GUIDELINES FOR SUMMONS PROCEEDINGS UNDER GST LAW

[Dr. Sanjiv Agarwal]

Evidence value of statement under section 70 of CGST Act, 2017

It is a settled law that any statement made before a police officer does not have any evidentiary value in terms of section 25 and 26 of the Indian Evidence Act, 1872. However, such provision is applicable to police officers and therefore, it becomes a subject matter of debate as to whether GST officer who has a power to arrest a tax offender can be equated. It may be noted that under section 69, an authorized officer has power to arrest a tax offender or even grant bail and for this purpose such officer is empowered to act as an officer incharge of a police station.

It is judicially settled under the excise laws and Customs Act, 1962 that tax officers cannot be equated with police officers and they continue to be the officers of the revenue.

In P.V. RAMANA REDDY, G. SRINIVASA RAJU, VENKATA SATYA DHARMAVATHAR BOLLINA, BALARAMA KRISHNA MANDAVA, M/S. VS FERROUS ENTERPRISES PRIVATE LIMITED, SMT. JAGANNAGARI RAGAVI REDDY, CHALLA DURGA ADI DEVA VARA PRASAD, TELAPOLU RAM PRASAD VERSUS UNION OF INDIA, MINISTRY OF FINANCE, DEPT OF REVENUE, NEW DELHI AND OTHERS - 2019 (4) TMI 1320 - TELANGANA AND ANDHRA PRADESH HIGH COURT, it was held that GST officers are not police officers. In view of the above and subject to section 136 of the CGST Act, 2017, the evidentary value of the contents of the statement recorded can be established.

Operational guidelines for summons

In the pre-GST era, for the purposes of issuing summons under service tax (Finance Act, 1994) and central excise (Central Excise Act, 1944), the erstwhile Central Board of Excise and Customs had issued guidelines / directions for issuance of summons and summon proceedings.

CBEC (now CBIC) had 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 had been issued -

1. 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;
2. 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;
3. 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;
4. 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;
5. 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: -

1. 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;
2. 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;
3. 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.”

According to FAQ’s issued by CBIC, FAQ No. 34 has referred to guidelines issued by CBIC so that summon proceedings are not misused. These are as under:

“What are the guidelines for issue of summons?

The Central Board of Indirect Taxes and Customs (CBIC) 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:

1. summons is to be issued as a last resort where assesses are not co-operating and this section should not be used for the top management;
2. the language of the summons should not be harsh and legal which causes unnecessary mental stress and embarrassment to the receiver;
3. 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;
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;
5. 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;
6. 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.”