Section 70 of the CGST Act empowers the proper officer (PO) 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.
The word summon is not defined in GST as well as in any other law. The meaning as per Oxford Dictionary means “summon somebody (to do something) (formal) to order somebody to appear in court”
The foremost condition before issuing the summon is that the inquiry has already been initiated. In relate to that inquiry the PO requires the person either to give evidence or to produce a document or any other thing. The matter connecting to the inquiry shall have to be explained in the summon issued. If it is not explained, summon issued may be invalid. The Circular No. 128/2019 dated 23-12-2019 provides the format of ‘Summon’.
It is ample clear that provisions of section 70 have been enacted for collecting evidences and materials to frame or proceed the case against the person concern. Before proceedings or framing a case, the PO shall have to compute the liability of tax, interest and penalty which is mandate under the GST Law. The same may be verified as under:
- Section 73 and Section 74 require to issue a statement containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised through GST form DRC-01;
- Section 69(2) requires to inform the grounds of arrest;
- Offences under section 132 cannot be framed without available of materials and evidences;
- The decision for Search and Seizure under section 67 may not be taken without reasons and
- Decision for Audit or Special Audit can also be taken after when the Authority find reasonable materials on hand.
Thus, it seems, inquiry is the only tool which can help the PO to proceed the case under proper provisions of the GST law.
The provisions under section 70 are analysed with judicial decisions as under:
1. SUMMON MAY BE ISSUED BY MULTIPLE AUTHORITIES
G.K.Trading Company v. Union of India reported as 2021-VIL-12-ALH – In this case the Hon’ble Court held that The word “inquiry” in Section 70 is not synonymous with the word “proceedings”, in Section 6(2)(b) of the CGST Act. Section 6(2)(b) prohibits the proceedings if the proceedings had already been initiated on the same subject-matter. Since inquire is not at par with the word proceedings, therefore, if the inquiry, is initiated on the matter by multiple authorities, cannot be prohibited by virtue of provisions contemplated under section 6(2)(b) of the CGST Act.
M/s SIDDHI VINAYAK TRADING COMPANY Vs UNION OF INDIA AND 2 OTHERS – 2021-VIL-155-ALH
The opinion of the Court in this case is that the initiation of the proceeding for imposition of tax and penalty was with the issuance of the notice under Section 74 as contained in Chapter XV of UPGST Act and the inquiry under Section 70 of the Act was independent.
2. ANTICIPATORY BAIL
The question is that whether anticipatory bail may be granted or not before attending the inquiry proceedings under Section 70 of the CGST.
There are differ views explained as under:
Affirmative view in Anticipatory Bail
SH. HARDEEP SINGH BANGA AND 6 OTHERS Vs STATE OF U.P. AND 4 OTHERS – 2021-VIL-694-ALH
The court allowed the anticipatory bail while giving following judgements:
- Petitioners are having a good business and social status in society;
- The petitioners have no prior criminal antecedents brought on record;
- The personal liberty guaranteed under Article 21 of the Constitution of India is a fundamental right and, in every case, arrest is not necessary;
- If the petitioners cooperate with the inquiry, there is no requirement of their arrest;
- The petitioners are having their own address of residence and business and they are having a good status in society;
- They can give surety ensuring their appearance;
- They do not appear to be habitual offender, prosecuted or convicted earlier.
Affirmative view in Anticipatory Bail
SRI HANUMANTHAPPA PATHRERA LAKSHMANA Vs STATE – 2020-VIL-249-KAR
The offences are not punishable with death or imprisonment for life. There is no statutory bar in the CGST Act for granting anticipatory bail by exercising power under Section 438 of the Cr. P.C. Merely, there were number of notices/summons issued by the respondent during the lockdown for COVID-19 that itself is not a ground to reject the bail petition. Considering the fact and circumstances of the case, if an anticipatory bail is granted, no prejudice would be caused to the respondent.
Dissenting view in Anticipatory Bail
DHIRENDRA SINGH Vs THE COMMISSIONER, CENTRAL GST COMMISSIONERATE – 2021-VIL-175-GUJ
The Hon’ble court views that if the writ applicants have an apprehension that they would be arrested any time, it is open for them to take recourse available to them in accordance with law to take care of such a situation. The application for anticipatory bail was rejected.
3. STAY ON PROCEEDINGS INITIATED PURSUANT TO ISSUANCE OF SUMMONS
JSK MARKETING LIMITED & ANR. Vs UNION OF INDIA & ORS. – 2021-VIL-114-BOM
Petitioner seeking stay on proceedings and consequential penal action, initiated pursuant to issuance of summons. The petitioner assumed that he would be apprehended or arrested during interrogation and inquiry.
The Court took the views that the summons makes it succinctly clear that the petitioners are required to tender oral evidence and produce certain documents. Investigation is under way pursuant to the raid which was carried out at the premises of the petitioners. It is therefore incumbent upon the petitioners to cooperate in the investigation / GST inquiry. The summons issued to the petitioners does not authorize the investigating officer to arrest petitioner No.2, but have been issued only for the purpose of completing the investigation into evasion of GST undertaken by respondent No.2. In this view of the matter, we do not see any reason for the petitioners / petitioner No.2 to apprehend or arrest on presenting himself before the investigating officer in response to the summons which have been issued to the petitioners.
In view of the aforementioned legal position, the summons issued to the petitioners / petitioner No.2 are valid and no interference is called upon.
The judgment of the Supreme Court in the case of Commissionerate of Customs Calcutta v. M.M.Exports 2007 (212) ELT 165, takes the view that the High Courts should not interfere at the summons stage except in exceptional cases, the reason being that the department has not decided and taken a firm opinion whether or not to issue a show-cause notice.
In the case of National Building Construction Co. Ltd. v. Union of India [2018] 100 taxmann.com 307 the observation of the Court was that “Courts would, however, not interfere merely because the authority has exercised discretion that is not acceptable to the assessee. The choice whether or not to exercise power of special audit, summons etc. is for the respondents to decide and exercise, and not for the petitioner to direct.”
4. TENDER THE STATEMENT AND ADDUCE EVIDENCE THROUGH VIDEO CONFERENCING
P.V. RAO Vs SENIOR INTELLIGENCE OFFICER, DIRECTORATE GENERAL OF GST INTELLIGENCE & ORS – 2020-VIL-566-DEL
The petitioner sought his presence before the GST Authority through the video conferencing on various reasons and grounds. The Hon’ble court held that the concept of balance of convenience cannot be tilted in favour of the Petitioner to be allowed to appear through video conferencing, merely because travelling from Bengaluru to New Delhi would be a risk factor for the Petitioner of contracting COVID-19. This mere apprehension of contracting COVID-19 does not persuade us to grant the relief sought for by the present Petitioner.
5. RECOVERY DURING INQUIRY
It is clear law that during investigation or inquiry the Authority cannot force and compel to pay any amount of tax etc. by the person concern. Even the Authority shall not take such coercive steps which compel the person to pay the tax.
In the case of Clear trip Private Ltd. and Ors. wherein a Bench of the Bombay High Court said that “there is no question of any recovery of tax by coercive means, unless the investigation results into issuance of a show cause notice, an opportunity to the Petitioner to resist the demand, an adjudication thereof by a reasoned order and protective remedies such as appeals. We do not think that any recovery by coercive measures is straightway permissible.”
In the case of Bhumi Associate the Gujrat High Court said that “No recovery in any mode by cheque, cash, e-payment or adjustment of input tax credit should be made at the time of search/inspection proceedings under any circumstances.
6. INTIMATORY AND MINATORY LANGUAGE ON NOTICE NOT PERMISIBLE
In the case of National Building Construction Co. Ltd. (supra) the observation of the court was that the letters/notices must be appropriately worded. In a given case they may refer to the penal or prosecution provisions to ensure compliance but they should not intimidate and be minatory.
7. MATTERS RELATING TO THE INQUIRY
M/s AGARWAL FOUNDRIES PRIVATE LIMITED RAMA TOWERS AND 3 OTHERS Vs UNION OF INDIA AND 9 OTHERS – 2020-VIL-540-TEL
The Hon’ble Court allowed the writ petition and directed as under:
VOILENCE AND COERCION BY THE GST OFFICIALS – The respondents cannot claim any liberty to torture or use physical violence during the course of search, investigation or interrogation under the CGST Act, 2017 against persons suspected of tax evasion.
TIMINGS FOR APPEARING – Any interrogation of petitioners or their employees shall be between 10:30 a.m. and 05:00 p.m. on week days.
PRESENCE OF A LAWYER – The lawyer may present in the inquiry in the visible range, who shall not be in hearing range.
RESTRICTION UPON THE ERRING OFFICER – The Court directed that the erring official shall not participate in the enquiry, and it shall be transferred to another official.
Location of investigation – The court disallowed to conduct the inquiry of about 50 persons of the petitioner in New Delhi head office while consider the situation of covid-19 pandemic and the high cost involved. The court directed that the petitioner nos.2 to 4 alone can be summoned to New Delhi for the purpose of the above inquiry by the respondents on one occasion for two to three days, and rest of their interrogation and those of their employees shall be conducted at zonal office Hyderabad.
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