GST department has issued over 60 summons during the first fifteen days of the new year 2023. The action covers taxpayers operating in several sectors and industries such as IT, pharma, and chemical. Blue Cross Laboratories, Supriya Life Sciences, and Yasho Industries are notably the big names who have received the summons, among others.
As per media reports, the companies listed above have not responded to emails seeking comment until press time. Summons were issued after the CBIC directed its officers to finish investigating the pending cases in December 2022 and realign their attention towards revenue collection in the Jan-Feb 2023 quarter.
Furthermore, some of these companies have sought the summons to be quashed by the Delhi, Mumbai, Goa, Haryana, and Punjab High Courts, while the CBIC or Central Board of Indirect Taxes and Customs considers its action valid. In one of the summons cases, Blue Cross Laboratories filed a writ petition at Goa before the Bombay High Court, and the hearing is due on 18th January 2023.
Whereas the CBIC claims that the issue of summons is a part of the process where any anomaly coming to their attention needs further explanation and evidence apart from what has been provided. These companies have the requisite time to respond to the summons.
Yet, some companies claim that the summons they received sought more documents. Moreover, their top management was also summoned despite their willingness to provide the necessary information.
The advocates arguing on behalf of certain taxpayers who received the summon state that summons must be issued only when essential and where an instance of non-cooperation is found.
Summons under GST is legally binding. If a GST officer summons any person, such person must appear before such a GST officer. Any failure can amount to prosecution as per Sections 172 and 174 of the IPC or Indian Penal Code. Further, Rs.25,000 is charged as a penalty on such a person as per the GST law.
However, one must note that the CBIC had recently issued a detailed guideline for the issue of summons under the GST law. Any deviation from the guidelines may have to cross the constitutionality test. The taxpayers can approach courts to quash the summons if these ask for unnecessary details and routine queries.
Earlier in August 2022, the CBIC issued instructions to its officers asking them not to summon any senior management of a company or Public Sector Undertaking (PSU) prima facie but only if there is clarity of their involvement in the decision-making process gets established.