Why Chartered Accountants Cannot Be Treated as Accused in GST Investigations

Chartered Accountants (CAs) play an indispensable role in ensuring seamless tax compliance for businesses. Yet, rising incidents during GST investigations reveal a troubling pattern: CAs are increasingly being subjected to intimidation, undue pressure, and unlawful demands. A critical representation dated 12 November 2025 by the Chartered Accountants Association, Surat (CAAS), bearing reference CAAS/Representations/2025-26/07, highlights an alarming episode where a CA was coerced by a GST officer to sign GSTR-2B and GSTR-3B in a format mimicking an audit report. The officer reportedly threatened seizure of professional equipment despite issuing no written summons.

This instance underscores the urgency of establishing clear professional boundaries and preventing investigators from misusing authority. Below is an optimized, comprehensive analysis of the legal, ethical, and procedural safeguards that protect CAs from being wrongly implicated.

1. The Core Issue: Unlawful Officer Overreach in GST Investigations

The CAAS representation documents how the officer verbally summoned the CA at 5:00 PM and subjected him to prolonged questioning—violating Section 70 of the CGST Act, which mandates written summons before appearance. Such intimidation tactics undermine due process and disregard provisions under:

Section 67 – governing inspection and search
Section 143(10) – restricting unauthorized audit-like demands

CAAS firmly asserts that CAs must not be mistaken as “soft targets” during probes. Misusing their professional role demoralizes compliance facilitators and compromises the integrity of GST investigations.

2. The CA’s Actual Role – What Was Done (and Not Done)

As clarified by CAAS, the CA’s engagement was limited to routine compliance:

Preparing and filing Income Tax Returns
Filing GST Returns for a specified period
Acting strictly on data provided orally by the client

The CA was not involved in:

Verification of transactions
Business decisions
Operational or financial oversight
Due diligence or audit-related functions

This aligns with ICAI’s guidance and Section 35 of the CGST Act, which restricts the CA’s role to filing and data compilation unless formally appointed for audit. Therefore, equating a CA with an accused in absence of evidence or intent is legally untenable.

3. Supreme Court Precedent: The K. Murali Krishna Judgment

CAAS relies on the landmark ruling in K. Murali Krishna vs. Deputy Director, Directorate of Enforcement (March 18, 2024), where the Supreme Court held: “A Chartered Accountant is not required to investigate the genuineness of underlying commercial transactions beyond the scope of engagement.”

The Court absolved the CA from PMLA prosecution, establishing that professionals performing certification or compliance tasks cannot be held vicariously liable for client misconduct unless intent or knowledge is proven. This reasoning equally applies to GST investigations under Sections 67~70.

4. Confidentiality & Professional Ethics: A Non-Negotiable Obligation

CAAS emphasizes that CAs are bound by stringent confidentiality principles:

ICAI Code of Ethics (Clause 114) — prohibits disclosure of client information without consent or legal compulsion
Chartered Accountants Act, 1949 — governs ethical obligations
Analogy with Section 126, Evidence Act — though applicable to advocates, it reinforces the standard of privileged communication

CAs are compliance facilitators, not enforcement instruments. They cannot be forced into investigative roles or compelled to divulge client data without lawful cause.

5. CAAS Advocacy: Due Process Must Prevail

The representation strongly demands:

Immediate cessation of coercive actions against the CA
Recognition of CAs as professional witnesses, not accused persons
Mandatory training for officers on ICAI rules and the professional remit of CAs
Strict adherence to written summons under Section 70

CAAS continues to champion the cause of fair, lawful, and respectful treatment of tax professionals.

6. Key Takeaways from the CAAS Representation

Confidentiality First: CAs must safeguard client data under ICAI ethics.
Check Officer Overreach: No verbal summons; written notice is mandatory.
Fair Treatment: CAs are witnesses, not accused, unless culpability is proven.
Role Clarity: CAs only file returns—they do not verify commercial transactions unless engaged.

Conclusion

The CAAS Surat representation of 12 November 2025 highlights how improper coercion during GST probes threatens both professional dignity and the lawful fabric of tax enforcement. CAs operate within defined statutory obligations and cannot be presumed complicit in client actions. Upholding judicial precedent, ethical standards, and procedural safeguards is essential to ensuring a fair, transparent, and respectful investigation environment. CAs facing similar situations should:

Document every interaction
Seek immediate ICAI guidance
Approach associations like CAAS for intervention

Strengthening these safeguards preserves trust in the compliance ecosystem and prevents misuse of power.