Assessment under GST Act

Section 2(11) of the CGST Act defines assessment as the determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment.

Types of Assessment under GST

The different types of assessment under GST are as under:

• Section-59 – Self-assessment of taxes payable
• Section-60 – Provisional assessment
• Section-61 – Scrutiny of tax returns filed by registered taxable persons
• Section-62 – Assessment of registered taxable person who has failed to file the tax returns
• Section-63 – Assessment of unregistered persons
• Section-64 – Summary assessment in certain special cases

Section 59 – Self Assessment

The taxable person is required to pay tax on the basis of self-assessment done by himself. Hence, all GST return filings are based on self-assessment by the taxpayer.

In this regard, a provision of Section 59 of the GST Act is reproduced hereunder:

“Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.”

Section 60 – Provisional Assessment

• Provisional assessment can be conducted for a taxable person when the taxpayer is unable to determine the value of goods or services or both or determine the rate of tax applicable thereto.

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Procedure for Provisional Assessment

Step-1: The taxable person has to give, the concerned GST officer, a request for provisional assessment in writing.

Step-2: The GST officer on reviewing the application, will pass an order, within a period not later than ninety days from the date of receipt of the request, allowing payment of tax on a provisional basis or at a GST rate or on such value as specified by him.

Step-3: The taxable person, who is making payment on a provisional basis, has to issue a bond with security promising to pay the difference between the provisionally assessed tax and final assessed tax.

Step-4: The GST officer will pass the final assessment, with a period not exceeding six months from the date of communication of the order of provisional payment.

Interest Payable for Provisional Assessment

• In case, after the final assessment, the tax is held payable i.e. taxable person is held liable to pay more tax than the tax paid at the time of provisional assessment, in such case, the taxable person will be liable to pay interest on such tax payment. Interest would be calculated from the actual due date of tax (please note original due date should be considered and not the provisional tax payment date) till the date of actual payment of tax. The interest calculation position will remain the same, even if the payment of tax is done before or after the final assessment.

Refund under Provisional Assessment

• In case of refund, interest will be paid on such refund as provided under section 56.

The time period for final assessment

• Final assessment will be carried out within six months of the provisional assessment. This can be extended by the Additional/Joint Commissioner for a period of six months. The Commissioner will, however, extend it for a further four years if he seems appropriate.

Interest on additional taxes payable and refunds

• The taxpayer would have to pay interest on any tax owed on the basis of a provisional assessment that has not been paid by the due date. The interest period shall be determined from the date on which the tax was first paid on the goods/services (not the provisional assessment date) to the actual payment date, irrespective of whether the payment was made before or after the final assessment. The interest rate would be a max of 18%.
• If the tax as per the final assessment is less than the provisional assessment, the taxable individual shall be reimbursed. He’s still going to get money on the refund.
• The interest rate would be a maximum of 6%.

_{Section 61 – Scrutiny Assessment}

GST Officers can scrutinize a GST return and related particulars furnished by the registered person to verify the correctness of the return. This is called a scrutiny assessment. In case there is any discrepancies noticed by the officer, he/she would inform the same to the registered person and seek his explanation on the same. On the basis of the explanation received from the registered person, the officer can take the following action:

• If the explanation provided is satisfactory, the officer will inform about the same to the registered person and no further action will be taken in this regard.
• If the explanation provided is not satisfactory or the registered person has failed to take corrective measures after accepting the discrepancies, the proper officer will initiate appropriate action like conducting an audit of the registered person, conducting a special audit, inspect and search the place of business of the registered person, or initiate demand and recovery provisions.

Section 62 – Failure to File GST Return – Best Judgement Assessment

• When a registered person fails to furnish the required returns, even after service of notice under Section 46 an assessment would be conducted by the GST Officer. In such cases, the GST officer would proceed to assess the tax liability of the taxpayer to the best of his judgment taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date for furnishing of the annual return for the financial year to which the tax not paid relates.
• On receipt of the said assessment order, if the registered person furnishes a valid return within a period of 30 days from the date of issuance of the assessment order, then in such case, the assessment order would be deemed to have withdrawn. However, the registered person will be liable to pay interest under Section 50 (1) and/or liable to pay a late fee under Section 47.

Section 63 – Assessment of Unregistered Person – Best Judgement

When a taxable person fails to obtain GST registration even though liable to do so or whose registration has been canceled under section 29 (2) but who was liable to pay tax, the GST officer can proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.

PRESUMPTIONS IN BEST JUDGEMENT ASSESSMENT IS NOT AN ARBITARY POWER

Section 64 – Summary Assessment

A GST Officer can on any evidence showing a tax liability of a person coming to his notice, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue. In order to undertake assessment under section 64, the proper officer is required to obtain previous permission of an additional commissioner or joint commissioner. Such an assessment is called a summary assessment.

The Honourable Bombay High Court stayed provisionally attached to bank accounts noting the assessee’s cooperation

Hon’ble Bombay High Court in case of AJE India Private Limited v. UOI & Ors. has stayed the order wherein assessee’s bank accounts were provisionally attached for recovering alleged tax dues and held that merely because there is a proceeding U/s 67 of the CGST Act, 2017. it would not mean that recourse to such a drastic power as given U/s 83 of the Central Goods and Services Tax Act 2017 would be an automatic consequence, more so when Petitioner has cooperated with the investigation process. [Writ Petition (ST.) No. 97165 of 2020 decided on 22 December 2020]

The Honourable Gujarat High Court Grants regular bail to assessee arrested for offenses punishable U/s 132(1)(a) of the Central Goods and Services Tax Act 2017

Honourable Gujarat High Court in the case of Idrish Yusufbhai Malvasi v. State of Gujarat & Ors. to grant a periodic bail to the MD of M/s. Mischat Agro Industries Pvt. Ltd., who was arrested primarily on charges of wrongfully availing of tax exemption by misapplying & misinterpreting the notifications of exemption issued by the Dept by actually using the company’s brand name and by willingly trying to suppress the facts. [R/Criminal error. Application No. 18320 of 2020 decided on December 10, 2020]

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