Dr. Sanjiv Agarwal
Section 83 of Finance Act, 1994 makes certain provisions of Central Excise Act, 1944 applicable to service tax. The issuance of summons is governed by section 14 of the Central Excise Act. While the field officers resort to issue of summons under section 14 even for seeking information or documents, to service providers and even to other persons who are not registered with the department, the harsh and legal language of the summons cause stress, embarrassment and fear in the minds of receivers. To curb this practice, CBEC has issued directions to all the field officers on how to issue summons for seeking information vide Letter No. 137/39/2007-CX 4 dated 26.2.2007. Accordingly, following directions have been issued —
a) For calling for information/documents, normally the mode of communication should be either in the form of a telephone call or by way of sending a simple letter;
b) Issuance of summons should be resorted to, only when the abovementioned modes of communications are found to be ineffective or are likely to jeopardize revenue interest or when it is essential to ensure personal presence of the person concerned to tender evidence or record statement in connection with a service tax evasion case;
c) In cases mentioned under (b) above, the summons should be issued after obtaining prior written permission from an officer not below the rank of Deputy Commissioner with reasons for issuance of summons to be recorded in writing;
d) In case, for unavoidable 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;
e) In all cases, where summons are issued, the officer issuing summons must submit a report on proceeding that took place during the presence of the taxpayer/person summoned, and the officer authorizing issuance of summons must satisfy himself that no harassment has been caused during the visit of the person summoned to the office.
CBEC has vide Instruction F. No. 207/07/2014-CX 6 dated 20.01.2015 issued instructions regarding issue of summons in Central Excise and Service Tax matters to discourage issuance of summons to senior management of assessees in a routine manner and in cases where demand is in dispute. It emphases that use of summons should be made only as a last resort when it is absolutely required. Also, senior officials should be summoned only when there are indications of their involvement in decision making resulting in loss of revenue. Following extracts of these instructions are relevant which assessees should know:
“It has been brought to the notice of the Board that in some instances, the summons under Section 14 of the Central Excise Act, 1944 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 been issued to enforce recovery of dues, which are under dispute. As per Section 14 of Central Excise Act, 1944, summons can be used in an inquiry for recording statements or for collecting evidence/ documents. While the evidentiary value of securing documentary and oral evidence under the said legal provision can hardly be over emphasized, nevertheless, it is desirable that summons need not always be issued when a simple letter, politely worded, can also serve the purpose of securing documents relevant to investigation. It is emphasized that the use of summons be made only as a last resort when it is absolutely required.
2. On this issue, Board has already issued a circular vide F. No 208/122/89-CX.6 dated 13.10.1989 in respect of Central Excise. Instruction has also been issued vide F. No. 137/39/2007-CX.4 dated 26.2.2007 in Service Tax matters.
3. The following guidelines are being issued to be followed in both Central Excise and Service Tax matters: –
(i) Power to issue summons are generally exercised by Superintendents, though higher officers also issue summons. Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner with the reasons for issuance of summons to be recorded in writing;
(ii) 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;
(iii) In all cases, where summons are issued, the officer issuing summons should submit a report or should record a brief of the proceedings in the case file and submit the same to the officer who had authorised the issue of summons.
4. Further, senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance. They should be summoned only when there are indications in the investigation of their involvement in the decision making process which led to loss of revenue.
In Anghinghu Nice Tobacco (Firm) v. CCE (2013) 298 ELT 570 (Cestat, Chennai), it was held that summons issued on spot are valid when issued with prior approval of competent authority.
In Vinod Kumar Sahadev v. Union of India (2014) 49 taxmann.com 380; 304 ELT 335 (Delhi), it was held that once alleged statement made by assessee was retracted on next day itself with allegations of force and duress, onus to prove that said statement was voluntary shifted upon Department and in absence of any such proof from Department, confessional statement could not be used as an evidence to levy penalty.