Power to Summon Persons to Give Evidence and Produce Documents – Section 70 of GST

In the realm of GST compliance, transparency and cooperation with tax authorities are vital. Section 70 of the CGST Act empowers the proper officer to summon individuals for inquiry purposes. This provision is instrumental in ensuring that investigations under GST law are carried out efficiently and within the legal framework.

This article provides a comprehensive understanding of Section 70 of the CGST Act, its scope, implications, recent amendments, and legal consequences of non-compliance.

What is Section 70 of the CGST Act?

Section 70 of the CGST Act grants powers to GST officers to summon any person whose presence is deemed necessary during the course of any inquiry. The provision is modeled on the procedure followed by civil courts under the Code of Civil Procedure, 1908.

Sub-Section (1): Power to Summon

“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.”

This implies that GST officers hold the authority to summon individuals or entities for examination or document production. The authority must be exercised judiciously and only when necessary for an inquiry.

Sub-Section (1A): Binding Nature of the Summon

“All persons summoned under sub-section (1) shall be bound to attend, either in person or by an authorised representative, as such officer may direct, and the person so appearing shall state the truth during examination or make statements or produce such documents and other things as may be required.”

This clause was inserted by Section 135 of the Finance Act (No. 2), 2024 and came into effect on 16th August 2024. It strengthens the provision by making it mandatory for the summoned person to attend and comply with the officer’s directions.

Sub-Section (2): Judicial Proceedings

“Every such inquiry referred to in sub-section (1) shall be deemed to be a ‘judicial proceeding’ within the meaning of Section 193 and Section 228 of the Indian Penal Code (45 of 1860).”

This makes false statements or intentional insults during such inquiries punishable under the IPC, emphasizing the seriousness of proceedings conducted under Section 70.

Objectives and Significance of Section 70

Section 70 plays a critical role in the investigation and enforcement mechanism under GST. Its primary objectives include:

• Ensuring cooperation from taxpayers and third parties.

• Facilitating evidence collection during audits or anti-evasion operations.

• Empowering officers to compel the production of documents crucial for inquiry.

This section ensures that tax inquiries are conducted with legal backing, similar to court proceedings, enhancing credibility and procedural fairness.

Legal Implications of Non-Compliance

Failure to comply with a summon issued under Section 70 may lead to the following consequences:

• Penal action under IPC Sections 193 and 228: Making a false statement or showing disrespect to the authority during proceedings can lead to imprisonment or fines.

• Prosecution under GST laws: Persistent non-compliance can lead to prosecution under various sections of the CGST Act.

• Adverse inference: Non-compliance may result in adverse inference during assessments or audits, impacting the taxpayer’s standing.

Summoning Procedure under Section 70

The process for issuing summons generally includes the following steps:

1. Identification of necessity: The officer identifies the requirement for additional information, documents, or testimony.

2. Issuance of summon (Form GST DRC-06): The summon is issued in writing specifying the purpose and required details.

3. Appearance or representation: The person must attend in person or through an authorised representative.

4. Recording of statement/evidence: The examination is recorded as per procedure, and statements may be used in further proceedings.

Recent Amendment: Finance Act (No. 2), 2024

The insertion of sub-section (1A) by the Finance Act (No. 2), 2024 has made it explicitly binding on individuals to comply with the summons. This amendment reinforces the importance of the inquiry process and introduces greater accountability.

Important Judicial Precedents

Courts have consistently upheld the authority of GST officers to summon individuals under Section 70. Key takeaways from judicial rulings include:

• Summons cannot be issued casually: It must be based on reasonable necessity.

• Right to legal counsel: The summoned person can be accompanied by a lawyer, although the lawyer may not be allowed to speak during examination.

• Reasonable time and manner: The summon must provide adequate notice and time for compliance.

Conclusion

Section 70 of the CGST Act is a powerful tool that facilitates effective tax administration and enforcement. By granting officers the power to summon individuals for inquiries, it ensures that GST investigations are thorough and legally sound. With the latest amendments, the obligations on taxpayers have been clearly defined, and the consequences of non-compliance have become more stringent.

Businesses and professionals must understand the gravity of this provision and ensure full cooperation when summoned. Ignorance or avoidance can lead to serious legal consequences under both GST law and the Indian Penal Code.

FAQs

Q1. Who can be summoned under Section 70?
Any person, including a taxpayer, employee, supplier, or third party, can be summoned if their presence is necessary for an inquiry.

Q2. Can a person refuse to attend a summon under Section 70?
No. As per sub-section (1A), attending the summon is mandatory. Non-compliance may attract penalties and prosecution.

Q3. Is the statement given under summon legally valid?
Yes. Statements recorded during such inquiries are considered part of judicial proceedings and can be used as evidence.

Q4. Can I send a representative to attend a summon?
Yes, if permitted by the officer. The summon will specify whether personal presence is required or if an authorised representative can appear.

Q5. What happens if a false statement is made under summon?
False statements are punishable under Section 193 of the Indian Penal Code, as such inquiries are treated as judicial proceedings.