Power to summon under Section 70 and guidelines on issuance of summons vide Instruction No. 03/2022-23 [GST-INV] Dated: 17th-August-2022
Pursuant to Section 70 of the Central Goods and Services Tax Act, 2017 (“CGST Act, 2017”) Proper Officer(s) under the law have the 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 Civil Code Procedure, 1908. Earlier (i.e. before GST) summoning authority needed to approach the civil court through their lawyer after giving intimation to the senior authorities for the execution of summons against the taxpayer. Now, there is no need to go to Civil Court for execution of summon in case of deliberate defiance by the summoned taxpayers.
While issuing of summon is one of the instruments with the department to get/obtain information or documents or statements from any person to find out the evasion of the tax etc. however, it need to be ensured of such power is done judiciously and with due consideration. Further, there should also be exercised caution and restraint against frivolous use of this provision. This should be used after due justification and as a measure of last resort in cases of deliberate defiance of summons. It should not be used repeatedly as a weapon of attack upon the freedom of the taxpayer rather as a shield of protection for the law of the land.
The summon can be given for giving evidence by way of statement on oath or production of any books or accounts, documents or other things. However, summon can be issued only during pendency of any enquiry under the law.
The extract of provisions may be read as under-
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 civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 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 (45 of 1860).
Proper Officer
The Superintendent is defined to be ‘Proper Officer’ under CGST Act, 2017 (Circular 3/3/2017-GST dated 05th July, 2017). Any superior officer can also exercise power under Section 5(2) of the CGST Act, 2017.
Non-Compliance of Summon
Non-compliance of summon is an offence under Section 174 and 175 of the Indian Penal Code, 1860 (“IPC”). Pursuant to Section 174 of IPC, if a person is legally bound to appear personally and not present, then has committed the offence defined under this section. Person shall be punished with simple imprisonment for a term which may extend to one month, or with fine which may extend to five hundred rupees, or with both. The offence under this section is non-cognizable, bailable, non-compoundable and triable by any Magistrate. Moreover, pursuant to Section 175 of IPC if person is fail to produce documents for which he is legally bound shall be punished with simple imprisonment for a term which may extend to one month, or with fine which may extend to five hundred rupees, or with both.
Submission of false evidence and punishment.
While exercising powers to issue summons provisions of the Code of Civil Procedure, 1908 shall apply and such enquiries shall be deemed as ‘Judicial Proceedings’ under Section 193 and Section 228 of IPC. It means if anyone intentionally gives false evidence in response to summon issued under Section 70 of CGST Act, 2017, or fabricates false evidence for the purpose of being used in any stage of such enquiry, may be punished with imprisonment which may extend to seven years, and shall also be liable to fine as per Section 193 of IPC. Moreover, Section 228 of IPC relates to intentional insult or interruption to public servant sitting in judicial proceeding and punished for it.
Tendering Statement
The summon can be given for giving evidence by way of statement on oath or production of any books or accounts, documents or other things. At the time of tendering the statement, it is quite possible that a person doesn’t have exact knowledge of facts and/or figures or might have forgot the same. In such a case the documents can be referred to refresh memory and statements can be given accordingly.
As per Section 59 of the Indian Evidence Act 1872, “a witness may, while under examination, refresh his memory by referring to any writing made by himself at the time of the transaction concerning which he is questioned, or so soon afterwards that the Court considers it likely that the transaction was at that time fresh in his memory. The witness may also refer to any such writing made by any other person, and read by the witness within the time aforesaid, if when he read it he knew it to be correct.
As regards to presence of advocate at the time of taking statement by Tax Authorities, it has been held that it is not a right of the tax payer to have its counsel along with him. However, looking to the medical or other conditions the counsel may be allowed to attend the proceedings, however no consultation is allowed at the time of recording the statements.
We may also take notice of the views expressed by the Hon’ble Supreme Court in Poolpandiv. Superintendent Central Excise [1992]. The Hon’ble Supreme Court – in that case – was considering a situation as to whether the petitioners were entitled to the presence of their lawyers when they were being questioned during investigation under the provisions of Customs Act, 1962 and the Foreign Exchange Regulation Act, 1973. There was a difference of opinion between the High Courts on this issue. The Supreme Court – in its judgment – has made certain observations while considering as to whether Article 21 is violated if a person is called away from his own house and questioned in that atmosphere of the Customs office without the assistance of his lawyers or his friends. In this context, the following observations of the Supreme Court would be worthwhile to be noticed and quoted:—
“It is true that large majority of persons connected with illegal trade and evasion of taxes and duties are in a position to afford luxuries on lavish scale of which an honest ordinary citizen of this country cannot dream of and they are surrounded by persons similarly involved either directly or indirectly in such pursuits…..The purpose of the enquiry under the Customs Act and the other similar statutes (emphasis supplied by this Court) will be completely frustrated if the whims of the persons in possession of useful information for the departments are allowed to prevail. For achieving the object of such an enquiry if the appropriate authorities be of the view that such persons should be dissociated from the atmosphere and the company of persons who provide encouragement to them in adopting a non-cooperative attitude to the machineries of law, there cannot be any legitimate objection in depriving them of such company. The relevant provisions of the Constitution in this regard have to be construed in the spirit they were made and the benefits thereunder should not be “expanded” to favour exploiters engaged in tax evasion at the cost of public exchequer. Applying the `just, fair and reasonable test’ we hold that there is no merit in the stand of appellant before us.
It is submitted that issue of summon in any inquiry, to witness or give evidence should be reasonable and not arbitrary. The authority issuing the summon must issue summons to a witness only when the authority considers it necessary for summoning. This necessarily implies application of mind and is guided by the principles of reasonableness in the matter of summoning of witness. Guiding force for issuing summon should be ‘necessity of witness for the purposes of inquiry’.
Writ against Summon
To a limited extent, the Writ Court can go into the question. The Hon’ble Allahabad High Court in Ankit Bhutani Vs Union of India (Writ Tax No. 132 of 2020) has refused to entertain a writ petition of an applicant who consistently evaded summons of GST Intelligence as the court believed that consistent absence was a sign of disinterest to cooperate with the revenue department.
GUIDELINES ON ISSUANCE OF SUMMONS UNDER SECTION 70 OF THE CENTRAL GOODS & SERVICES TAX ACT, 2017
As mentioned above, the power of summon u/s 70 should be used after due justification and as a measure of last resort in cases of deliberate defiance of summons. It should not be used repeatedly as a weapon of attack upon the freedom of the taxpayer rather as a shield of protection for the law of the land. Therefore, CBIC has issued Guidelines on issuance of summons under section 70 of The Central Goods & Services Tax Act, 2017 vide Instruction No. 03/2022-23[GST-INV] Dated: 17th-August-2022.
It has been brought to the notice of the Board that in certain instances, summons under Section 70 of the Central Goods and Services Tax Act, 2017 (the CGST Act’) have been issued by the field formations to the top senior officials of the companies in a routine manner to call for material evidence/ documents. Besides, summons have also been issued to call for statutory records viz. GSTR-3B, GSTR-1 etc., which are available online in the GST portal. Under the guidelines, officers are advised to explore instances when instead of resorting to summons, a letter for requisition of information may suffice. Previously in respect of legacy laws, the Board has sensitized the officers regarding use of power of issuance of summons diligently. However, the Board finds it necessary to issue fresh guidelines under GST.
Accordingly, Board desires that the following guidelines must be followed in matters related to investigation under CGST:
- Power to issue summons are generally exercised by Superintendents, though higher officers may also issue summons. Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Deputy/ 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 record in file about appearance/ non-appearance of the summoned person and place a copy of statement recorded in file.
- Summons should normally indicate the name of the offender(s) against whom the case is being investigated unless revelation of the name of the offender is detrimental to the cause of investigation, so that the recipient of summons has prima-facie understanding as whether he has been summoned as an accused, co-accused or as witness.
- Issuance of summons may be avoided to call upon statutory documents which are digitally/ online available in the GST portal.
- Senior management officials such as CMD/ MD/ CEO/ CFO/ similar officers of any company or a PSU should not generally be issued summons in the first instance. They should be summoned when there are clear indications in the investigation of their involvement in the decision-making process which led to loss of revenue.
- Attention is also invited to Board’s Circular No. 122 /41/2019-GST dated 5th November, 2019 which makes generation and quoting of Document Identification Number (DIN) mandatory on communication issued by officers of CBIC to tax payers and other concerned persons for the purpose of investigation. Format of summons has been prescribed under Board’s Circular No. 128/47/2019-GST dated 23rd December, 2019.
- The summoning officer must be present at the time and date for which summons is issued. In case of any exigency, the summoned person must be informed in advance in writing or orally.
- All persons summoned are bound to appear before the officers concerned, the only exception being women who do not by tradition appear in public or privileged persons. The exemption so available to these persons under Section 132 and 133 of CPC, may be kept in consideration while investigating the case.
- Issuance of repeated summons without ensuring service of the summons must be avoided. Sometimes it may so happen that summoned person does not join investigations even after being repeatedly summoned. In such cases, after giving reasonable opportunity, generally three summons at reasonable intervals, a complaint should be filed with the jurisdictional magistrate alleging that the accused has committed offence under Sections 172 of Indian Penal Code (absconding to avoid service of summons or other proceedings) and/or 174 of Indian Penal Code (non-attendance in obedience to an order from public servant), as inquiry under Section 70 of CGST Act has been deemed to be a “judicial proceedings” within the meaning of Section 193 and Section 228 of the Indian Penal Code. Before filing such complaints, it must be ensured that summons have adequately been served upon the intended person in accordance with Section 169 of the CGST Act. However, this does not bar to issue further summons to the said person under Section 70 of the Act.
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