PRESUMPTION AS TO DOCUMENTS IN CERTAIN CASES IN GST

Section 144 of CGST Act, 2017 provides for presumption to be made for documents tendered by the prosecution in evidence unless the contrary is proved by the person being prosecuted. It presumes that any documents produced or seized or received in any GST proceedings are genuine and the contents, signatures and hand writing are considered to true unless proved to be contrary. Such documents etc. will be admissible as evidence and the burden of proof lies on the person against whom they are used, to proof such presumption wrong.

Evidentary value of documents etc. seized

It is generally seen that during the course of search, seizure and investigation, revenue authorities come across various goods etc which may seize during the search etc. Section 67(2) stipulate the following for seizure:

• Goods
• Documents
• Books
• Things

Often the items seized include, apart from the above, one or more of the following:

• Note books
• Registers / copies
• Handwritten diaries
• Writing pads
• Estimates / rough calculations
• Loose slips
• Carbon copies etc.

Whether these items would constitute document or books of accounts would depend on facts of each case.

According to section 2(1)(d) of the Bharatiya Adhiniyam, 2023,

(d) "document" means any matter expressed or described or otherwise recorded upon any substance by means of letters, figures or marks or any other means or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter and includes electronic and digital records.

Illustrations.

(i) A writing is a document.

(ii) Words printed, lithographed or photographed are documents.

(iii) A map or plan is a document.

(iv) An inscription on a metal plate or stone is a document.

(v) A caricature is a document.

(vi)An electronic record on emails, server logs, documents on computers, laptop or smart phone, messages, websites, locational evidence and voice mail messages stored on digital devices are documents.

Further, Section 2(1)(e) defines 'evidence' which means and includes:

(i) all statements including statements given electronically which the Court permits or requires to be made before it by witnesses in relation to matters of fact under inquiry and such statements are called oral evidence; (ii) all documents including electronic or digital records produced for the inspection of the Court and such documents are called documentary evidence.

On the other hand, Section 2(41) of the CGST Act, 2017 defines document as follows:

(41) "document" includes written or printed record of any sort and electronic record as defined in clause (t) of section 2 of the Information Technology Act, 2000.

In CENTRAL BUREAU OF INVESTIGATION CBI Versus VC. SHUKLA & ORS. - 1998 (3) TMI 675 - Supreme Court, it was held that any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational and hence legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. Entries in books of account shall not alone be sufficient evidence to charge any person with liability. Entries, even if relevant, are only corroborative evidence. Independent evidence as to the trust worthiness of those entries is necessary to fasten the liability. Further, it was also held in this case that books ordinarily mean a collection of sheets of paper or other material, blank, written, printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as book for they can be easily detached and replaced. The Supreme Court further held that even correct and authentic entries in books of account cannot, without independent evidence of their trustworthiness, fix a liability upon a person. [Also see: Common Cause (A Registered Society) And Others Versus Union of India And Others - 2017 (1) TMI 1164 - Supreme Court]. Based on the above judgments, it can be ascertained that entries in loose papers / sheets are irrelevant and not admissible under Section 34 of the Evidence Act. It is only where the entries are in the books of account regularly kep, depending on the nature of the occupation, that those are admissible. Entries in books of account are not by themselves sufficient to charge any person with liability; the reason being that a man cannot be allowed to make evidence for him-self by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate, and in the absence of such evidence, no relief can be given to the party who relies upon such entries to support his claim against another. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts.

Entries found in loose slips, note pads, handwritten diaries etc., are not admissible because they are not books of account. However, even if it is presumed to be admissible evidence, such transactions must also be corroborated by relevant supporting materials. It would be desirable that loose papers or slips detected during a search proceedings should be properly arranged, authenticated, and backed by independent evidence like books of account, bank records, or a voluntary and reliable statement before any addition to be sustained. Seizure of documents by itself does not automatically justify a tax demand. The department must establish a clear legal and factual nexus between the seized material and the supply actually made by the taxpayer.

In M/s. Vigneshwara Transport Company Versus Additional Commissioner of Central Tax Bengaluru Commissioner Of Central Tax Mangaluru, Principal Commissioner Of Central Tax Bengaluru. - 2024 (12) TMI 1511 - KARNATAKA HIGH COURT, where search and investigation was conducted by an officer who was not a proper officer and later show cause notice under section 74 was issued by a proper officer, it was held that investigation, inspection, search and seizure carried out by an improper officer was void ab inito. Consequently, the show cause notice based on search, seized documents and recorded statements was also declared to be illegal. The court observed that there cannot be satisfaction on part of the proper officer for issuing show cause notice where the foundation itself was void. Thus, the subsequent proceedings were held to be invalid.

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