2021 (2) TMI 768 - HC - Service Tax

Validity of Summons Upheld for GST Evasion Investigation

The court held that the summons issued under various provisions of the Finance Act, Central Excise Act, and CGST Act were valid for the ongoing ... Inquiry proceedings under Service Tax - apprehension of arrest - Seeking stay of proceedings and consequential penal action, initiated against the petitioners pursuant to issuance of summons - Section 83 of the Finance Act, 1994 read with Section 14 of the Central Excise Act, 1944 - HELD THAT:- Though the Central Excise Act and the Finance Act, 1994 to the extent of Chapter V of the said Act have been repealed, sub-section (2) of section 174 states that the aforesaid action shall not affect any investigation, inquiry, verification (including scrutiny and audit) assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, service charge, penalty, fine etc. and other legal proceedings or recovery of arrears or remedy as may be instituted, continued or enforced and any such tax may be levied or imposed as if the aforesaid acts had not been so amended or repealed. Thus it is evident that respondent No.2 has power and authority to issue summons to the petitioners and more specifically petitioner No.2 under the provisions of the aforementioned statutes to give evidence and produce the relevant documents in inquiry. The power to summon persons to give evidence and produce documents in inquiry is a statutory function regulated by the aforementioned provisions of the statutes. Sub-sections (1) and (2) of Section 14 of the Central Excise Act state that summons to produce documents or other things in the possession of or under the control of the person summoned can be issued by an officer duly empowered by the Central Government and all persons so summoned shall be bound to attend and state the truth upon any subject respecting which they are examined or make statements or to produce such documents and other things as may be called upon. Sub-section (3) of section 14 states that every such inquiry as aforesaid shall be deemed to be a judicial proceedings within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 - On a thorough reading of the summons dated 12.10.2020 and 13.11.2020 it is clear that the summons have been issued to petitioner No.2 calling upon him to tender oral evidence and produce documents or things which have been specified in the summons. The summons clearly state that an inquiry in connection with GST under the CGST Act, 2017 is being undertaken by the Superintendent / Appraiser / Senior Intelligence Officer and that the attendance of petitioner No.2 is considered necessary to give evidence and produce documents. Perusal of the summons signify that there is no threat of arrest as perceived and argued by the petitioners / petitioner No.2. This is buttressed by the fact that under section 70 of the CGST Act tendering of evidence or production of document is to be done in the same manner as done by a civil court under the provisions of the Civil Procedure Code, 1908. The summons specifically call upon the petitioner to tender evidence and produce documents and clarification as stated in the summons dated 12.10.2020. There is a clear mandate on the petitioner No.2 to honour the summons and present himself in the inquiry undertaken in connection with evasion of GST under the CGST Act by the investigating officer. The summons do not state that the petitioner No.2 shall be liable for arrest or will be arrested as the statutory provisions under which the summons have been issued pertain to investigation undertaken by the statutory officer. Hence there is no reason for the petitioners to assume that the petitioner No.2 on presenting himself before the investigating officer will be arrested or apprehended. The inquiry which is undertaken by respondent No.2 is a statutory inquiry pertaining to evasion of GST under the CGST Act wherein the petitioner No.2 has been called upon to tender his oral evidence as also to produce the documents that may be required for the purpose of completing the inquiry by the investigating officer. Petitioners’ apprehension that petitioner No.2 will be apprehended / arrested / incriminated since the inquiry pertains to evasion of service tax / GST is not well founded. The summons dated 12.10.2020 makes it succinctly clear that the petitioners are required to tender oral evidence and produce certain documents. Investigation is under way pursuant to the raid which was carried out at the premises of the petitioners on 03.04.2019 and seizure of the material and documents by the authority. It is therefore incumbent upon the petitioners to cooperate in the investigation / GST inquiry - the summons issued to the petitioners / petitioner No.2, does not authorize the investigating officer to arrest petitioner No.2, but have been issued only for the purpose of completing the investigation into evasion of GST undertaken by respondent No.2. In this view of the matter, we do not see any reason for the petitioners / petitioner No.2 to apprehend arrest on presenting himself before the investigating officer in response to the summons which have been issued to the petitioners. The summons issued to the petitioners / petitioner No.2 on 12.10.2020 and 13.11.2020 are valid and no interference is called upon - it is directed that petitioner shall remain present before the concerned investigating officer / authority in the office of the Directorate General of GST Intelligence, Mumbai Zonal Unit, NTC House, 3rd Floor, N.M. Road, Ballad Estate, Mumbai - 400 001 on 1st March 2021 at 11:00 a.m. for the purpose of inquiry and thereafter as and when required. If the petitioners cooperate in the investigation, respondents shall not take any coercive steps against the petitioners - petition disposed off. Issues Involved:1. Legality of the summons issued under Section 83 of the Finance Act, 1994 read with Section 14 of the Central Excise Act, 1944 and Section 174 of the CGST Act, 2017.2. Petitioners' apprehension of arrest and their cooperation in the investigation.3. Validity and necessity of the summons issued on 12.10.2020 and 13.11.2020.Detailed Analysis:1. Legality of the Summons Issued:The petitioners challenged the summons issued by the Directorate of GST Intelligence under Section 83 of the Finance Act, 1994, read with Section 14 of the Central Excise Act, 1944, and Section 174 of the CGST Act, 2017. The court noted that these provisions empower the authorities to summon any person to give evidence or produce documents necessary for an inquiry. Section 174(2) of the CGST Act ensures that ongoing investigations, inquiries, or legal proceedings are not affected by the repeal of the earlier acts. Therefore, the court concluded that the Directorate of GST Intelligence had the authority to issue the summons.2. Petitioners' Apprehension of Arrest and Cooperation:The petitioners expressed a severe apprehension of arrest by the officers of respondent No.2 for interrogation related to alleged evasion of GST. The petitioners argued that they were willing to cooperate with the investigation but needed access to the seized documents to do so effectively. The court observed that the summons did not indicate any threat of arrest but were issued for the purpose of gathering evidence and documents necessary for the investigation. The court emphasized that the petitioners are mandated by law to attend and state the truth upon any subject respecting which they are examined or make statements and produce documents as required.3. Validity and Necessity of the Summons Issued on 12.10.2020 and 13.11.2020:The court examined the summons issued on 12.10.2020 and 13.11.2020, which specifically called upon the petitioners to produce transport documents, payment particulars to transporters, and sample sale/purchase invoices. The court found that these summons were clear in their requirements and did not pose any threat of arrest. The court stated that the summons were part of a statutory inquiry into the evasion of GST and were necessary for completing the investigation. The court held that the petitioners' apprehension of arrest was unfounded and directed them to cooperate with the investigation.Conclusion:The court concluded that the summons issued to the petitioners were valid and necessary for the ongoing investigation into the evasion of GST. The petitioners were directed to appear before the investigating officer and cooperate with the inquiry. The court assured that no coercive steps would be taken against the petitioners if they cooperated with the investigation. The writ petition was disposed of, and the interim application was accordingly dismissed.