The Supreme Court has stayed a Delhi High Court judgment that upheld the GST Department’s search of an advocate’s office and seizure of his computers, while questioning why the “reasons to believe” supporting the search were not disclosed to the lawyer affected by the action.
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New Delhi: The Supreme Court has stayed the Delhi High Court judgment upholding a search and seizure conducted by the Goods and Services Tax Department at the office of Advocate Puneet Batra and his law firm, Bass Legal LLP.
A Bench comprising Justice Dipankar Datta and Justice Sheel Nagu issued notice on Batra’s Special Leave Petition and granted the respondents three weeks to file their reply.
The Court also permitted Batra to appear before the investigating authority at 12 noon on Wednesday, September 30, 2026, instead of requiring him to appear on the day of the hearing.
The interim stay places the operation of the High Court ruling on hold. The Supreme Court has not yet finally decided whether the search was lawful or how advocate–client privilege must be protected when an investigating agency suspects the advocate’s own involvement.
Bench questions non-disclosure of reasons supporting search
During the hearing, the Bench questioned the GST Department about its refusal to disclose the recorded reasons that formed the basis of the search. It indicated concern that an affected person could be left without an effective remedy if the statutory satisfaction rested on irrelevant material but the foundation of the action remained undisclosed.
The Court examined material handed over by Additional Solicitor General S.V. Raju and questioned an apparent discrepancy involving the statement of one Suraj Kumar. The petitioner argued that the version dated July 24 did not name Batra or refer to the alleged 0.7 per cent share attributed to him, while a later version recorded the matter differently.
The Bench also observed that when an investigating agency reproduces a statement as a quotation in a remand application, the reproduction should be faithful to the original.
Petitioner challenges GST Department’s power to search third party
Senior Advocates Balbir Singh and N. Hariharan, appearing for Batra, argued that the case concerned both the legality of the search and the confidentiality of professional communications stored on devices seized from a law office.
They submitted that Batra had responded to summons, joined the proceedings and supplied material sought by the Department. If further information was required, the authorities could summon him and seek production of specific records instead of searching the premises and taking custody of devices containing information belonging to several clients.
The petitioner relied on the structure of Section 67 of the Central Goods and Services Tax Act, 2017. It was argued that Section 67(1) requires a proper officer of the prescribed rank to possess reasons to believe that a taxable person has suppressed transactions, improperly claimed input tax credit or otherwise contravened the law to evade tax.
For a search under Section 67(2), counsel contended, a separate satisfaction must exist that goods liable to confiscation or documents, books or things relevant to proceedings are secreted at a particular place.
Batra maintained that he was a third party and not the taxable person under investigation. His counsel argued that Section 67(11) specifically addresses records produced by a person who is not a taxable person and requires reasons to be recorded in writing. According to the petitioner, the statutory scheme did not confer an unrestricted power to search a third party’s professional premises merely because the Department was investigating a client.
Challenge to sealed-cover material and cloned data
The petitioner also objected to the High Court considering investigation material placed in a sealed cover. He argued that material collected after the search could not retrospectively supply the required “reason to believe” that had to exist when the search was authorised.
Particular concern was raised over the cloned copy of the computer data retained by the GST Department. The High Court had directed officials to confine their examination to material relevant to the investigation and not access information relating to unrelated clients.
Batra submitted that possession of the complete cloned data itself exposed confidential information concerning other clients. When the Supreme Court asked how privileged and unrelated material would be segregated, the Department suggested that it could redact such information. The Bench questioned whether the investigating authority itself could be the sole decision-maker on what was privileged.
GST Department alleges lawyer’s role went beyond legal advice
Additional Solicitor General S.V. Raju opposed the petition and disputed the existence of an advocate–client relationship in the factual circumstances under investigation. He referred to an alleged fraud involving approximately ₹1,306 crore and entities connected with Chinese nationals.
The Department maintained that several statements implicating Batra were already available before the search and that the relevant material had not been manufactured after the event. It argued that disclosure of the recorded reasons at the investigation stage could compromise the inquiry because the file contained statements and sensitive information.
The Department further contended that the power under Section 67(2) was not dependent entirely on action under Section 67(1), relying on the statutory expression “or otherwise.” It also said that the authorisation had been shown at the premises and acknowledged by the person in charge.
Delhi High Court had upheld search under Section 67(2)
The Delhi High Court had dismissed Batra’s writ petition in a judgment delivered by a Division Bench of Justice Anil Kshetarpal and Justice Shail Jain.
The High Court held that the search was supported by a valid authorisation under Section 67(2) of the CGST Act. It further ruled that advocate–client privilege could not function as an absolute barrier to investigation where prima facie material suggested that the advocate may have acted beyond the role of legal adviser and participated in the affairs being investigated.
At the same time, the High Court did not record a final finding on Batra’s alleged role and prescribed safeguards for genuinely privileged communications and data belonging to unrelated clients.
The Supreme Court’s stay means those conclusions will now be examined in the pending SLP. The case raises significant questions regarding the threshold for searching a lawyer’s office, disclosure of reasons recorded under tax legislation, and the mechanism required to prevent investigators from accessing confidential material concerning unrelated clients.
Case Title: Puneet Batra v. Union of India
Case Number: Diary No. 59119 of 2026
Coram: Justice Dipankar Datta and Justice Sheel Nagu
Hearing Date: September 28, 2026
Appearances: Senior Advocates Balbir Singh and N. Hariharan for the petitioner; Additional Solicitor General S.V. Raju for the respondents