may conduct a search where there are recorded reasons to believe that relevant goods, documents or other material are secreted at a premises; the reviewing court examines whether there was material capable of supporting the authorization, not whether guilt was ultimately established.

Advocate–client privilege under Section 132 of the Bharatiya Sakshya Adhiniyam, 2023 (“BSA”) protects confidential professional communications made in the course of the advocate–client relationship, but is a protection primarily belonging to the client and does not immunize the Advocate’s own conduct or independent business activities from investigation.

The Court also referred to Section 130 of the BSA concerning communications made to a public officer in official confidence and Section 192(5) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), reflecting the principle that investigative records are not ordinarily disclosed during a pending investigation.

It distinguished Madhyamam Broadcasting Ltd. v. Union of India, 2023 SCC OnLine SC 366, and relied upon the principles in Balakram v. State of Uttarakhand, 2017 INSC 365, and Sidharth v. State of Bihar, (2005) 12 SCC 545, regarding restricted access to investigative material and case diaries.

Administrative instructions and circulars may regulate the exercise of statutory power but cannot override or extinguish the power conferred by Section 67 of the CGST Act.

The Court held that the Petitioner’s cabin formed part of the premises of Bass Legal LLP, which was expressly covered by the search authorization.

The reasons recorded by the competent authority disclosed sufficient material to authorize the search under Section 67(2); the Court was not required at that stage to determine the Petitioner’s guilt or the ultimate truth of the allegations.

The fact that the Petitioner was an Advocate did not, by itself, invalidate the search or create immunity from investigation.

The Respondents had placed prima facie material suggesting that the Petitioner may have participated in MTPL’s operations and benefited from them, thereby raising an issue beyond the mere possession of privileged communications.

Nevertheless, the Court recognized that an Advocate’s computer may contain unrelated confidential material.

It therefore preserved the safeguards requiring supervised examination, cloning, identification of MTPL-related data, and exclusion of unrelated third-party client information.

The sealed-cover material was considered only to assess whether the investigation had a legitimate basis, not to determine final liability; disclosure could be withheld where it risked compromising an ongoing investigation.

The absence of an SCN was immaterial because the proceedings remained at the investigative stage, while the alleged change in the Respondents’ position was not inconsistent with the progress of an investigation.

Any deviation from departmental instructions or circulars did not invalidate the search absent violation of a mandatory statutory requirement or a jurisdictional defect.

The interim orders were vacated, except for the safeguards governing the examination and use of the seized electronic material.

The Respondents were directed to use the cloned data, confine their examination to material relevant to MTPL and the investigation, and refrain from accessing unrelated data concerning the Petitioner’s other clients.

The Court clarified that the judgment did not authorize unrestricted searches of Advocates’ premises or dilute genuine advocate–client privilege; its ruling was confined to the circumstances in which prima facie material indicated that the Advocate’s own conduct was under investigation.