RELEVANT STATUTORY PROVISIONS
Section 70: Power to summon persons to give evidence and produce documents
1. The proper officer under this Act 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 in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908.
2. Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code.
The words which are made underline above are of utmost importance.
a) The Proper Officer: Proper Officer is defined in Section 2(91) – “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board
Vide Entry 4 of Circular 3/3/2017 dated 05.07.2017, CBIC assigns ‘Superintendent of Central Tax’ as the proper officer for the purpose of section 70. CBIC vide entry 8 of Not 14/2017 Central Tax dated 01.07.2017 appoints Senior Intelligence Officer, GST Intelligence or Superintendent, GST Audit and invests them with power that of a Superintendent.
Further CGST Act in section 70 has used the word ‘The’ before the words ‘proper officer’. It gives meaning that it is the specific officer who has been assigned jurisdiction either on the basis of territory, function or category, has the authority to issue summon under the said section.
b) Any Person: Legislature has used the words ‘any person’ while making law. It means the proper office has got wide power to issue summon to any person whose attendance he considers necessary. But at the same time law uses the expression ‘in the manner under the provisions of CPC’ 1908’.
Sec. 27 of CPC’ 1908 provides Summons to defendants:
Where a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim and may be served in manner prescribed.
Further Order No. 4 of CPC Orders imposes certain restriction while issuing summons:
4. No party to be ordered to appear in person unless resident with certain limits
No party shall be ordered to appear in person unless he resides—
(a) within the local limits of the Court’s ordinary original jurisdiction, or
(b) without such limits but at place less than fifty or (where there is railway or steamer communication or other established public conveyance for five-sixths of the distance between the place where he resides and the place where the Court is situate) less than two hundred miles distance from the Court-house.
To sum-up, summons can be issued to persons residing within the territorial jurisdiction of the proper officer but it can be extended upto a distance of less than two hundred miles beyond his territorial jurisdiction.
APPLICABILITY OF INDIAN PENAL CODE
Sub section 2 has created a deeming fiction to the effect that enquiry u/s 70 shall be considered to be ‘judicial proceeding’ within the meaning of section 193 and 228 of IPC.
193 (IPC) –Person giving false evidence to be imprisoned for 7 years with fine
228 (IPC) –Person who offers insult or interrupts any public servant, punishable with imprisonment of six months
The expression ‘judicial proceedings’ has neither been defined under GST law nor under IPC. Section 2(i) of CRPC defines judicial proceedings as – judicial proceedings include any proceedings in the course of which evidence is or may be legally taken on oath. Hence one can reasonably opine that documents, statements etc given pursuant to section 70 of CGST Act may be considered as given under oath.
As per section 25 and 26 of the Indian Evidence Act 1872, confessional statement given before a police officer is inadmissible and holds no value. Now the moot question is whether GST Officer shall be considered a police officer for the purpose of CGST Act. Honble Telengana High Court in the case of P V Ramama Reddy V UOI (2019) 104 taxmann.com 407 has held that GST Officers are not police officer to whom section 25 of the Indian Evidence ct 1872 would apply.
Under the erstwhile regime some jurisprudence has evolved as to whether an officer under a revenue law could exercise the power of a police officer. Honble Apex Court in the case of State of Punjab Vrs Barkat Ram AIR 1962 SC 276 has held that Custom Officer cannot be equated with a police officer. Further constitution bench of Honble Apex Court in the case of Soni Ballavdas Liladhar Vrs Asst Collector of Customs AIR 1965 SC 481 reiterated the same position that custom officers are not police officers and accordingly statement made to them are not inadmissible under section 25 of Indian Evidence Act. Similar view was taken again by Honble Apex Court in the case of Ilias Vrs The Collector of Customs AIR 1970 SC 1065 and ruled that Central Excise Officer are not police officer and he do not have power to submit a charge sheet u/s 173 of CRPC.
Section 136 of CGST Act carved out certain circumstances under which statements given could be made relevant for the purpose of proving in any prosecution of an offence under the Act and but otherwise. The circumstances listed out are: The person who has given statement is i) dead/ not found/ incapable/ kept out etc. ii) has been examined in a court and court is opinion that such statement should be admitted.
The statement so recorded during summon is relevant only for prosecution in an offence. Meaning thereby, section 136 cannot be invoked for other purposes like making assessment, adjudication, penalty proceedings etc.
Section 70 uses the expression ‘in any inquiry’. Now the question is can the Proper Officer initiate summon in case of pendency of any proceeding against a person who may not be the same person to whom summon has been issued. Can ‘inquiry’ be equated with ‘proceeding’?
The words “proceedings” and “inquiry” have not been defined in CGST Act. Therefore, these words have to be interpreted in the context of the aforesaid Acts. The word “inquiry” in Section 70 has a special connotation and a specific purpose to summon any person whose attendance may be considered necessary by the proper officer either to give evidence or to produce a document or any other thing. It cannot be intermixed with some statutory steps which may precede or may ensue upon the making of the inquiry or conclusion of inquiry. The process of inquiry under Section 70 is specific and unified by the very purpose for which provisions of Chapter XIV of the Act confers power upon the proper officer to hold inquiry. The word “inquiry” in Section 70 is not synonymous with the word “proceedings” in section 6(2)(b) of the CGST Act.
The Hon’ble Allahabad High Court in G. K. Trading Company v. Union of India & Ors. [Writ Tax No. 666 of 2020, dated December 2, 2020] has held that inquiry cannot be equated with proceeding. Meaning thereby, summon can be initiated even if there is pending proceeding against the assessee.
SUMMON TO PRESENT AT ODD HOURS NOT PERMISSIBLE
Although there is no express provision in the law which bars proper officer to require the presence of the person at odd hours, it was held in the case of Agarwal Foundries Vrs UOI 121 taxmann.com 134 (Telengana HC) as follows:
‘’In our opinion, the respondents cannot contend that they will interrogate the persons suspected of committing any tax evasion as per their sweet will forceably keeping them in their custody for indefinite period. If it is done, it has to be construed as informal custody and the law relating to an accused in custody has to be expressly or impliedly applied. If accused can get all the benefits under Art.22 of the Constitution, a person in such informal custody can say that he is also entitled to get relief under Art.21 of the Constitution of India. This view has been taken by the Gujarat High Court in Jignesh Kishorbhai MSR,J & TA,J ::31:: wp_28268_2019 Bhajiawala v. State of Gujarat6 while dealing with similar actions of authorities under the Prevention of Money Laundering Act, 2002.’’
SUMMON TO MANAGING DIRECTOR/ GENERAL MANAGER
CGST Act does not bar proper officer to issue summon to Managing Director or General Manager of a company. It has evolved through jurisprudence that the proper officer must be reasonable and must not act in an arbitrary manner. Honble Jharkhand High Court while dealing with similar case has held in the case of Sudhir Deora Vrs CCE that although the officer has legal right to summon any person including Managing Director or General Manager, but he should not summon them unless it is required for the purpose of an inquiry. Similar view was also express by Honble Delhi High Court in the case of Gail Gas Ltd Vrs DGGI (2018) 100 taxmann.com 242.
RIGHT TO REMAIN SILENCE DURING SUMMON
Article 20(3) of Constitution of India guarantees fundamental right against self-incrimination. It says – No person accused of any offence shall be compelled to be a witness against himself.
Further, section 161 of CrPC provides that no person is bound to answer any question which exposes him to a criminal charge.
In the case of NSR Krishna Prasad (1992) 57 ELT 568 AP it was held that right to silence is not an offence and cannot be said to be an obstruction to a proceeding. Further in case of Padam Narain Agarwal AIR 2009 SC 254 it was held that a person is not absolved from speaking the truth on the ground that such statement could be used against him.
KNOW YOUR RIGHTS
1. If a statement is subsequently found to be incorrect or was given not under proper mind or taken under coercion, should be retracted at the earliest possible time.
2. Assessee has right to cross examine the witness/ third party whose statements has been obtained and used against such person.
3. Refreshing Memory: It is advisable to take time rather than giving incorrect statement. Section 159 of Indian Evidence Act allows it.
4. While recording statement, he is allowed to refer Books of Accounts and other documents before giving statement. He is not expected to remember everything (Chelapati Ganeswar Rao SC).
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