Advocate-Client Privilege Cannot Bar GST Search Of Advocate's Office If His Role Is Under Probe: Delhi High Court
The Delhi High Court has upheld the search conducted by the Goods and Services Tax (GST) Department at an Advocate's office, including seizure of a CPU from his cabin, holding that advocate-client privilege cannot operate as an absolute bar against investigation into the conduct of the advocate himself where there is prima facie material indicating his possible involvement in the affairs under investigation.
The Division Bench of Justices Anil Kshetarpal and Shail Jain, however, clarified that confidential communications and material belonging to clients unconnected with the investigation continue to enjoy legal protection.
"There can be no dispute that communications and material protected by advocate-client privilege are entitled to the protection recognised in law. However, such privilege cannot operate as an absolute bar against an investigation into the conduct of the Advocate himself, where the Respondents have placed prima facie material indicating that the Petitioner may have acted beyond the role of a legal adviser and may have been involved in the affairs under investigation", the court ruled.
The court was dealing with a lawyer's petition, challenging the search and seizure at his offices, in connection with alleged GST evasion by one of his clients.
He claimed that a CPU device containing client correspondence, which is confidential in nature, was seized by the GST Department, apart from Partnership Deed related to his law firm and other documents.
Department ont he other hand claimed that the Petitioner though being an advocate, was not merely representing the client as an advocate, but was in fact involved in running of the business and affairs of the client itself.
Various statements recorded by the GST Department during the investigation, allegedly attributing the active role played by the Petitioner, were also filed in a sealed cover.
When the plea initially came before the Court, it directed that the CPU should not be opened or its contents downloaded without Petitioner or his authorised representative being present.
Subsequently, the Court permitted examination of the CPU subject to safeguards, including that data belonging to third-party clients should not be made available to the GST Department.
Dealing with the scope of privilege, the High Court held that the privilege contemplated under Section 132 of the Bharatiya Sakshya Adhiniyam is intended to protect the client and does not automatically extend to every piece of material found in an advocate's possession.
The court observed that the privilege attaches to the nature of the communication or material and the circumstances in which it came into existence.
“Consequently, material relating to the independent affairs, transactions or activities of the Advocate himself cannot, merely by reason of its being found in his office, be placed beyond the reach of a lawful investigation,” it held.
The court observed that the privilege attaches to the nature of the communication or material and the circumstances in which it came into existence. Therefore, material concerning an advocate's independent affairs, transactions, or activities does not become immune from lawful investigation merely because it is found in the advocate's office.
In the present case, the Department had placed material alleging that Petitioner himself was involved in its client's affairs rather than merely representing it professionally.
The Court thus held that the search of Petitioner's offices was conducted pursuant to a valid authorisation under Section 67(2) of the CGST Act.
At the same time, the Court emphasised that an advocate's computer may contain confidential information belonging to clients who have no connection with the investigation.
It therefore held that the safeguards imposed during the proceedings were necessary to ensure that the investigation was not frustrated while maintaining confidentiality of data belonging to unrelated third-party clients.
The Court also noted that Petitioner had admitted that certain files were deleted remotely while the search was underway. It clarified that the deletion, by itself, could not establish wrongdoing, though it was a circumstance the Department was entitled to examine as part of its investigation.
As such, the Court upheld the search and seizure, subject to the protection of privileged and confidential material belonging to unrelated clients.
For Petitioner: Senior Advocate N. Hariharan, Senior Advocate Avi Singh, Senior Advocate Mohit Mathur, Advocate Vinit Bhatia, Advocate Animesh Gaba, Advocate Shikhar Garg, Advocate Yash Kadyan, Advocate Harsh Vardhan, Advocate Punya Rekha Angara, Advocate Amartya, Advocate Aman Akhtar, Advocate Vasundhara Raj Tyagi, Advocate Arjan Singh Mandla, Advocate Apoorv Kumar, Advocate Krishna Shukla, Advocate Vignesh and Advocate Bhavya Chhikara, with Petitioner in-person.
For Respondents: Solicitor General Tushar Mehta, Additional Solicitor General S. V. Raju, Junior Standing Counsel Akash Panwar, Advocate P. C. Aggarwal, Advocate Digvijay Dam, Advocate Aman Mehta, Advocate Madhav Goel, Advocate Annam Venkatesh, Advocate Aditi Andley, Advocate Aryansh Shukla, Advocate Agrimaa Singh and Advocate Abhimanyu Kapoor; Senior Advocate T. Singhdev with Advocate Abhijit Chakravarty, Advocate Tanishq Srivastava, Advocate Anum Hussain, Advocate Bhanu Gulati, Advocate Sourabh Kumar and Advocate Yamini Singh; Senior Standing Counsel Anurag Ojha with Advocate Dipak Raj, Advocate Aryaman Singh Chouhan and Advocate Aditya Chaudhary; Standing Counsel Varun Mishra with Advocate Shreeya Sud and Advocate Ashar Hussain.