In our earlier update, we discussed about the importance of panchnama in the investigation proceedings. In the present update, we will discuss another important document, i.e. statement taken during the course of investigation proceedings and the situations wherein the said statement cannot be considered as sufficient evidence in particular case.
At the outset, we submit that statement is nothing but the document containing the details of reply given by the concerned person of the organization to the questions raised by the investigating officer. Statements are taken not only of the authorized persons of the organization but also of the persons indirectly associated with the organization such as transporters, buyers etc. One of the most important point that needs consideration is that the statement should have been taken without any coercion, duress or pressure. It has been held by Courts in number of cases that confessional statements cannot be held as having evidentiary value if it has been proved that the said statement were being taken under threat or pressure by the investigating officer. In such a case, the only recourse available with the person who has given the statement is to retract it immediately or within reasonable time. The term reasonable time is to be understood in genuine parlance and it has been held by the Courts that retraction made after one month is not reasonable. Hence, the courts do examine the reasonableness of retraction and so it is advised that if any statement has been taken under pressure or influence, the same should be retracted within 1-2 days so as to pass the test of reasonable time within which it is retracted. In this context, reference may be made to the decision pronounced by Hon’ble Rajasthan High Court in the case of ACTO, ANTI-EVASION-I, ALWAR VERSUS KHANDELWAL FOOD PRODUCTS [2018 (8) G.S.T.L. 112 (RAJ.)] wherein it was held that retraction of confessional statement after long gap is not acceptable as if something wrong happened in survey proceedings, the onus is on the assessee to bring to the notice of revenue authorities.
It is also a settled principle of law that charges or allegations cannot be proved against anyone solely on the basis of confessional statements or statements of third parties connected with the organization and the onus is with the investigating authorities to corroborate their charges or allegations with sufficient and appropriate other documentary evidences other than statements. It is pertinent to refer to the decision given by Hon’ble Delhi Tribunal in the case of COMMISSIONER OF C.EX., INDORE VERSUS PRAG PENTACHEM PVT. LTD. [2018 (360) E.L.T. 1025 (TRI.-DEL)] wherein it was held that statements of various third parties cannot be made the sole basis to deny credit to the recipient on the grounds of bogus transaction if there is no corroborative evidence that credit was availed without receipt of inputs. It is also submitted that in case investigating authority places reliance on the statements tendered by third parties such as transporters, buyers, the assessee has right to cross examine the said third parties. It has been held by various Courts that the request of cross examination is to be considered while finalizing the investigation proceedings against any assessee. To quote, reference may be made to the decision given by the Hon’ble Rajasthan High Court in the case of SHREE PARVATI METALS VERSUS UNION OF INDIA [2018 (11) G.S.T.L. 137 (RAJ)] wherein it was held that cross examination is right of assessee and the same should be granted. Similar view was taken by the Hon’ble Delhi High Court in the case of KRISHAN KISHORE AGGARWAL VERSUS ADDITIONAL COMMISSIONER OF CUSTOMS [2019 (366) E.L.T. 970 (DEL)] wherein it was held that denial of right of cross examination is violation of the principles of natural justice.
The provision contained in section 136 of the CGST Act, 2017 also states that a statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant for the purpose of proving in any prosecution for an offence under this Act. Hence, the principles laid down by the Courts as regards admitting statement as evidence for investigation proceedings in the erstwhile indirect tax regime will be helpful in the present GST regime also.