Summons cannot be issued where the assessee is cooperating during the inquiry

[CA Bimal Jain]

The Hon’ble Bombay High Court in FSM EDUCATION PVT. LTD. VERSUS UNION OF INDIA, THROUGH THE PRINCIPAL SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, MUMBAI AND OTHERS [2022 (1) TMI 551 - BOMBAY HIGH COURT] set aside the summons issued by the Revenue Department without any details of the inquiry, wherein the assessee was co-operating in furnishing the documents as requisitioned and to provide further details. Held that, summons is a last resort and are not to be issued in a casual manner.

Facts:

FSM Education Private Limited (“the Petitioner”) is a school of music, engaged in the business of recreational activities such as teaching music to school children and other enthusiasts either at its teaching center or at a school. The Revenue Department (“the Respondent”) issued various summons to the Petitioner under Section 70 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) for appearance and to submit certain documents, without any details of the inquiry, wherein, the Accounts Manager of the Petitioner was grilled and interrogated and was subjected to cross-questioning. Further another summon was issued to one of the Directors of the Petitioner for appearance, producing documents and providing oral evidence.

The Petitioner contended that, all the documents are furnished as requisitioned by the Respondent. Further, the summons cannot be issued to coerce and pressurize the Petitioner or its Director, being a musician, who is not personally familiar with the issue of exemption regarding payment of GST.

Issue:

Whether summons can be issued by the Respondent to coerce and pressurize the Petitioner or its director, even when the Petitioner is co-operating during the inquiry?

Held:

The Hon’ble Bombay High Court in FSM EDUCATION PVT. LTD. VERSUS UNION OF INDIA, THROUGH THE PRINCIPAL SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, MUMBAI AND OTHERS [2022 (1) TMI 551 - BOMBAY HIGH COURT] held as under:

• Noted that, the summons were issued in view of the statement made by Accounts Manager of the Petitioner that the decision regarding payment of taxes and claiming of exemption was taken by the director of the Petitioner.
• Observed that, issuance of summons is a last resort and are not issued in a casual manner. Further, there are no allegations made by the Respondent alleging non-cooperation on the part of the Petitioner. Further observed that, the Petitioner is agreeable to co-operate with the Respondents in furnishing the documents as requisitioned and to provide further details through consultants.
• Set aside the summons issued by the Respondent.
• Directed the Respondent to inform the Petitioner the list of further documents required to be produced by the Petitioner and other requisite queries for clarifications within one week.
• Directed the Consultant of the Petitioner to co-operate with the Respondents in furnishing the documents and the information within prescribed time.
• Opined that, it is upon the Respondent to decide whether the director of the Petitioner shall be still called for recording of evidence after furnishing of the documents and information by the consultant of the Petitioner.
• Held that, if any summon is issued by the Respondent, it shall indicate the purpose of issuing summon with clear 7 days notice before fixing the date for recording the statement of the Director of the Petitioner, who shall appear on the appointed date and cooperate with the Respondent in recording evidence.

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