ASSESSMENT UNDER GST

TYPES OF ASSESSMENT

• Self Assessment (Section 59)
• Provisional Assessment (Section 60)
• Scrutiny of Returns (Section 61)
• Best Judgment Assessment
• Assessment of non-filers of returns (Section 62)
• Assessment of unregistered persons (Section 63)
• Summary assessment (Section 64)
• Audit by Tax Authorities (Section 65)
• Special Audit (Section 66)

Self Assessment (Section 59)
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 i.e GSTR
Provisional Assessment (Section 60)
(1) Subject to the provisions of sub-section (2), where the taxable person is unable to determine the value of goods or services or both or determine the rate of tax applicable thereto, he may request the proper officer in writing giving reasons for payment of tax on a provisional basis and the proper officer shall pass an order, within a period not later than ninety days from the date of receipt of such request, allowing payment of tax on provisional basis at such rate or on such value as may be specified by him.
(2) The payment of tax on provisional basis may be allowed, if the taxable person executes a bond in such form as may be prescribed, and with such surety or security as the proper officer may deem fit, binding the taxable person for payment of the difference between the amount of tax as may be finally assessed and the amount of tax provisionally assessed.
(3) The proper officer shall, within a period not exceeding six months from the date of the communication of the order issued under subsection (1), pass the final assessment order after taking into account such information as may be required for finalizing the assessment: Provided that the period specified in this sub-section may, on sufficient cause being shown and for reasons to be recorded in writing, be extended by the Joint Commissioner or Additional Commissioner for a further period not exceeding six months and by the Commissioner for such further period not exceeding four years.
(4) The registered person shall be liable to pay interest on any tax payable on the supply of goods or services or both under provisional assessment but not paid on the due date specified under sub-section (7) of section 39 or the rules made thereunder, at the rate specified under sub-section (1) of section 50, from the first day after the due date of payment of tax in respect of the said supply of goods or services or both till the date of actual payment, whether such amount is paid before or after the issuance of order for final assessment.
(5) Where the registered person is entitled to a refund consequent to the order of final assessment under sub-section (3), subject to the provisions of sub-section (8) of section 54, interest shall be paid on such refund as provided in section 56.

Scrutiny of Returns (Section 61)
(1) The proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto.
(2) In case the explanation is found acceptable, the registered person shall be informed accordingly and no further action shall be taken in this regard.
(3) In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the registered person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper officer may initiate appropriate action including those under section 65 (Audit by Tax Authority) or section 66 (Special Audit) or section 67 (Inspection, Search & Seizure), or proceed to determine the tax and other dues under section 73 or section74.

Assessment of non-filers of returns (Section 62)
(1) Notwithstanding anything to the contrary contained in section 73 or section 74, where a registered person fails to furnish the return under section 39 (GSTR 3B) or section 45 (Final Return), even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person 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 specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.
(2) Where the registered person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub- section (1) of section 50 or for payment of late fee under section 47 shall continue.

Assessment of unregistered persons (Section 63)
Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable person fails to obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2) of section 29 but who was liable to pay tax, the proper officer may 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:

Provided that no such assessment order shall be passed without giving the person an opportunity of being heard.

Summary assessment (Section 64)
(1) The proper officer may, on any evidence showing a tax liability of a person coming to his notice, with the previous permission of Additional Commissioner or Joint Commissioner, 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: Provided that where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be assessed and liable to pay tax and any other amount due under this section.
(2) On an application made by the taxable person within thirty days from the date of receipt of order passed under sub-section (1) or on his own motion, if the Additional Commissioner or Joint Commissioner considers that such order is erroneous, he may withdraw such order and follow the procedure laid down in section 73 or section 74.

Audit by Tax Authorities (Section 65)

(1) The Commissioner or any officer authorized by him, by way of a general or a specific order, may undertake audit of any registered person for such
period, at such frequency and in such manner as may be prescribed under Rule 101(1) of CGST Act.
(2) The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office.
(3) The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.
(4) The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of the audit:

Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months.

Explanation. For the purposes of this sub- section, the expression commencement ofaudit shall mean the date on which the records and other documents, called for by the taxauthorities, are made available by the registered person or the actual institution of audit at theplace of business, whichever is later.
(5) During the course of audit, the authorized officer may require the registered person,
(i) to afford him the necessary facility to verify the books of account or other documents as he may require;
(ii) to furnish such information as he may require and render assistance for timely completion of the audit.
(6) On conclusion of audit, the proper officer shall, within thirty days, inform the registered person,whose records are audited, about the findings, hisrights and obligations and the reasons for such findings.
(7) Where the audit conducted under sub-section (1) results in detection of tax not paid or short
paid or erroneously refunded, or input tax credit wrongly availed or utilized, the proper officer may initiate action under section 73 or section 74.

Special Audit (Section 66)
(1) If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner.
(2) The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified by him to the said Assistant Commissioner mentioning therein such other particulars as may be specified: Provided that the Assistant Commissioner may, on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of ninety days.
(3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force.
(4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under subsection (1) which is proposed to be used in any proceedings against him under this Act or the rules made thereunder.
(5) The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final.
(6) Where the special audit conducted under subsection (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74.

Telangana High Court Judgment Case Name: - Golden Mesh Industries V/s ACST {Appeal No WP No 7789/2021 dated 31/03/2021}
The Hon’ble Telangana High Court in W.P. No. 7789 of 2021 dated March 31, 2021 held as under:

• Observed that, there is no principle on which Impugned order passed by the Respondent by multiplying 3 times the monthly average SGST tax, and adopting it as a basis for assessing the Petitioner to tax for the month of November, 2018. Further observed that, 100% penalty has been levied on the Petitioner without indicating the provision of law.
• Held that, the Impugned order appears to be prima facie arbitrary and contrary to the provisions of the CGST Act.
• Set aside the Impugned order passed by the Respondent. Further, set aside the consequential attachment orders/garnishee orders issued by the Respondent and its officials.

Remanded back the matter to the Respondent and directed the Respondent to issue notice to the Petitioner indicating the method of assessment under the best judgment assessment provision contained in Section 62 of the CGST Act and pass a reasoned order both with regard to levy of tax but also with regard to interest and penalty afresh within 8 weeks.

Patna High Court Judgment

National Enterprises V/S Union of India {Appeal No 12233 of 2021 dated 30/07/2021}

Having heard learned counsel for the parties as also perused the record made available, we are of the considered view that this Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. HC quashed and set aside the impugned order.

Author View

In my view some of the above provisions of the Act are in favor of the Taxpayer such as Self Assessment (Section 59) in which he has to determine own his own the tax liability which he discloses in his GSTR 3B if he discloses all his liabilities correctly in GSTR 3B then there will be no need of further proceedings and further initiation of the Sections 61-66 as they all are initiated only after we didn’t disclose our liabilities correctly. One of the harsh Section is Section 65 (Audit by Tax Authorities) which is not in favor of the Taxpayer in this Proper Officer can do whatever as he has reasons to believe that the Taxpayer has evaded tax or taken erroneously Input Tax Credit then he can initiate the proceedings under Section 73 or 74.

DISCLAIMER

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