Department cannot issue summons to Managing Director
In the given case, department had issued summon to the Managing Director of the company in connection to import of EPCG Licenses under Section 108 of Customs Act, 1962.
Being aggrieved by the action of the department, the taxpayer has filed Writ before the Hon'ble Gauhati High Court for providing the alternative of it being issued to an authorised representative.
Petitioner Contention: -
The petitioner contended that the action of the department to issue summon to the Managing Director is not valid as he is cooperating and his presence is not required for the investigation without providing an alternative option wherein summon can be attended by an authorised representative.
Petitioner further explained the relevant circular bearing C.B.E & C Letter F. No. 208/122/89-CX.6 dated 13.10.1989 issued by the Central Board of Excise and Customs, which provides that summon cannot be issued to the Managing Director if he is cooperating and his presence is not required for the investigation. The relevant portion of circular is extracted below:-
"Complain have been received from the trade that in some of the Collectorates summon Section 14 of the Central Excise & Act, 1944 are being issued to the managing directors & other high officers with a view to enforce recovery of dues which are under dispute. Action under this Section is to be taken only as a last resort in cases where assesses are not cooperating or investigations are to be completed expeditiously. This Section should not be issued for harassing the top management for forcing them to pay up demands which are disputed by them. For recovery of demands normal procedure under the law should be followed. If any instance of issue of summons to Managing Directors without justification is noticed, a serious view will be taken by the board. Collectors will be held personally responsible for enforcing these instructions in their charges."
Hon'ble High Court held that summon cannot be issued to the Managing Director if he is cooperating and his presence is not required for the investigation for any reason.
It was held that if summon is issued to the Managing Director of the company then such summon can be attended by an authorised representative of the company.
In the case of Suresh Balakrishna Jajra vs Union of India, Hon'ble Rajasthan High Court held that as per Section 116 of CGST Act 2017 authorised representative cannot attend summon on behalf of the Directors of a company.
As per Section 116 of CGST Act, any person who is entitled or required to appear before an officer appointed under this Act or the Appellate Authority or the Appellate Tribunal with connection with any proceedings under this Act, may, otherwise than when required under this Act to appear personally for examination on oath or affirmation, subject to the other provisions of this section, appear by an authorised representative.