Dr. V. Balachandran
Dr. M. Govindarajan
Summons
Legally a ‘summons’ is a legal document issued by a Court or by an administrative agency of a Government for various purposes. Summons is of various types. One among them is ‘notice to appear’. In this summons is prepared and served on a person by a law enforcement officer, compelling the appearance of a person before him within a certain period of time or on certain date to give information or furnish documents etc., In tax laws the authorities as authorized by the Government are competent to issue summons to the assessee or any person to appear before him. The person on whom the summon is issued is bound to comply with the summons. He is to appear in person. He cannot be represented by his Advocate or anybody before the authority unless otherwise so authorized. The person concerned may be compelled to produce documents such as book of accounts etc., Non compliance with the instructions contained in the summons leads to attract penalty under the respective law.
Summons under service tax provisions
Under Finance Act, 1994 (‘Act’ for short) there is no separate provision for issue of summons by the Service Tax Authorities. Section 83 of the Act provides that certain provisions of Central Excise Act, 1944 will be applicable to service tax also. Section 14 of the Central Excise Act, 1944 is one among them. The term ‘summons’ is not defined either in Finance Act, 1994 or in Central Excise Act, 1944.
Power to summon
Section 14 of the Central Excise Act gives powers to summon persons to give evidence and produce documents in inquiries under the Central Excise Act. Section 14(1) provides that any Central Excise Officer duly empowered by the Central Government in this behalf, shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purposes of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the persons summoned.
Central Excise Officer
Section 2(b) defines the term ‘Central Excise Officer’ as-
- Principal Chief Commissioner of Central Excise;
- Chief Commissioner of Central Excise;
- Principal Commissioner of Central Excise;
- Commissioner of Central Excise;
- Commissioner of Central Excise (Appeals);
- Additional Commissioner of Central Excise;
- Joint Commissioner of Central Excise;
- Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise; or
- Any other officer of the Central Government; or
- Any person, including an officer of the State Government invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 with any of the powers of a Central Excise Officer under the Act.
Any of the above Officer, who is given power by the Central Government to issue summons, may issue summons to any person in relation to taxation matters directing him to appear him to give information or produce documents as required by the Central Excise Officer.
Duty of the person summoned
Section 14(2) provides that all persons so summoned shall be-
- Bound to attend, either in person or by an authorized agent, as such officer may direct; and
- all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required.
Exemption from appearance
The proviso to Section 14(2) provides that the exemptions under sections 132 and 133 of the Code of Civil Procedure, 1908shall be applicable to requisitions for attendance under this section.
Section 132 of the Code of Civil Procedure gives exemption of certain women from personal appearance. The said section provides that women who, according to the customs and manners of the country, ought not to be compelled to appear in public shall be exempt from personal appearance in Court. Nothing herein contained shall be deemed to exempt such women from arrest in execution of civil process in any case in which the arrest of women is not prohibited by this Code.
Section 133 of the Code of Civil Procedure exempts the following persons from the personal appearance-
- The President of India;
- The Vice President of India;
- The Speaker of the House of the People;
- The Ministers of the Union;
- The Judges of the Supreme Court;
- The Governors of the State and Administrators of the Union Territories;
- The Speakers of the State Legislative Assemblies;
- The Chairman of the State Legislative Councils;
- The Ministers of the States;
- The Judges of High Courts; and
- The persons to whom Section 87B applies.
Inquiry through summons
The Central Excise Manual provides that Central Excise Officers of Superintendent and above rank are empowered to issue summons. Summons for documents should specify which documents are required. Where documents for 3/ 4 years are very bulky which runs into thousands of pages, request must be made in regard to production of copies of such records/ registers if that could serve the purpose. Person summoned is bound to attend and state the truth. If any difficulty occurred in attending to the summons on the fixed date, a suitable reply and request for an alternate date to appear must be sought for.
Statement can be recorded during such enquiry (i.e. during summon) or during search and seizure operations before a gazetted officer not below the rank of Superintendent. These statements may be relied upon by the department at the time of issue of show cause notice.
- It should be in writing, signed by the maker in order to safeguard the interest of the maker as well as department.
- Statement should be voluntary and not under threat. However, the person should be told that he is bound to tell the truth and if he does not tell the truth, he may be prosecuted under section 193 of IPC for giving false evidence. This does not amount to threat; the threat comes from the statue itself.
- While recording the statement or interrogation, the assessee has no right to ask for his advocate’s presence by his side and if allowed to do so, the advocate cannot interrupt the investigations.
- Where statement is extracted through coercive and objectionable methods, the person giving the statement shall immediately send a notice of retraction of his statement explaining the grounds. If the notice of retraction is not given immediately but after the issue of show cause notice or after considerable lapse of time, such retraction will not be entertained.
Inquiry a judicial proceeding
Every inquiry conducted under the issue of summons, according to Section 14(3) shall be deemed to be a judicial proceeding within the meaning of Section 193 and 228 of Indian Penal Code, 1860.
Instructions of Board
The Central Excise Officers even issued summons to the higher officers of the Company with a view to enforce recovery of the tax. In this regard the Board received many complaints as Section 14 had been used to harass the assessees. The Board came out with a circular dated 13.10.1989. In this circular the Board stressed that action under Section 14 is to be taken only as a last resort in cases where assessees are not co-operating or investigations are to be completed expeditiously. This section should not be used for harassing the top management forcing to pay up the demands which are disputed by them. The Board further instructed that for the recovery of demands, normal procedure should be followed. The Board further instructed that the summons should be issued on justified grounds otherwise the Collector would be held personally responsible.
Vide circular No. F No. 137/39/2007-CX-4 dated 26.02.2007 the Board issued specific instructions in regard to issuance of summons in service tax matters. The Board has given the following instructions for this purpose:
- For calling for information/documents normally the mode of communication should be either in the form of a telephone call or by way of sending a simple letter;
- Issuance of summons should be resorted to, only when the above mentioned modes of communications are found to be ineffective or are likely to jeopardize revenue interest or when it is essential to ensure personal presence of the person concerned to tender evidence or record statement in connection with a service tax evasion case; the summons should be issued after obtaining prior written permission from an officer not below the rank of Deputy Commissioner with reasons for issuance of summons to be recorded in writing;
- In case, for unavoidable operational reasons it is not possible to obtain such prior written permission, oral/telephonic permission from such officer must be obtained and the same should be reduced to writing and intimated to the officer according such permission at the earliest opportunity;
- In all cases, where summons are issued, the officer issuing summons must submit a report on proceeding that took place during the presence of the taxpayer/person summoned, and officer authorizing issuance of summons must satisfy himself that no harassment has been caused during the visit of the person summoned to the office.
Vide circular No. F. No. 207/07/2014-CX-6, dated 20.01.2015 the Board advised that it is desirable that summons need not always be issued when a simple letter, politely worded, can also serve the purpose of securing documents relevant to investigation. It is emphasized that the use of summons be made only as a last resort when it is absolutely required. The Board further issued guidelines in respect of summons, as detailed below:
- Power to issue summons are generally exercised by Superintendents, though higher officers also issue summons. Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner with the reasons for issuance of summons to be recorded in writing;
- where for operational reasons it is not possible to obtain such prior written permission, oral/telephonic permission from such officer must be obtained and the same should be reduced to writing and intimated to the officer according such permission at the earliest opportunity;
- In all cases, where summons are issued, the officer issuing summons should submit a report or should record a brief of the proceedings in the case file and submit the same to the officer who had authorized the issue of summons.
The circular further emphasized that senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance. They should be summoned only when there are indications in the investigation of their involvement in the decision making process which led to loss of revenue.
Offences and penalty
Section 77(1)(c) of the Act provides that who fails to-
- furnish information called by an officer in accordance with the provisions of this Chapter or rules made there under; or
- produce documents called for by a Central Excise Officer in accordance with the provisions of this Chapter or rules made there under; or
- appear before the Central Excise Officer, when issued with a summon for appearance to give evidence or to produce a document in an inquiry,
shall be liable to a penalty which may extend to ten thousand rupees or two hundred rupees for every day during which such failure continues, whichever is higher, starting with the first day after the due date, till the date of actual compliance.
Section 89 (1)(c) provides that whoever fails to supply information which he is required to supply under this Chapter or the rules made there under or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information and where the amount exceeds fifty lakhs rupees, he shall be punishable with imprisonment for a term which may extend to three years. The said person shall be punished for the second and subsequent offence with imprisonment for a term which may extend to three years.
Writ against summons
Summons is not appealable. Summons can be issued to the assessee as well as to the third parties for collecting information in regard to the evasion of service tax. Whether writ lies against the issue of summons?
In ‘Siri Restaurant & Bar V. Commissioner of Customs, Central Excise & Service Tax, Vishakpatnam’ – 2016 (41) STR 177 (AP) the petitioner was issued with summons by the Authority on 17.09.2013 indicating that he had reasons to believe that the petitioner was in possession of facts or/and documents and things which were relevant to the inquiry. The Authority directed to appear before him on 01.10.2013 to give evidence or to make statement truthfully on such matters concerning the inquiry as he may be asked and to produce the documents mentioned in the schedule. If the petitioner failed to obey this summons and intentionally omitted to attend to give evidence to make statements the petitioner would be liable to be punished under the provisions of Section 174 and 175 of the Indian Penal Code.
Against this the petitioner filed this present writ petition before the High Court declaring the action of the department in proposing to impose service tax on the petitioner for providing Air conditioning facility to its customs and issuing summons. The petitioner prayed the Court to direct the summons is illegal, arbitrary and without power and set aside the same and direct the department not to impose any service tax on the petitioner for providing air conditioning facility to its customs and to pass such other orders as the High Court may deem fit proper in the circumstances of the case.
The High Court held that it is merely a summons issued to the petitioner alleging a case about evasion of service tax/contravention of provisions of the Finance Act, 1994. It does not specifically say that who is evader and whom the proceedings have to be initiated. The petitioner assumed that, since summons has been issued to the petitioner, proceedings might have initiated against the petitioner for imposition of tax. Section 14 of the Act clearly says that summons can be issued to any person either prospective assessee or a third party. The authorities have only issued summons intending to inquire into alleged evasion. The High Court directed the petitioner to appear before the authority concerned to know what the intention of the issuing authority vis-a-vis nexus is.
Conclusion
Issuing of summon is one of the instrument helping the Department to get information or documents or statement from any person to find out the evasion of the tax in the case of assessee himself or the information etc., may be obtained from the third party who is in possession of information/documents relevant to the tax evaded cases. The Board directs the authorities to take last resort for the issue of summons. It shall not be used for the purposes of harassment of the assessee or any other person. Once summons is issued the concerned person is to co-operate with the department to unearth the evaded cases.
Please indicate within how many days/months the show cause notice after the summon