[GST Investigations] Summon for Attendance and Production of Documents | A Comprehensive Guide

Table of Contents

1. Power to Summon Persons to Give Evidence and Produce Documents
2. Inquiry Deemed to be Judicial Proceedings as per IPC
3. Nature of Proceedings
4. Applicability of Provisions of CPC
5. Consequences of Failure to Attend as per Summons
6. Compliance with Summons
7. Details Available with Department – Summons Not To Be Issued
8. Admissibility of Statements

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1. Power to summon persons to give evidence and produce documents

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.

To summon is to demand the presence of or call upon a person to appear¹. It is the stage of inquiry. The Allahabad High Court in G.K. Trading Company v. Union of India² held that the word “inquiry” in Section 70 has a special connotation and a specific purpose to summon any person whose attendance may be considered necessary by the proper officer either to give evidence or to produce a document or any other thing. It cannot be intermixed with some statutory steps which may precede or may ensue upon making of the inquiry or conclusion of inquiry and that the word “inquiry” in Section 70 is not synonymous with the word “proceedings”, in Section 6(2)(b) of the UPGST Act/CGST Act.

The Rajasthan High Court in S.K. Metal v. Assistant Commissioner, B II Enforcement Wing II, Department of Commercial Taxes, Government of Rajasthan, Jaipur³ held that power to issue summons is neither unguided or uncanalised and is constitutionally valid.

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 (3^rd edition), Assistant Commissioner’s prior written permission is required with reasons before issuing summons. The Gujarat High Court in Yasho Industries Ltd. v. Union of India [2021] 127 taxmann.com 781/8 GST 11/(54) G.S.T.L. 19 (Guj.) has held that officers of DGGSTI (also referred as DGGI) are “proper officers” empowered to issue summons to compel attendance of persons and production of documents under Section 70 of CGST Act.

2. 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(i) 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.

2.1 Power of “inquiry” under the Act is not restricted

The CGST Act, vide Section 70, empowers the officer to summon any person for the purpose of giving evidence, produce document or any other thing in an inquiry. The Central Excise Act, 1944 had similar provisions authorizing the officer to issue summons etc., for making any inquiry for any purposes of that Act. In National Building Construction Company Ltd. v. Union of India⁴ the scope of the word “inquiry” was examined. The High Court opined that word inquiry cannot be given a restrictive meaning to only cover post enquiry post issue of notice and since the words “for purposes of this Act” appear in the statute (Central Excise Act and applicable to Finance Act, 1994) the officer may also initiate inquiry, gather details, documents etc., and then issue notice. The inquiry will not be limited to only issues which are finally raised in the SCN. The CGST Act does not use the word “for purposes of this Act”. However, the scope of inquiry would be as wide since the “proper officer” under the Act is empowered to undertake inquiry to carry out the functions assigned to him under the Act.

3. Nature of proceedings

The nature of inquiry proceedings was noted by the Telangana High Court in the case of P.V. Ramana Reddy v. Union of India⁵ wherein it was observed –

“Therefore, even if the enquiry before the Proper Officer under CGST Act, 2017 is not by its nature, a criminal proceeding, it is nevertheless a judicial proceeding and hence, the person summoned is obliged not to give false evidence nor to fabricate evidence. He is also obliged not to insult and not to cause any interruption to the Proper Officer in the course of such proceedings.”

The Supreme Court in the case of Romesh Chandra Mehta v. State of West Bengal⁶ which was relied on in K.I. Pavunny v. Asstt. Collector⁷ held that before the Customs Officer, the nature is civil proceedings for collecting evidence to take further action. It can be said that the proceedings initiated through summons are not criminal in nature. It should be noted that deeming such proceedings as judicial proceedings is to enforce attendance and also visit the same with penal consequences in case of default.

4. 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.

5. 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.

6. 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. In Vijay Mallya v. Enforcement Directorate, Ministry of Finance⁸ the Supreme Court held that non-compliance with summons would be a separate offence and exonerating an accused, who successfully evades the process of law and thereby commits an independent offence on the ground that he is found to be not guilty of the substantive offence would be destructive of law and order. The decision was in the context of FERA and the judgment of the Supreme Court in Dy. Chief Controller of Imports and Exports v. Roshan lal Agarwal⁹ wherein since the departmental proceedings were concluded in favour of the accused, the proceedings in criminal cases were quashed was held as being applicable to the peculiar facts of the case.

7. 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 India¹⁰ 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. In the instant case all details were available in the documents seized by the department and the summons only served to harass the partners of the petitioner firm. This decision was followed in Dharampal Satyapal Ltd. v. Union of India¹¹ wherein the Gauhati High Court quashed the enquiry related to the capacity of the packing machine where the inquiry and therefore summons were held to be a hollow exercise and the information sought from persons summoned had no material bearing on the case.

A truck with 123 cartons of documents were taken for submission to DGCEI office but the officers insisted on providing information in particular format. In this case of Ebiz.Com (P.) Ltd. v. Union of India¹², the Delhi High Court held that there was no provision in law to order the assessee to create documents not in his possession. The department undertook before the Court that it would call for documents and the same may be provided if available.

CBIC has emphasized through Instruction No. 03/2022-23 (GST-Investigation) dated 17-8-2022 that officers should explore instances when instead of resorting to summons, a letter of requisition of information may suffice. These instructions also call upon the officers to avoid issuance of summons when statutory documents are available online in GST portal. Further, summoning officer must be present at the time and date for which summons is issued.

8. Admissibility of  Statement

Summoning is primarily to make the person tender statement which is treated as an evidence in the proceedings.

Section 25 of the Indian Evidence Act, 1872 states that no confession made to a police officer shall be proved as against a person accused of any offence. This means any statement given before police officers is not admissible as evidence. As against such express provision, CGST Act in Section 136 makes a departure whereby statements made by a person in response to summons under Section 70 during inquiry or other proceedings shall be relevant for the purpose of providing the truth of the facts in prosecution for an offence. The Supreme Court had held in Romesh Chandra Mehta v. State of West Bengal¹³ that Customs officers are not police officers. The ratio of this judgment is applicable to proceedings under Section 70 of CGST Act also. Such statements are admissible as evidence to prove the truth of the facts if the person could not be located or is incapable of giving statement. If the person who has tendered the statement is available, then he can be examined as a witness before the court and the court is of the opinion that the statement should be admitted as evidence. The Supreme Court in Amba Lal v. Union of India¹⁴ had held in a Customs case that Code of Criminal Procedure (Cr. P. C.) and Evidence Act are applicable only to the extent specified but principles of criminal jurisprudence and natural justice are applicable. This ratio is applicable to such proceedings under CGST Act also.

The statement recorded as tendered by the person may be an admission of certain facts or acts. While no person can be compelled to self-incriminate himself, such statements are obtained on voluntary basis though coercion is often alleged subsequently. Article 20(3) of the Constitution of India provides –

“No person accused of an offence shall be compelled to be a witness against himself.”

Because the word “compelled” is used, voluntary statements or admissions are not prohibited. The person from whom statement is recorded after issuance of summons during investigations is not “accused of an offence” as per the Supreme Court in K.I. Pavunny v. Asstt. Collector¹⁵ relying on Romesh Chandra Mehta v. State of West Bengal¹⁶. Therefore, the bar placed by Article 20(3) will not arise generally in investigation proceedings under GST when statements are recorded. As noted above, only those statements which are tendered voluntarily are admissible as evidence. The Supreme Court in the case of Soni Vallabhdas Liladhar v. Asstt. Collector of Customs¹⁷ held that statement would be admissible if it is not made due to inducement, threat or promise. It said –

“Customs authorities must be taken to be persons in authority and the statements would be inadmissible in a criminal trial if it is proved that they were caused by inducement, threat or promise.”

This principle of voluntary nature of statement being necessary for admissibility was subsequently reiterated in K.I. Pavunny v. Asstt. Collector¹⁸.

Upholding the right to be provided with a copy of statement, the Supreme Court in Amba Lal v. Union of India¹⁹ held that if the department wanted to rely upon statement, then it should give an opportunity to the appellant to inspect it and should supply a copy of such statement. This judgment lays down the principle that irrespective of any statutory mandate, copy of statement should be given in case the department wants to use the same as evidence in the proceedings. A related right that the person from statement is recorded pertains to right to refresh memory by a witness as provided under Section 159 of Evidence Act. The person before or during recording of statement has the right to take time so as to refer books or documents or records of the company right to refresh memory.

8.1 Presence of Advocate during recording of statement

Rejecting the argument on questioning of persons in tax department’s office without the assistance of lawyer as violative of Article 21 of the Constitution, the Supreme Court in the case of Poolpandi v. Superintendent of Central Excise²⁰ held:

“The purpose of the enquiry under the Customs Act and the other similar statutes will be completely frustrated if the whims of the persons in possession of useful information for the departments are allowed to prevail. For achieving the object of such an enquiry if the appropriate authorities be of the view that such persons should be dissociated from the atmosphere and the company of persons who provide encouragement to them in adopting a non-cooperative attitude to the machineries of law, there cannot be any legitimate objection in depriving them of such company.”

The above was relied on by the department in one of the cases in GST regime when the petitioner sought High Court’s direction on presence of Advocate during recording of statement. The Court relied on certain other cases and permitted presence of Advocate though not in hearing range – Agarwal Foundries Pvt. Ltd. v. Union of India²¹.

Generally statements obtained during interrogation are viewed with suspicion since there could be coercion by the law enforcing authority. In Anil G Merchant v. Director of Revenue²² the assessee contended that a lawyer should be allowed during the interrogation and the manner of interrogation whereby he was detained for long hours was in violation of his rights. The High Court held that Customs officers did not have the power to take a person in custody while issuing summons and conducting inquiry and the officers were expected to treat the person with dignity. At the stage of inquiry, the person is not accused of committing any offence. However, as regards presence of lawyer it held that there is no fundamental right guaranteeing such presence though the person is entitled to legal assistance. It further stated that lawyers may be allowed during the interrogation process while observing necessary precautions as to confidentiality of proceedings. CBIC has also, through Frequently Asked Questions (FAQs) on GST dated 15-12-2018 (3^rd edition) instructed its officers that statements should be recorded during office hours generally and no person should be made to wait for long hours.

Since revenue officers are not police officers, no reliance can be placed on Nandini Satpathy v. Dani (P.L.)²³ wherein the presence of a lawyer during interrogation was permitted. The Delhi High Court in Sudhir Kumar Aggarwal v. Directorate General of GST Intelligence²⁴ held following the judgment of Poolpandi v. Superintendent of Central Excise²⁵ that presence of a lawyer is not required and such benefit is not to be extended to tax evaders. The revenue officer has powers to summon any person as may be required for the investigation. As regards the apprehension of manhandling, physical assault etc., it was held that revenue officers are not authorised to do such acts and it would be expected that the officer conducts the investigation within four corners of law.

The Madhya Pradesh High Court in A Y Trading Co. v. Director General of GST Intelligence²⁶ held that a lawyer may be permitted to be present within visible distance but beyond the audible distance.

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2. [2021] 126 taxmann.com 211/(51) G.S.T.L. 288 (All.)
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14. 1983 (13) E.L.T. 1321 (SC).
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