This article provides a detailed look into GST summons, covering what they are and how they work within the legal framework. It explains the key requirements for a summon to be valid, such as stating the purpose clearly, getting written permission, and not overusing summons. The article also discusses the rights of individuals who receive a GST summon, including the right to change their statements, the right to stay silent, and the right to question statements made by others. It goes on to describe what’s expected of taxpayers when they’re summoned, like following the rules, being honest, and following the legal process. In conclusion, the article stresses the important role summons play in the GST system and the need for everyone involved to understand how they function.
What is Summon ?
As per Law summon is legal document issued by court or any administrative agency of government ordering a specific person to appear, at a specific place at a specific time, before specific government authorities/agency for some specific purpose.
What is Summon under GST Act 2017?
70. (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.
Under GST, it is any inquiry that means the GST officer can summon anyone for any inquiry. But there is a speed breaker. Under GST, the power to summon is in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908. Mind you, it is not mutatis-mutandis, but same manner. Under ORDER V of the CPC’ 1908.
Below are the few listed matters on which inquiry could be initiated (generally) if considered necessary by the proper officer;
* The Input tax credit taken is wrongly availed or utilized.
* G.S.T. Refund is wrongly made with or without the intent to defraud.
* Non-payment of G.S.T. liability (tax) or the short payment of the tax with or without the intent to defraud.
* Differences in Input tax credit claims made in GSTR-3B vis-a-vis GSTR-2A/2B * Delay in filing of GSTR-1 and GSTR-3B consecutively for more than six months * Inconsistent declaration in GSTR-1 and e-way bill portal. Etc
Issuance of Summon required application of mind and must be based on principals of natural reasonableness. Like, where any legal issue is involved, legal officer may be the right person to be summoned; where accounts is involved CFO may be the right person etc…. Summoning Top Management at first instance should be avoided.
(Sudhir Deoras & Others Vs The Commissioner, Central Excise & Service Tax-Jharkhand HC).
It is judicially held that summons should be issue only to the concerned person who are expected to have knowledge relating to enquiry.
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 Hon’ble Delhi High Court in the case of Gail Gas Ltd Vs DGGI (2018) 100 taxmann.com 242.
Bound to attend:
A taxpayer should understand that summons is a legal proceeding, which cannot be ignored. Once the taxpayer and the practitioner are satisfied with the justification and purpose of summon, the taxpayer shall block
his calendar for the notified date.
As per Section 122(3)(d) of the GST Act, ” Any person who–– fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry; shall be liable to a penalty which may extend to twenty-five thousand rupees .” So, if you don’t honour the summons, you are liable to a penalty which may extend to 25,000 rupees.
Summon under Section 70 of the GST Act where two other sections 193 and section 228 of the Indian Penal Code are specifically and threateningly mentioned. These two IPC sections will invariably be mentioned in the summons to be issued by the GST officers to perhaps intimidate the summoned persons and to make him understand that the inquiry is “judicial proceedings” which can-not be avoided. Section 175 of IPC is not specifically being mentioned hence not applicable for Summons u/s 70 of GST Act’ 2017.
Section 193 only says, “Whoever intentionally gives false evidence in any of a judicial proceeding, or fabricates false evidence for the purpose of being used in any stage of a judicial proceeding, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine;”
Section 228 stipulates of Indian Penal Code:, “Whoever intentionally offers any insult, or causes any interruption to any public servant, while such public servant is sitting in any stage of a judicial proceeding, shall be punished with simple imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.”
Complaint with the Jurisdictional Magistrate u/s 172 and/or 174 of Indian Panel Code:
If the summoned person does not join the investigations even after being repeatedly being summoned, in such a case, after giving a reasonable opportunity, generally three summon at reasonable interval, a complaint can be filed with Jurisdictional Magistrate alleging that accused has committed offence u/s 172 of IPC and/or u/s 174 of IPC.
Further, avoiding summons and not co-operating the GST officers during the investigation might result is harsh actions of the department like Inspection, Search & Seizure and arrest.
REQUIREMENTS OF A VALID SUMMON:
70. (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.
There are many judgements of the court and it is a well settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner.
Chandra Kishor Jha vs. Mahavir Prasad and Ors. (1999) 8 SCC 266.
To begin with, the taxpayers must be aware that Central Board of Indirect Taxes & Customs (CBIC) has issued detailed guidelines for regulating summons proceedings. INSTRUCTION NO. 03/2022-23 dated 17.08.2022 provides that:
Summon in an Inquiry: Summon should not be issued for appearance where it is not justified. The power to summon can be exercised only when there is an inquiry being undertaken and attendance of the person is considered necessary. Reference Central Excise and Intelligence Manual 2004 para 94
[Our View: Summon should not be used as a tool to initiate an inquiry.]
‘The’ Proper Officer
Section 2(91) defines “proper officer” in relation to any function 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;
In the above mentioned section-70 of the Central Goods & Service Act’ 2017, it is written as “The Proper Officer”. The same issue has been discusses/decided by the Honourable Supreme Court of India in case of M/S Canon India Private Limited vs Commissioner of Customs on 9 March, 2021 which observes that “the proper officer” means that particular officer and not any or every officer.
Reference to Circular No. 3/3/2017 DATED 5th July 2017: In Table Serial No. 4, Superintendent of Central Tax had been designated as proper officer, but not as ‘The Proper officer’.
Summon not in violation of Section 6(2)(b) of the CGST Act’ 2017:
Where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, on same subject matter, no proceedings shall be initiated by the proper officer under this Act (CGST Act’ 2017) on the same subject matter.
FSM Education (P) Ltd. Vs UOI 2022:
Summon to be issued on the taxpayer only as a last resort and as far as practicable, details and information can be obtained from a taxpayer by the way of an ordinary letter. Summon should not be issued to coerce & pressurize anyone.
If the Summon is issued by the tax authorities, the summon shall indicate the purpose of issuing the
summons with clear seven days notice before fixing the date of recording the statement.
Reasons for issuance of summons to be recorded in writing.
As per the INSTRUCTION NO. 03/2022-23 dated 17.08.2022, point no. 3 (i) summon by the superintendent should be issued after obtaining prior written permission from Deputy/Assistant Commissioner with the reasons to be recorded in writing.
Summons by Superintendents, may be issue after obtaining prior written permission from an officer not below the rank of Deputy/Assistant Commissioner.
Our View: Superintendents will start getting permissions from AC/DC as the part of internal/departmental process, but here we can raise objection how the sanction for issuing summon is granted at first instance without first sending the simple letter.
Indicate the name of the offender: Summons should normally indicate the name of the offender(s) against whom the case is being investigated, so that the recipient of summon has a prima-facie understanding as whether he has been summoned as accused, co-accused or as witness. Further, he must be prepared himself properly with the information which is required to be given.
Not to call upon documents available online digitally on GST Portal. As per the INSTRUCTION NO. 03/2022-23 dated 17.08.2022, the data which is available on government portal and can be accessed by the GST officers of their own should not be called for eg: GSTR-1, GSTR-3B, GSTR-9, GSTR-9C.
Summons should only be issued against senior management if investigation indicates their involvement and not at first instance.
Senior management officials such as CMD/MD/CEO/CFO/Similar officer of any company or PSU should not generally be issued summon in first instance. They should be summoned when there is a clear indication of their involvement in the decision making process which let to loss of revenue.
It is judicially held that summons should be issue only to the concerned person who are expected to have knowledge relating to enquiry (Sudhir Deoras & Others Vs The Commissioner, Central Excise & Service Tax-Jharkhand HC).
Hon’ble Jharkhand High Court while dealing with similar case has held in the case of Sudhir Deora vs 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 Vs DGGI (2018) 100 taxmann.com 242.
Board’s circular No. 122/41/2019-GST dated 5th Nov’ 2019 and 128/47/2019-GST dated 23rd December’ 2019 in respect to the use of DIN and mandatory Formats must be duly followed.
Summons should be signed by the proper officer and Seal to be affixed.
Date and time for appearance should be clearly mentioned on summon.
Summons should be clear and not vague.
Repeated Summons: Summons should not be issued repeatedly for same purpose.
Our View: At first, simple letter to be issued, if the person is co-operating in inquiry, for further information only letters to be used to call upon any information. In case, summon is issued and the person on whom summon is being served is co-operating with the GST Officers, to call for further information/evidences/things, letter should be issued instead of repeated summons.
RIGHTES OF THE PERSON SUMMONED:
Right of retraction: Tax officers often put undue pressure on taxpayers as a result of which they are forced to make inaccurate statements. In such a situation, taxpayers have the right to retract the earlier incorrect statement recorded during the summon proceedings and substitute the same with the correct statement. This will safeguard the taxpayers from any adverse action being taken by the tax authorities based on such incorrect statements.
However retraction should be made as earliest as possible. If the statement has been retracted, the same may not be admitted as evidence. Early retraction is not seen as after-thought as there was no long gap between the date of tendering the statement and re-traction of the same.
The revenue officer is not a police officer and hence the bar under Section 25 Indian Evidence Act, 1872 on confessions made to a police officer being inadmissible may not apply. The issue also came up under GST law before the Telangana High Court wherein it has been held that GST officers are not police officers for the purpose of Indian Evidence Act and thus, any statements made before them would have evidentiary value.
Right to remain silent as per Art 20(3) Const. of India: Any person who is appearing before GST Authorities in response to the summon, at the time of getting his statement recorded, if he wish not to answer any question, he may remain silent and it will not be considered as an offence or causing any obstruction to any proceedings as affirmed in pleather of judgements of High Courts and Supreme Court.
Article 20(3) of Constitution of India guarantees fundamental right against self-incrimination. It says that no person can be compelled to be witness against himself.
Section 161(2) of CrPC: Such person shall be bound to answer truly all the questions relating to such cases put to him by such officer, other than the questions the answer to which would have tendency to expose him to criminal charge or to a penalty or forfeiture.
Section 313(3) CrPC: The accused shall not render himself liable to punishment by refusing to answer such questions, or by giving false answers to them”.
However, as per our view, if we do not fully co-operate with the GST Officer at the time of recording statement and do not produce all the documents, then you might face more harsh proceedings such as search/seizure.
Right to cross examine: Tax authorities sometimes tend to manipulate/trick the summoned person by giving reference to the adverse statement given by any third person who can be his colleague, vendor/dealers of the company, etc. In such a situation, the taxpayer need not concede to such statements made by any third person and can exercise his right of cross-examining the other person to verify the adverse statements made by him.
Right to refer any entry or record: The taxpayers are not expected to recall everything when giving or writing a statement. This right allows the taxpayers to be free to refer to any relevant papers or Books of Accounts.
Least number of appearances: Right to get statement recorded in least number of appearances. As far as possible, statement must be concluded in least number of appearances. It is often seen that the GST officers to harass the taxpayer or any other person, used to call him to record statement again & again. The reason behind to do so it to play the mind game and try can get the truth out as per their need.
Right to refuse to appear at odd hours: Although there is no express provision in the law which bars proper officer to require the presence of the person during odd hours, but there are necessary rules that regulate that the taxpayer can refuse to appear and cooperate at odd hours. These regulations safeguard the rights of the taxpayers from being summoned and called to appear before the authority at odd and uneven hours.
DUTIES OF A TAXPAYER WHEN SUMMONED UNDER GST:-
Bound to honour and appear: The taxpayers must not ignore the summons and should duly appear before the authority or the concerned officer. It is the duty of the taxpayers to follow the necessary guidelines envisaged under the summons which have all the information with respect to venue, date of appearance, cause, material information, default by the company or individual and etc.
Submit Documents: The taxpayers should follow the directions of the authorities when they are required to submit any document. They need to be conscious when asked to provide necessary documents as the proceeding of summons and investigation under GST is similar to the procedure under the general prevailing law of the country that is followed in the courts of law. It is the duty of taxpayers to furnish the relevant documents before the authorities in case of default on their part under GST.
Furnish Relevant Information: It is important that taxpayers provide the GST officers with true answers to the raised queries and all such necessary information which is in their knowledge. Taxpayers must not furnish false statements before the authority as it may attract an offense under the Indian Penal Code, 1860 for which they can be tried to mislead Government officials.
Therefore, it is the duty of the taxpayers to accurately provide all the information that the tax officers ask for. This will safeguard the taxpayers from any default or eventualities.
Do not conceal material information: The taxpayers must not conceal any material information from the officials. The information which has serious nature and can affect the direction of the investigation must be put forward.
Follow Legal Procedure: Although, there are several rights provided to the taxpayers with it taxpayers are also duty-bound to follow the due legal procedure. The individuals who are summoned must not escape from their duty to follow the provisions of law as are provided under the CGST Act, 2017.
CARE TO BE TAKEN WHILE APPERARING AGAINST THE SUMMON:
While making any statements or submitting any documents, the taxpayers should know the consequences of such submissions. Unlike in case of police officers, the statements made before the GST officers are admissible as evidence against the taxpayer. The issue is no more res integra as this position has been addressed by the Supreme Court in case of the customs officers wherein it was held that customs officers do not constitute police officers even if they may have specific powers and hence any statement made before the customs officers will be admissible as evidence. The issue also came up under GST law before the Telangana High Court wherein it has been held that GST officers are not police officers for the purpose of Indian Evidence Act and thus, any statements made before them would have evidentiary value. Therefore, the taxpayers need to be conscious while making any statements before the GST officers in their own matter as these can form the basis for issuing notices or taking any action punitive against them.
Statement of the person summon recorded: If the person summoned give adverse statement in respect of some other person it can become RUD (Relied upon document), but can only become evidence after giving opportunity to cross examine by the person against whom the statement is given.
It is important that taxpayers give their answers in the truest manner and to the best of their knowledge. Providing false statements tantamount to an offence under the Indian Penal Code. Thus, in order to safeguard themselves from such eventualities, it will be in the best interest of the taxpayers to provide all the information/replies asked by the tax officers accurately without any deliberate suppression on their end.
Make sure to take acknowledgement of all the documents you submit to GST Authorities while appearing against summon.
statements must be recorded during official hours etc.
language used in summons should not be unnecessarily harsh to cause stress or embarrassment to the taxpayer and should provide the justification of its issuance.
Statement must be recorded in least number of appearances.
Spot Summons: Summons can be issue on Spot if deemed necessary and also during the course of search for seeking evidences and documents.
Anghinghu Nice Tobacco (Firm) vs Commissioner of C. Excise, Madurai- 2010’ CESTAT Chennai: It was held those summonses issued on spot are valid when issued with prior approval of the competent authority. Generally, this is resorted to during search proceedings.
Although Spot summon in normal course to be avoided as the plain reading of section 70 of CGST Act’ 2017, it is mentioned “to give evidence or to produce a document or any other thing in any inquiry”
Our View: In case summon is issued on spot, the same fact should be mentioned in the said summon (served on Spot).
Judgement on summon issued under section 70 with direction to stop payment:-
Citation – 2023-VIL-165-AP Date of Order – 07-03-2023
M/s SRI SAI BALAJI ASSOCIATES Vs THE STATE OF ANDHRA PRADESH
HIGH COURT OF ANDHRA PRADESH
The petitioner aggrieved with notice issued under section 70 CGST with direction to stop payment. The petitioner submits that the respondent in terms of Section 70 (1) of G.S.T Act, has power to summon any person whose attendance is considered necessary either for giving evidence or producing a document or any other thing in any inquiry in the same manner, however that power is not extended to direct the summoning of a party to stop all further payments, which he ought to receive from the customers.
HELD
It is obvious that under Section 70 (1) of GST Act the proper officer cannot exercise powers to direct the summoning party to stop payment to the assessee which is beyond the scope of 70 (1) of GST Act. Of course, under Section 83 of GST Act, if the Commissioner is of the opinion that for the purpose of protecting the government revenue, he may by order provisional attachment of any property including bank account belonging to the taxed person or any person specified in Sub Section 1 (A) of Section 122 in such manner as prescribed. The impugned notice was issued under Section 70 (1) of GST Act but not in exercise of powers conferred under Section 83 of GST Act. Therefore, such a direction is beyond the jurisdiction of the 3rd respondent. The same is liable to be set aside to that extent.
DISCLAIMER
TEAM Know The Tax disclaim all liability in respect to actions taken or not taken based on any or all the contents of this Insight report to the fullest extent permitted by law.
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