CA VARDEEP SINGH

HOW TO HANDLE SUMMONS UNDER GST ?

V.S. Hora & Co.

Address: 28/2, 2^nd Floor, Ashok Nagar,

Jail Road, New Delhi-110018.

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Presented by CA Vardeep Singh

Contact No. +91-9999450487

Email: vardeepsinghhora@gmail.com

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CA VARDEEP SINGH

Disclaimer

The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. The presentation is made with utmost professional caution but in no manner guarantees the content for use by any person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the matter given. The presentation is meant for general guidance and no responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this presentation will be accepted by us. Professional advice recommended to be sought before any action or refrainment.

CA VARDEEP SINGH

Section 70

POWER TO SUMMON PERSONS TO GIVE EVIDENCE AND PRODUCE DOCUMENTS

Power to summon persons to give evidence and produce documents.

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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 (5 of 1908).

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(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).

Section 70(1)

POWER TO ISSUE SUMMON

Section 70(1) of CGST/SGST Act gives powers to a Proper officer to call upon a person by issuing a summon to present himself before the officer issuing the summon.

Section 2(91)

MEANING OF PROPER OFFICER UNDER GST

Section 2(91) of the CGST Act, defines ‘Proper Officer’ as:

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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;

• Important to highlight the word “The Proper Officer” and why it has been distinguished from “Any Proper Officer”.

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• Canon India Private Limited vs Commissioner of Customs 2021- Supreme Court Judgement.

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Section 167: Delegation of powers.

⁷⁸ 167. The Commissioner may, by notification, direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by any authority or officer under this Act may be exercisable also by another authority or officer as may be specified in such notification.

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MEANING OF PROPER OFFICER UNDER GST

Circular No. 3/3/2017 – GST Dated the 5^th July, 2017

Subject: Proper officer relating to provisions other than Registration and Composition under the Central Goods and Services Tax Act, 2017–Reg.

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In exercise of the powers conferred by clause (91) of section 2 of the Central Goods and Services Tax Act, 2017 (12 of 2017) read with Section 20 of the Integrated Goods and Services Tax Act (13 of 2017) and subject to sub-section (2) of section 5 of the Central Goods and Services Tax Act, 2017, the Board, hereby assigns the officers mentioned in Column (2) of the Table below, the functions as the proper officers in relation to the various sections of the Central Goods and Services Tax Act, 2017 or the rules made thereunder given in the corresponding entry in Column (3) of the said Table:-

Circular No. 3/3/2017 – GST Dated the 5^th July, 2017

Section 27

RELEVANT SECTIONS OF THE CODE OF CIVIL PROCEDURE, 1908

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Section 70(1) of the CGST Act states that the proper officer shall has the power to summon any person in the manner as provided in provisions of the Code of Civil Procedure, 1908

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RELEVANT SECTIONS OF THE CODE OF CIVIL PROCEDURE, 1908

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27. Summons to defendants—

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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.

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SUMMONS TO PERSONS OUTSIDE THEIR TERRITORIAL JURISDICTION

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• Can a proper officer of Mumbai issue summons to a person in Delhi ?

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• If yes, what is the procedure for issue of summon?

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Section 28

RELEVANT SECTIONS OF THE CODE OF CIVIL PROCEDURE, 1908

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28. Service of summons where defendant resides in another State—

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1. A summons may be sent for service in another State to such Court and in such manner as may be prescribed by rules in force in that State.

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(2) The Court to which such summons is sent shall, upon receipt thereof, proceed as if it had been issued by such Court and shall then return the summons to the Court of issue together with the record (if any) of its proceedings with regard thereto.

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(3) Where the language of the summons sent for service in another State is different from the language of the record referred to in sub- section (2), a translation of the record,—

(a) in Hindi, where the language of the Court issuing the summons is Hindi, or

(b) in Hindi or English where the language of such record is other than Hindi or English,

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shall also be sent together with the record sent under that sub-section.

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SECTION 70(2) OF THE CGST ACT

As per Section 70(2) of the CGST Act,

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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

SECTION 193 OF THE INDIAN PENAL CODE

Section 193 - Punishment for false evidence

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Whoever intentionally gives false evidence in any stage 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,

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and whoever intentionally gives or fabricates false evidence in any other case, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine.

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Explanation 1.--A trial before a Court-martial; is a judicial proceeding.

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Explanation 2.--An investigation directed by law preliminary to a proceeding before a Court of Justice, is a stage of a judicial proceeding, though that investigation may not take place before a Court of Justice.

Section 228 - Intentional insult or interruption to public servant sitting in judicial proceeding 

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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.

SECTION 228 OF THE INDIAN PENAL CODE

Any person whose attendance he considers necessary:

Considers it necessary- Importance of these words?

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“Considers it necessary” postulate due application of mind is sine qua non

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In Barium Chemicals Ltd v A.J. Rana (1972) S.C the words “considers it necessary” postulate that the authority concerned has thought over the matter deliberately and with care it has been found necessary as a result of such thinking to pass the order. �

Any person whose attendance he considers necessary:

Any Person cannot be read in isolation:

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Case 1: DGGI MEERUT EXAMPLE (Transporter)

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Case 2: Whether a CEO/Managing Partner can be called upon?

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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 Vs DGGI (2018) 100 taxmann.com 242.�

Give evidence or to produce a document or any other thing in any inquiry :

• Inquiry must exist/precede issuance of summons.
• Section 70 cannot be ignition point of inquiry.
• Section 70 is like a machinery provisions, which is for collection of an inquiry, therefore it cannot be read as a substantive provisions to conduct an inquiry.

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Question: General Summon has been issued. What to do?

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Question: Whether officer while recording statement- can he ask any question of law or interpretation of law?

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Question: Whether officer can ask to give legal grounds? (Question of law vs Fact)

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Question: Can officer ask to prepare details?

Give evidence or to produce a document or any other thing in any inquiry :

• Produce a document: Document is something which is in existence.
• In the case of Ebiz.com Private Limited v UOI, (2016 Excise Del HC) wherein when the court asked the revenue department/DGCEI to point out the provision under which an assessee could be ordered to create documents, the revenue department could not point out any provision.
• Question: Whether a re-conciliation statement can be asked?
• Question: Whether Bank Statement can be asked?
• Question: Whether Ledger Can be asked?
• Question: Whether form 2A can be asked?
• Question: Whether Ledger of all parties can be asked?

Give evidence or to produce a document or any other thing in any inquiry :

Section 6(2)(b): 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, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.

If proceedings has been initiated by the any officer, then such proceedings can not be issued by any other officer. Important to note that both the proceedings should be on same subject matter.

FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST)

Question: What are the responsibilities of the person so summoned?

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Ans. A person who is issued summon is legally bound to attend either in person or by an authorized representative and he is bound to state the truth before the officer who has issued the summon upon any subject which is the subject matter of examination and to produce such documents and other things as may be required.

CONSEQUENCES OF NON-APPEARANCE TO SUMMONS

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• If a person does not appear on the date when summoned- without any reasonable justification- he can be prosecuted under section 174 of IPC.

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• If he absconds to avoid service of summons- he can be prosecuted under section 172 of the IPC.

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• He does not produce the documents or electronic records required to be produced- he can be prosecuted under section 175 of the IPC.

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• In case he gives false evidence- he can be prosecuted under section 193 of the IPC.

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• If a person does not appear before a CGST/ SGST officer who has issued the summon- liable to a penalty up to Rs 25,000/- under section 122(3)(d) of CGST/SGST Act.

FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST)

Q 29. What can be the consequences of non-appearance to summons?

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Ans. The proceeding before the official who has issued summons is deemed to be a judicial proceeding. If a person does not appear on the date when summoned without any reasonable justification, he can be prosecuted under section 174 of the Indian Penal Code (IPC). If he absconds to avoid service of summons, he can be prosecuted under section 172 of the IPC and in case he does not produce the documents or electronic records required to be produced, he can be prosecuted under section 175 of the IPC. In case he gives false evidence, he can be prosecuted under section 193 of the IPC. In addition, if a person does not appear before a CGST/ SGST officer who has issued the summon, he is liable to a penalty up to Rs 25,000/- under section 122(3)(d) of CGST/SGST Act.

FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST)

Q 30. What are the guidelines for issue of summons? - F. No. 207/07/2014-CX-6 dated 20.01.2015

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Ans. The Central Board of Excise and Customs (CBEC) in the Department of Revenue , Ministry of Finance has issued guidelines from time to time to ensure that summons provisions are not misused in the field. Some of the important highlights of these guidelines are given below:

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1. Summons are to be issued as a last resort where assesses are not co-operating and this section should not be used for the top management;

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• The language of the summons should not be harsh and legal which causes unnecessary mental stress and embarrassment to the receiver;

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• 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;

FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST)

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4. 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;

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• 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 authorized the issuance of summons;

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• Senior management officials such as CEO, CFO, General Managers of a large company or a Public Sector Undertaking 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.

FREQUENTLY ASKED QUESTIONS (FAQs) ON GOODS AND SERVICES TAX (GST)

Q 31. What are the precautions to be observed while issuing summons?

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Ans. The following precautions should generally be observed when summoning a person: -

(i) A 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 the attendance of the person is considered necessary.

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(ii) Normally, summons should not be issued repeatedly. As far as practicable, the statement of the accused or witness should be recorded in minimum number of appearances.

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(iii) Respect the time of appearance given in the summons. No person should be made to wait for long hours before his statement is recorded except when it has been decided very consciously as a matter of strategy.

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(iv) Preferably, statements should be recorded during office hours; however, an exception could be made regarding time and place of recording statement having regard to the facts in the case.

Circular No. 122/41/2019 – GST Dated the 5^th November, 2019

• Generation and quoting of Document Identification Number (DIN) on any communication issued by the officers of the CBIC to tax payers and other concerned persons.

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• No search authorisation, summons, arrest memo, inspection notices and letters issued in the course of any enquiry shall be issued by any officer under the Board to a taxpayer or any other person, on or after 08.11.2019 without a computer generated DIN being duly quoted prominently in the body of such communication.

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• Any specified communication which does not bear DIN and is not covered by the exceptions mentioned in the circular no. 122/2019-GST shall be treated as invalid and shall be deemed to have never been issued.

PRECAUTIONS TO BE TAKEN WHILE GIVING STATEMENTS

• Ensure that before signing on recorded statement, the person asks to allow to read statement before signing it.

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• The person being summoned has the right to ask a copy of the statement being recorded.

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• Ask for copy of statement, before signing it.

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• Statement should be in writing and signed by the officer making the statement.

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• Copy of signed statement was asked but not given, then soon after coming out of the room, he should write down all the questions and answers when fresh in his mind.

CA VARDEEP SINGH

IS THE PERSON GIVING STATEMENT ENTITILED TO COPY OF THE STATEMENT

M/s. Jayachandran Alloys (P) Ltd., vs. The Superintendent of GST and Central Excise and Ors. (Writ Petition No.5501 of 2019)

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• The Hon’ble Court held that copies of the documents sought will be furnished within a period of two (2) weeks from the date of receipt of a copy of this order upon remittance of copying charges. As far as statements are concerned, there being no condition imposed/ restriction placed in statute, copies of the same will be furnished upon remittance of copying charges within two(2) weeks from date of receipt of a copy of this order.

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• Further the Court rejected the contention of the respondent where the respondent submitted that Petitioner be directed to remit a sum of Rupees five crores as a security for the demand as confirmed by the Managing Director and held that the request is unacceptable. A statement is no substitute for an assessment. No doubt, the value of the statement and the retraction thereof will be considered by the Assessing Authority while framing the order of assessment and nothing stated in this order shall be considered to be a fetter upon the powers of the assessing authority to do so. However, in the absence of a statutory provision that enables such imposition of a condition even prior to determination of the violations by an assessee and quantification of the consequent demands, this argument is rejected.

CA VARDEEP SINGH

WHETHER THE COUNSEL OF THE PERSON CAN BE PRESENT DURING THE COURSE OF SUMMON

Vijay Sanjani Vs UOI 2017 (345) E.L.T. 323 (S.C.)

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During the course of summons, the tax payer’s counsel would be allowed to be present within visible distance, but beyond hearing range. 

CA VARDEEP SINGH

Section 136

RELEVANCY OF STATEMENTS IN PROSECUTION PROCEEDINGS

Relevancy of statements under certain circumstances.

136. 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,––

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1. 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

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(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.

CA VARDEEP SINGH

RETRACTION OF STATEMENTS

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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.

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A question arises whether a person is required to answer all questions when summoned by a revenue officer during the proceedings, investigation etc. While a person is necessarily required to attend and speak the truth when he answers the questions, he may refuse answer questions on the ground that it would incriminate him.

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CA VARDEEP SINGH

RETRACTION OF STATEMENTS

•  DRI Vs. Mahendera Kumar Singhal 2016 (333) ELT (250) (Del.): held that burden is on the department to show that retraction made by the maker is the statement is not valid. 

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• In COMMR. OF C. EX., AHMEDABAD-III Vs. DEORA WIRES N. MACHINES PVT. LTD. 2016 (332) ELT 393 (Guj.):When in fact, the confirmation of duties and penalties were based on confessional statements which were promptly retracted and there was no other independent material on record, the Tribunal correctly reversed the orders of the authorities below. No question of law arises. Tax appeal is dismissed. Civil application also stands dismissed.

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CA VARDEEP SINGH

THANK YOU!

Any un-answered questions?

You can reach out CA Vardeep Singh at +91-9999450487 or send an Email at: vardeepsinghhora@gmail.com, vshora.co@gmail.com