By, Abhishek Raja Ram, CA in Practice, Abhishek Raja and Associates
Section 70 of Central Goods and Services Act 2017 – Power to summon persons to give evidence and produce documents.
(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.
(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.
As you can see, Section 70 contains two sub-sections and is very brief but in so far investigation by the department is concerned, it plays a vital or indispensable role. In the absence of the power to compel attendance of persons or production of documents, investigations cannot be undertaken in tax cases involving documents, records, accounts and books handled by specific individuals in the premises of the person against whom the probe is launched. Section 70 empowers the proper officer to summon any person whose attendance he considers necessary either to give evidence or produce document or any other thing. The power is exercisable only by the proper officer as specified.
The proper officer for issuance of summons is Superintendent as per CBIC Circular No. 3/3/2017 dated 5-7-2017. However, as per CBIC’s Frequently Asked Questions (FAQs) on GST dated 15-12-2018 (3rd edition), Assistant Commissioner’s prior written permission is required with reasons before issuing summons. Therefore, there is a confusion with the word “Proper Officer”.
The Gujarat High Court in Yasho Industries Ltd. v. Union of India  127 taxmann.com 781 (Guj.) has held that it clearly emerges from section 70 that proper officer has power to summon any person whose attendance he considers necessary either to give evidence or to produce documents in any inquiry. ‘Proper officer’ in relation to any function to be performed under CGST Act means Commissioner or Officer of Central Tax, who is assigned that function by Commissioner in Central Board of Excise and Customs (CBIC). Respondent in instant case was an officer of Directorate General of Goods and Services Tax Intelligence (DGGI) holding designation of Senior Intelligence Officer, who was appointed as Central Tax Officer with all powers under CGST Act and IGST Act and Rules made thereunder, as are exercisable by Central Tax Officers of corresponding rank of Superintendent as specified in CBEC Notification No. 14 of 2017-Central Tax dated 1-7-2017. Further, respondent being officer of Central Tax and Superintendent under CGST Act was also assigned powers of proper officer by Board vide Circular dated 5-7-2017. Therefore, respondent, officer of DGGI was proper officer in relation to function to be performed under CGST Act as contemplated under section 2(91), and as such, was entitled to issue summons under section 70, in connection with inquiry initiated against petitioner.
INQUIRY DEEMED TO BE JUDICIAL PROCEEDINGS AS PER IPC
The purpose of summoning may be to either record evidence from such person or to compel or require him to produce document or any other thing which may include books of account, ledgers, invoices, bills, vouchers, balance sheet, profit and loss account, annual report, delivery challans, bills of supply, purchase orders, credit notes and debit notes. The provision uses the term “inquiry” and it connotes the process of investigation which is mostly in suspected cases of tax evasion or mis-classification or wrong availment of input tax credit. Such inquiry is deemed to be “judicial proceeding” as per Section 193 and Section 228 of Indian Penal Code (IPC). Section 2(1) of Cr. P. C. defines “judicial proceedings” as including any proceeding in the course of which evidence is or may be legally taken on oath.
Section 193 of IPC provides for punishment for giving false evidence in judicial proceedings. The punishment prescribed is imprisonment for a period upto seven years and fine. Section 228 of IPC prescribes punishment of imprisonment upto six months and/or fine for the offence of interruption of public servant sitting in judicial proceeding. “Inquiry” is to be distinguished from “enquiry” as the former means investigation while the latter connotes information seeking of general nature.
APPLICABILITY OF PROVISIONS OF CPC
Sub-section (1) of Section 70 makes the provisions of Code of Civil Procedure, 1908 (CPC) relating to civil court applicable to the manner in which such proceedings are conducted by the GST department. Sections 27 to 32 and Order V of CPC provides for mode of service, etc. By conferring the powers of civil court, the GST department can compel attendance. As per CPC, there are certain exceptions like a person unable to attend because of sickness or infirmity or a civil or military officer who cannot attend without detriment to public service.
CONSEQUENCES OF FAILURE TO ATTEND AS PER SUMMONS
If the summoned person fails to attend or produce documents without lawful excuse, the court has the power to issue a warrant of arrest, with or without bail and may also issue an order for attachment of his property and also impose fine. The court may also issue a proclamation before issuing arrest warrant. Same powers have been vested with proper officer under CGST Act also by drawing such powers from CPC. Such arrest/attachment may be cancelled if the person satisfies the court (proper officer in the context of CGST Act) the failure to attend as per summons was not without lawful excuse [Order XVI- Rules 10 to 16 of CPC].
Attendance through the process of summons has, therefore, serious consequences, if such summons are not complied with under GST law. While the power to arrest under Section 69 of CGST Act is resorted to in suspected cases of major tax evasion adopting fraudulent methods, the above said arrest provision of CPC is procedural to require a person attend the proceedings when he refuses to attend.
Penalty of Rs. 25,000 under Section 122(3)(d) of CGST Act is imposable for failure to appear when summoned or for failure to produce document despite issue of summons in an inquiry. This is a monetary penalty imposable in addition to the consequences discussed above.
COMPLIANCE WITH SUMMONS
The assessee is expected to comply with summons which are issued by the GST officer. This would be regardless of the plea of innocence, hardship etc. and even if the adjudication proceedings are ultimately dropped, non-compliance with summons would be separate punishable offence.
DETAILS AVAILABLE WITH DEPARTMENT – SUMMONS NOT TO BE ISSUED
If all details are available with the department, the issue of summons to officers of the company or other persons may not be necessary. The Gujarat High Court in A.S. Corporation v. Union of India” imposed costs and issued a direction that the petitioner-assessee shall not be issued any further summons in relation to the same subject matter, unless and until the respondent department is in possession of any specific evidence requiring the presence of the partners of the petitioner firm after coming across such evidence pursuant to inquiries/investigations.
RETRACTION OF STATEMENT
If the statement has been retracted, the same may not be admitted as evidence in case such retraction is not seen as after-thought and there was no long gap between the date of tendering the statement and re traction of the same.
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. The revenue officer is not a police officer and hence the bar under Section 25 Indian Evidence Act, 1872 on confessions made to a police officer being inadmissible may not apply.
PRESENCE OF SENIOR OFFICERS NOT NECESSARY ALWAYS
CBIC in Frequently Asked Questions (FAQs) on GST dated 15-12-2018 (3rd edition) has instructed that summons is to be issued as a last resort where assessees are not cooperating and this provision should not be used for the top management. It further directs that 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, and 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. As per these instructions, authorized representative can attend when summons is issued.
Where revenue issued summons on senior officers of assessee-company to answer queries of Director General of GST (Intelligence), assessee was directed to intimate about officers concerned who were familiar with records and thereupon Director General of GST (Intelligence) shall fix a convenient date with them in connection with investigation – Gail Gas Ltd. v. Directorate General of GST Intelligence  100 taxmann.com 242 (Delhi).
APPEARANCE THROUGH VIDEO CONFERENCING
Where assessee was residing at Bengaluru and GST Authority posted at New Delhi summoned assessee requiring him to tender his statement and present evidence before him and the assessee requested High Court that he be allowed to appear through video conferencing because travelling from Bengaluru to New Delhi would be a risk factor for him of contracting COVID-19, it was held that mere apprehension of contracting COVID-19 would not persuade Court to grant relief sought for by the assessee – P.V.Rao v. Senior Intelligence Officer, Directorate General of GST Intelligence  123 taxmann.com 201 (Delhi)
Where assessee carried on business at Mumbai and Jaipur and he filed writ petition challenging an enquiry initiated by Authority of Mumbai and contended that he was already being subjected to enquiry by Central GST Authorities at Jaipur and two enquiries under same subject were without jurisdiction, since assessee had taken registration in Mumbai, he was subject to jurisdiction of Mumbai Authorities. Court held that no interference with investigation by Authority of Mumbai was warranted. – Shafi Khan Khokhar v. State of Maharashtra  102 taxmann. com 191 (Bom.)
COURSE OF ACTION IN CASE OF NON-RESPONSE TO SUMMONS
If a person does not answer to the summons under Section 70 of the CGST Act, 2017, he would render himself liable to prosecution under Section 174 of the I.P.C.
If on the other hand, he gives false evidence, he would be liable to prosecution under Section 193 of the L.P.C. for giving false evidence in a judicial proceeding.
In situations where a person refuses to record any statement, the summoning officer should record his non-cooperation and submit the same to his superior officer for further necessary action. Invariably, in such cases the matter should be brought to the notice of the Magistrate.
If a person does not appear for statement even after repeated Summons, then after giving reasonable opportunity, generally 3 summons at reasonable intervals, a complaint should be filed with the jurisdictional Magistrate alleging that the accused has committed offence under Section 172 of Indian Penal Code (absconding to avoid service of summons or other proceedings); and/ or Section 174 of IPC (non-attendance in obedience to an order from public servant); and/ or Section 175 of IPC (Omission to produce documents called for to public servant by the person legally bound to produce it).
The Courts generally issue necessary directives to the accused to join investigations. Failing to appear even after issuance of such directives by Courts, the Courts may proceed for punitive action as per Law.
As per Section 122(3)(d) of the CGST Act, 2017, a person, who fails to appear before the Proper Officer, when issued with a summon for appearance to give evidence or to produce a document in an enquiry, shall be liable to a penalty which may extend to Rs.25,000/-
When the proper officer can issue summon Summon can be issued by duly authorized CGST/SGST officer to call upon a person to present himself before the officer to
• Either give evidence or produce a document or
• Any other thing in any inquiry which an officer is making.
Responsibilities of the person so summoned He 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
1. 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).
2. If he absconds to avoid service of summons, he can be prosecuted under section 172 of the IPC and
3. 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.
4. 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/-
After analysing this Section in detail, we have understood that though this section is brief, but this section has vital role in investigations and non-compliance to summons could lead to penalty and arrest provisions. Therefore, it is advised to the comply with summon proceedings with utmost care. As an honest citizen of this country it is our duty also to support Department in their investigations.
Disclaimer: This article is only for knowledge sharing. Author does not take any responsibly for any loss caused to any individual or organization on based of this article.
By, Abhishek Raja Ram, FCA, DISA, Certificate Courses on – Valuation, Indirect Taxes , GST etc, M. Com (F&T)
CA in Practice, Abhishek Raja and Associates
Abhishek Raja Ram – Popularly known as “Revolutionary Raja” is FCA, DISA, Certificate Courses on – Valuation, Indirect Taxes , GST etc, M. Com (F&T) Mr. Abhishek Raja “Ram” is a Fellow member of ICAI, qualified in 2006, and holds Master’s-Degree in Commerce. He has more than a 15 years of experience in Litigation in Indirect Taxes (i.e VAT, Service Tax & Excise laws) at various appellate forums. He is also speaker on VAT, Service Tax and GST and deliberated many seminars & webinars on various CA CPE Study Circles, Taxation Bar Associations, other associations/web portals like CA ClubIndia, StudyCafe, Clear Tax, Corporate Talks, Global Chamber of Professionals, Federation of Indian Professionals, e-Tax etc. • He has authored 6 books on GST • His articles have been published in various Magazines, Websites & Newspapers like The Statesman, Economic Times, The Pioneer, The Hindu Businessline etc • He is also Radio & TV Debate Panelist