When a statement recorded under Section 70 under the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) is relevant and admissible?
Section 136 of CGST Act, 2017 pertains to the relevancy and admissibility of statements made and signed in response to the summons issued under Section 70 during the course of any inquiry or proceedings under this Act. It is provided that in specified situations the statement given will be considered to be valid and relevant for prosecution. The two circumstances mentioned in above section are as under:
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.”
Pursuant to Section 70 of the 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. 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. 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.
Section136. Relevancy of statements under certain circumstances
At the time of recording of a statement before the departmental/authorities, taxpayer is always under pressure. This statement is not to be treated as confession but it is to put the investigating officer in a position to further the investigation based on new facts arising from such statement. No doubt, possibility of fear and threat makes these statements unreliable and weak in evidentiary value. But the discoveries arising out of the information secured in summons will be substantive evidence to support allegations.
In regard to the above, Section 136 of the CGST Act, 2017 makes it compulsory that the evidence of the witness has to be recorded in accordance with the ‘due process’ that is available to a Court. It is not open for the Proper Officer to straight away treat the statement as relevant and admissible without following the due process of law enshrined in Section 136 of CGST Act, 2017. The extract of the provisions of Section 136 are as under-
“A statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,––
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the court and the court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.”
A conjoint reading of clause (a) and clause (b) of Section 136 of the CGST Act, 2017 reveals that ‘such statement’ may be treated ‘relevant’ and ‘admissible’ under the GST law if five contingencies like death/non-availability of the maker of the statement do exist ‘or’ if the person who made the statement is examined as witness in the case before the Court and the Court forms an opinion that having regard to the circumstances of the case, the statement should be admitted in the evidence, in the ‘interest of justice’.
Clause (a) of Section 136 of the CGST Act, 2017 deals with five contingencies/circumstances which are given therein and if these contingencies or circumstances exist, then the statement shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains. It means, if any of the circumstances exist like, death of the maker of the statement, non-availability of the maker of the statement etc., in such cases the statement may be treated as relevant and shall be admitted in evidence.
Therefore, if the Proper Officer wants to invoke clause (a) of Section 136, he will have to pass a reasoned and speaking order to the effect that he is satisfied that any of the five circumstances exist and he is thus straight away relying upon the statement of the maker without first examining him as witness.
Clause (b) of Section 136 of the CGST Act, 2017 provides that statement shall be relevant, only when the person, who made the statement is examined as witness before the Court and the court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.
Thus, before the statement is treated ‘relevant’ and ‘admissible’ under the GST law, the person is not only required to be present in the proceedings before the adjudicating authority but the proper officer is also obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.
Remark: The parties are entitled to withdraw the statement based on facts. If the party finds any such eventuality it should do needful at the earliest, else the above provision may affect adversely. Normally, if any statement is relied upon in prosecution the person making such statement is required to be made available for cross examination. The test of cross examination is missing under Section 136 of the CGST Act, 2017. Fundamental right under principles of natural justice of getting cross examination opportunity is not available. Every citizen expects that there should not be artificial encroachment on fundamental rights of citizen. Therefore, appropriate changes are required in above provision.
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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
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Thanks for analysing the section.
Surely, Fundamental Rights under principle of natural justice for the cross-examination is not available in this section 136 of CGST Act; and in absence of such vital right, the Section doesn’t pass the constitutional requirement. The section should be challenged before the constitutional courts because the same has deliberately been left over by the law makers.