The Finance (No. 2) Bill, 2024 or Budget 2024-25, has proposed an amendment to Section 70 of the CGST Act, aimed at addressing the widespread concerns about the misuse of summons by GST officers. This proposal, if enacted, would allow taxpayers to be represented by an authorised person during the production of evidence or documents, marking a significant potential shift in the existing legal framework.
Currently, under Section 70 of the CGST Act, GST officers have the authority to issue summons to taxpayers, requiring their personal appearance to provide evidence or produce documents.
There have been numerous reports of misuse of this power, with taxpayers being directed to appear at inconvenient hours, detained for extended periods, and subjected to coercion and even physical abuse. Such actions have prompted many taxpayers to file writ petitions, seeking the right to be accompanied by representatives or advocates during interrogations.
While courts have ruled against allowing taxpayers to be accompanied by advocates, they have permitted the presence of such advocates at a non-audible distance. This decision, however, did not fully address the grievances of many companies, especially those whose top managerial personnel, such as CEOs and COOs, were summoned despite not being involved in day-to-day financial operations or tax matters.
The proposed sub-section (1A) in Section 70 of the Goods and Services Tax Act, 2017 offers a potential solution. It suggests allowing taxpayers to either appear in person or be represented by an authorised person for the production of evidence or documents. If passed, this change is expected to alleviate the burden on top executives by enabling companies to delegate the task to the appropriate personnel.
However, it is important to note that this amendment is currently only a proposal within the Finance Bill 2024. It does not yet have the force of law. Even if enacted, the law would not completely eliminate the possibility of the proper officer insisting on the personal attendance of the summoned individual. The proposal, however, represents a significant step towards addressing the routine grievances related to the issuance of summons to high-level managerial staff.
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