SUMMONS PROCEEDINGS UNDER GST LAW

[Dr. Sanjiv Agarwal]

CGST Act, 2017 empowers the proper officer under the GST Act in the process of making any enquiry and to give evidence or to produce a document or any other thing. This article covers provisions relating to issue of summons, consequences and penalties for not attending to summons and right to silence of summoned person under section 70 of CGST Act, 2017.

How summon to be issued?

A summon issued to give evidence or produce documents shall be issued by CGST/SGST officer in writing, duly authorized by the competent authority.

It can be said that for initiating summon proceedings, a summon has to be issued in writing only. However, mode of communication can be in electronic mode also. Further, summons should bear a Document Identification Number (DIN).

A sample copy of the ‘summons’ may be referred in Annexure 7.2 of the Chapter.

Issuance of summons to firms / company

In case of business entities, which are non individuals, taxable person can be any entity as defined in section 2(84) of CGST Act, 2017, i.e., any one of the following :

(b)       a Hindu Undivided Family;

(c)       a company;

(d)       a firm;

(e)       a Limited Liability Partnership;

(f)        an association of persons or a body of individuals, whether incorporated or not, in India or outside India;

(g)       any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013;

(h)       anybody corporate incorporated by or under the laws of a country outside India;

(i)        a co-operative society registered under any law relating to co-operative societies;

(j)        a local authority;

(k)       Central Government or a State Government;

(l)        society as defined under the Societies Registration Act, 1860;

(m)      trust; and

(n)       every artificial juridical person, not falling within any of the above;

In case of above entities, since all these are non-individuals and artificial / legal persons, they can’t be present in person. As such, they have to be represented through authorized representative of such entity who could be any one of the following :

1. Managing director / whole time director / executive director
2. Any director
3. Partner
4. Designated partner
5. Key managerial personnel- CEO / CFO / company secretary etc.
6. Trustee / Secretary / President etc. in case of other enterprises.

The issuance of summons requires application of mind and must be based on principles of reasonableness. For ex-where a legal issue is involved, legal officer may be the right person; where accounts are involved, CFO may be the right person and so on. It may not be necessary to summon top management in every summon.

It has been judicially held that summons should be issued only to the concerned person who are expected to have knowledge relating to enquiry. [Refer : SUDHIR DEORAS & OTHERS VERSUS THE COMMISSIONER, CENTRAL EXCISE & SERVICE TAX, JAMSHEDPUR & OTHERS - 2012 (11) TMI 915 - JHARKHAND HIGH COURT. The CBEC (now CBIC) had earlier issued guidelines in the pre-GST regime on the same lines.

Issuance of summons during search

Summons can be issued on the spot if deemed necessary and also during the course of search for seeking evidences and documents.

In ANGHINGHU NICE TOBACCO (FIRM) VERSUS COMMISSIONER OF C. EX., MADURAI - 2010 (8) TMI 826 - CESTAT CHENNAI, it was held that summons issued on spot are valid when issued with prior approval of competent authority. Generally, this is resorted to during the search proceedings.

Consequences and penalties for not attending to summons

Since the summon proceedings are deemed to be judicial proceedings, 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 terms of penal provisions, if a person does not appear before a any officer who has issued the summon, he shall be liable to a monetary penalty upto INR 25,000.

In case the person to whom summons are issued does not comply with or respond to the same, following actions are contemplated:

(a)   Not responding/answering to summons – liable to prosecution under section 174 of the Indian Penal Code (IPC)

(b)  Giving false evidences – liable to prosecution under section 193 of the Indian Penal Code for giving false evidence in judicial proceedings

(c)   Refusing to record statement/non-cooperation - reporting non-cooperation to senior authority for further action such as informing the Magistrate

(d)  Non-appearance after repeated summons - liable for complaint to jurisdictional Magistrate for offence under section 172 of IPC (absconding to avoid service of summons/proceedings); under section 174 of IPC (non-attendance in obedience to an order from public servant; or under section 175 of IPC (omission to produce documents called for)

(e)   Failing to appear even after court’s directions to joint investigations- punitive action including issuance of warrants by court.

Right to silence of summoned person

When a person is summoned, it is obligatory on him to comply with the requirements of the summon, i.e., submit the information sought and appear before the authorities for explanations / recording of statements. Any non-compliance is punishable as the person summoned can be prosecuted under IPC. While summon proceedings are judicial proceeding, following provisions provide some relief to the summoned person.

1. Article 2020 (3) of Constitution

“20 Protection in respect of conviction for all offences.

(3) No person accused of any offence shall be compelled to be a witness against himself.”

2. Section 161(2) of CrPC

Such person shall be bound to answer truly all questions relating to such case put to him by such officer, other than questions the answers to which would have tendency to expose him to a criminal charge or to a penalty or forfeiture.

3. Section 313 (3) of CrPC

The accused shall not render himself liable to punishment by refusing to answer such questions, or by giving false answers to them”.

Considering the above provisions, it may be argued that it may not be necessary for the summoned person to answer all the questions post before the summoned person if answering such questions is likely to incriminate such person.