Analysis of Provisions of issue of Summon Under GST

Summons are issued under the GST Law .

A summons is a formal order for someone to appear with authorities. Any registered individual can be summoned by the concerned GST officers to appear with evidence or documents, as the case may be. The purpose of this article is to provide some rules and safeguards about the issuance of GST summonses.

Section 70 of the CGST Act, 2017 provides GST officers the powers to summon anyone to appear before them if it is required in the course of an investigation to record statements or present documents. Those who have been summoned by the GST officers have a legal duty to appear in front of the officers.

Procedure for Verification of issue of Summons under GST

Not Permissible to Summon to Present At Odd Hours

Despite the fact that there is no specific provision in the law prohibiting a proper officer from requiring a person’s presence at odd hours, the following was held in the case of Agarwal Foundries Vrs UOI (Telengana HC):

• ‘In our opinion, the respondents cannot claim that they will examine people suspected of tax evasion in accordance with their sweet will, forcing them to stay in their custody indefinitely.’ If this is done, it must be interpreted as informal custody, and the legislation regulating an accused in custody must be applied directly or impliedly. If an accused can claim all of the benefits under Article 22 of the Constitution, a person in such informal custody can claim relief under Article 21 of the Indian Constitution”.

RIGHT TO BE SILENT DURING THE SUMMON

• The right against self-incrimination is guaranteed by Article 20(3) of the Indian Constitution. It states that no individual accused of an offence shall be called as a witness against himself.
• Furthermore, under section 161 of the Criminal Procedure Code, no one is obligated to answer any question that exposes him to a criminal charge. It was decided that the right to silence is not a crime and cannot be considered an impediment to a procedure.
• Furthermore, it was stated in the case of Padam Narain Agarwal AIR 2009 SC 254 that a person is not excused from stating the truth because such a remark could be used against him.

Also Read : What to be do when issue of summons to a person under gst

Guidelines on issue of Summons under GST

• In the event that an assessee refuses to cooperate, the authority may issue a summons as a last measure.
• The summons language should not be harsh or legal, as this may cause the receiver significant mental stress.
• If a Superintendent intends to issue a summons, he must get the permission of an official with a rank equal to or greater than that of an Assistant Commissioner in writing first.
• Where it is not possible to receive such previous written permission for operational reasons, oral/telephonic permission from such officer must be obtained, and same should be reduced to writing and communicated to the officer in accordance with such permission as soon as practicable.
• The officer issuing the summons must either transmit the summons recordings or record a synopsis of the proceedings for submission to the officer who authorized the summons to be issued.
• Top management personnel, such as the CFO, CEO or General Manager, should not be summoned without warning. The entity can only issue the summons if there is evidence of their participation in the decision process that resulted in revenue loss.
• Also read: Proposed GST Law Procedures & Compliances

Be aware of your rights while issuing of summons.

Right of retraction:

• Tax officials pressurising undue pressure to taxpayers, forcing them to make false declarations as a result. In this situation, taxpayers have the choice of retracting the prior false statement made during the summons procedures and replacing it with the proper statement.
• This will protect taxpayers from any adverse actions taken by the tax authorities as a result of such incorrect statements.

Right to cross-examine:

• Tax authorities have been known to manipulate the summoned person by pointing to an adverse remark made by a third party, such as a colleague, a company’s vendor/dealer, and so on.
• In this circumstance, the taxpayer does not have to accept any assertions made by a third party and can use his right to cross-examine the other party to verify the adverse statements he made.

Refreshing Memory:

• It is preferable to take your time rather than making a mistake. The Indian Evidence Act, Section 159, enables it.

Right to remain silent:

• If a taxpayer does not know or is unsure of the answer to a question, he has the option to exercise his right to remain silent.
• It should be highlighted that the aforementioned right is a constitutional right available to the taxpayer and will not be regarded an offence or obstructing the proceedings, as the Supreme Court and various High Courts have ruled in various judgments.

Other right :

• The assessee has the right to question the witness/third party whose statements were acquired and utilised against them.
• A statement should be retracted as soon as feasible if it is later shown to be erroneous, or if it was made without sound judgement or under duress.
• Before giving a statement, he is permitted to examine the Books of Accounts and other documents. He is really not expected to recall every detail (Chelapati Ganeswar Rao SC).

Discriminatory and Hostile Attitude of DGGI Officials under section 70 of GST

• The guidelines of the DGGI GST and judgments of various high courts show beyond a shadow of a doubt that DGGI staff behave like police officers and torture (a wound in the soul that is so severe that you cannot touch) a person during an inquiry. Using physical aggression and coercion to pay tax during a search is against the DGGI GST’s directives. In fact, the statement recorded is the statement of Department officials, not a person.
• As a consequence, it is concluded that DGGI personnel should refrain from employing physical aggression, torture, extended investigations, abusing and using filthy language, and that such activity should be avoided. During an investigation or search, highhandedness and illegal methods should not be used.

Director of the company was getting prosecuted and summoned for non-compliance of GST in the company or some specific offences.

• Do you think the Director of the company should be prosecuted for this?
• We’ve heard of a range of examples in which the company’s director was prosecuted and summons for corporate non-compliance or other specific offences.
• The Supreme Court has issued an order directing authorities not to prosecute company directors only because of their position in the firm for offences committed by other company executives. The Supreme Court further stated that this results in a great deal of embarrassment and a blemish on the directors’ reputations, and that this is due to offences committed without their knowledge.
• In a case where the company allegedly failed to pay minimum wages to some workers, a bench of Justices R S Reddy and Sanjiv Khanna overturned the prosecution and summons issued to the director of the company.

Summoned for non-compliance of GST in the company or some specific offences

The Court noted, “A person cannot be prosecuted and punished merely because of their status or position as a director, manager, secretary or any other officer, in a company unless the offence in question was committed with their consent or connivance or is attributable to any neglect on their part.”

• The mere fact that you hold a particular position does not justify the actions performed by different departments.
• Judges stated that in instances like these, an act like the arrest of the directors should be avoided at all costs.
• Honorable Court further stated that it is the obligation and responsibility of every public officer to carefully consider all facts before initiating any action against any company official, as doing so can damage an individual’s reputation and lead to the prosecution of an innocent person.
• This judgement is squarely applicable in GST also.

Precautions under GST

• The summons must be issued with proper justification. Only when the appearance of the assessee is needed can the summoning power be using it.
• Entity must not be summoned again. The accused’s statements should be recorded in the least number of appearances possible.
• Except in cases when it is a matter of strategy, the candidate’s importance of time and effort must be respected, and summonses must be completed on time.
• However, with a few exceptions, the authority will only assess the assessee’s statements during office hours.

What are the consequences of non-response to the GST Summon?

1. A complaint should be filed against the GST Taxpayer person with the jurisdictional magistrate in the event that the summoned person refuses to cooperate with investigations despite repeated requests, normally three summonses at a reasonable interval, alleging that the accused has committed an offence under:
   • Absconding to avoid service of summons or other proceedings – consequences applicability under Sec 172 of the IPC.
   • non-attendance in obedience to an order from a public servant – consequences applicability under Sec 174 of the IPC (non-attendance in obedience to an order from a public servant)
2. But, Prior to filing such kind of complaints, GST authority shall  be check that GST summons has properly been served to the Taxpayer upon intended person, But GST authority does not bar to issue furthermore summons to the said person u/s 70 of the cgst Act.

 

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