Section 144 of GST Act: Presumption as to documents in certain cases

Explanation of CGST Section 144: Presumption as to Documents in Certain Cases

Section 144 of the Central Goods and Services Tax (CGST) Act, 2017 establishes a legal presumption regarding documents used in legal proceedings under the Act. This provision primarily benefits the prosecution by shifting the burden of proof to the accused or the concerned person.

Key Provisions of Section 144

1. Applicability of the Presumption
   The section applies to any document that:
   • (i) is produced by any person under the CGST Act or any other law in force.
   • (ii) has been seized from a person’s custody or control under the CGST Act or any other law.
   • (iii) has been received from outside India during any proceedings under the CGST Act or any other law.
2. Legal Presumption in Favor of the Prosecution
   When such a document is presented as evidence against a person (or jointly tried persons), the court shall presume:
   • Truth of the contents of the document unless the contrary is proven.
   • Authenticity of signatures and handwriting: The court assumes that the signature and writing in the document belong to the person who purportedly signed or wrote it.
   • Execution and attestation of the document: If the document is meant to be executed or attested, it is presumed that it was done by the concerned person.
3. Admissibility of Unstamped Documents
   Even if a document is not duly stamped, it will still be admissible as evidence if otherwise legally admissible. This ensures that procedural deficiencies do not prevent evidence from being considered.

Purpose of Section 144

• Strengthens enforcement by facilitating the admissibility of documents in tax-related legal proceedings.
• Reduces the chances of accused parties denying authenticity without strong counter-evidence.
• Ensures that documents seized, produced, or obtained from outside India are treated as valid unless proven otherwise.

Impact on Taxpayers and Businesses

• Taxpayers must maintain accurate records, as documents produced or seized can be presumed to be correct unless challenged effectively.
• In case of litigation, a strong defense with counter-evidence is necessary to refute the presumptions under this section.

Example to Illustrate CGST Section 144

Scenario:

A business, XYZ Pvt. Ltd., is under investigation for alleged tax evasion under the CGST Act. During the investigation:

1. Documents Produced Voluntarily:
   • The company submits sales invoices and financial records to the tax authorities.
   • Under Section 144, these documents are presumed to be true unless XYZ Pvt. Ltd. proves otherwise.
2. Documents Seized from the Office:
   • The authorities raid the office and seize handwritten records of cash sales showing unreported revenue.
   • The court will presume that the handwriting belongs to the concerned employee or owner unless they provide evidence to refute it.
3. Documents Received from Outside India:
   • The tax department receives bank statements from a foreign bank indicating hidden offshore transactions.
   • These documents will be admitted as evidence, and the court will assume their authenticity unless proven otherwise.

Legal Impact:

• The burden is on XYZ Pvt. Ltd. to prove that these documents are incorrect, forged, or misinterpreted.
• Even if some of these documents are unstamped, they will still be admissible in court.

How Can XYZ Pvt. Ltd. Defend Itself?

• By proving that the records are inaccurate or manipulated (e.g., through forensic audits).
• By challenging the authenticity of signatures or handwriting (e.g., via handwriting experts).
• By providing alternative explanations for the transactions in the foreign bank.