MARCH 07, 2018

By Lukose Joseph (CA) & Anil P Nair (CA)

Recently, an Assessee received a Summons to appear and produce books of accounts before an Officer from Intelligence Squad of State GST which reads in this manner:

Let us see what empowered the Officer to issue such a Summons.

Power to issue Summons:

This is given in Section 70(1) of the GST Acts. 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 (Central Act 5 of 1908).

Further Sub-section (2) states that 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, 1860 (Central Act 45 of 1860).

Who is a Proper Officer? According to Section 2 (91) the term is defined thus - "proper officer" in relation to any function to be performed under this Act, means the Commissioner or the officer of the State tax who is assigned that function by the Commissioner.

Apart from this, Rule 132 of CGST Rules empower the Director General of Safeguards, or an officer authorized by him in this behalf to issue a Summons as above and shall be deemed to be a proper officer for Section 70.

Form used in Summons as above:

A search for Rules or Forms under Kerala GST produced no result for summons on Kerala taxes.gov.in. In CGST Rules updated up to 23-01-2018 also no prescribed Form was found [cbec.gov.in].

The form of Summons issued here is obviously taken from THE KERALA VALUE ADDED TAX RULES, 2005 inFORM NO. 22 [See Rule 101]

This in turn must have been appropriated from Form No 51 as authorized by Rule 72 of erstwhile Kerala General Sales Tax Rules, 1963 for appearance of any person with certain documents required by it. Form No 50 is also authorizing Summons in terms of Rule 21E for production of Accounts.

What was the position in the erstwhile The Kerala Value Added Tax Act, 2003?

According to Section 81 of Kerala Value Added Tax Act, 2003, "An assessing authority or an appellate or revisional authority (including the Appellate Tribunal) shall, for the purposes of this Act, have all the powers conferred on a court by the Code of Civil Procedure, 908 (Central Act 5 of 1908), in respect of the following matters, namely,- (a) summoning and enforcing the attendance of any person and examining him on oath or affirmation; and (b) compelling the production of any document."

Please note that proceedings have become Judicial Proceedings as per Indian Penal Code under GST. This by itself is baffling. Moreover, Summons to an accused person under Section 61 of Criminal Procedure Code normally follows these wordings "Whereas your attendance is necessary to answer to a charge of …You are hereby required to appear in person /by pleader before the …magistrate of …at…herein fail not." Thus Even a Magistrate under Indian Criminal Procedure Code demands someone, only to appear in person or by pleader and do not necessarily add a caveat not to leave without permission! [ Emphasis supplied ]

Guidelines for Summons:

CBEC has issued already guidelines from time to time to ensure that summons provisions are not misused in the field. A glance at the same revealed two very important premises.

1. There should be proper justification for Summons.

2. Summonses are to be issued as a last resort where assessees are not co-operating.

3. The language of the Summons should not be harsh and legal which causes unnecessary mental stress and embarrassment to the receiver.

4. Repeated Summons should be avoided and statements should be recorded in minimum appearance.

5. Top management should not be summoned unless their involvement in decision making which lead to revenue loss is indicated.

It appears that the change perceived in administration via integrating indirect tax offices in the country in tune with the change of times has not percolated well enough to the state officers of GST administration.

Are we following the guidelines while drafting a Summons?

Shouldn't those guidelines be explained to State GST Administration as well?

Why do we need such sweeping powers and judicial proceedings for something as simple as to ask an assessee to appear with his books of accounts in person or by an authorized representative? Why every Officer of a Tax administration is allowed at his convenience to become a Magistrate with powers given under Indian Penal Code?

Without proper guidance to officers, there are chances that they will continue to use erstwhile forms, measures and those very intimidations hereto unhindered as ever and the efforts to make tax administration business friendly will remain a lip service.

Is this what the Good and Simple Tax supposed to be?

(The views expressed are strictly personal.)