Assessment under GST | Section 59 to 64 | CGST Act, 2017

Simplified GST Series – Section 59-64/CGST ACT 2017/Assessment- Article explains Section 59- Self Assessment,  Section 60- Provisional Assessment, Section 61- Scrutiny of Returns, Section 62- Assessment of non-filers of returns, Section 63-Assessment of unregistered persons and Section 64- Summary assessment in certain special cases.

Section 59- Self Assessment

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

Analysis– Self-assessment means an assessment by the registered person himself and not an assessment conducted or carried out by the Proper Officer. Every registered person would be required to assess his tax dues in accordance with the provisions of GST Act and report the basis of calculation of tax dues to the tax administrators, by filing periodic tax returns. In terms of Section 39(9), if a registered person discovers any omission or incorrect particulars furnished in a return, he is required to rectify such omission or incorrect particulars in the return to be furnished for the tax period during which such omission or incorrect particulars are noticed on payment of due interest.

Section 60- Provisional Assessment

(1) Subject to the provision 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.

Analysis- Provisional assessment can be resorted to-

1. When a taxable person is unable to determine the Value of goods or services

2. Rate of tax applicable on the supply cannot be determined by the taxable person

• The facility of provisional assessment is available only in the cases of Valuation and determination of rate of tax. The provisions of this section cannot be extended for any other purposes or subject matter.

(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 sub-Section (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/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 subsection (7) of section 39 or the rules made there under, 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. 

Analysis – Procedure of Provisional Assessment explained as follows-

1. Application by the registered person along with the necessary supporting documents in FORM GST ASMT-01, electronically through the common portal.

2. The proper officer will thereafter issue a notice in FORM GST ASMT-02. As per ASMT-2, reply is required to be given within 15 days to the registered person and if required seek additional information or documents.

3. The applicant is required to file his objections / make submissions in FORM GST ASMT – 03.

4. The proper officer must issue an order in FORM GST ASMT-04, by allowing payment of tax on provisional basis, indicating the value or rate or both on the basis of which assessment is allowed on a provisional basis. He cannot reject the application.

5. The order so passed should also indicate the amount for which bond has to be executed in Form GST ASMT – 05 by the applicant. The security has to be furnished in the form of bank guarantee not exceeding 25% of the bond ‘amount’ which shall include IGST, CGST, SGST or UTGST and cess (if any) payable in respect of the transaction

6. The proper officer by issue of a notice in FORM GST ASMT-06 will call for information and records required for finalization of assessment.

7. A final assessment order shall be passed by the proper officer in FORM GST ASMT-07, specifying the amount payable or refundable to the registered person within a period of 6 months from the date of communication of provisional assessment order.

Interest Liability–  If the amount of tax determined to be payable under final assessment order, is more than the tax which is already paid along with the return filed in terms of section 39, the registered person shall be liable to pay interest on the shortfall, at the rates specified in Section 50(1) of the Act [i.e. @18%], from the first day after due date of payment of tax in respect of the said goods and /or services or both, till the date of actual payment, irrespective of whether such shortfall is paid before or after the issuance of order for final assessment.

Likewise, when the registered person is entitled to refund consequent upon the order for final assessment, interest shall be paid on such refund at the rates specified in proviso to Section 56 @ 9% because refund is arising out of order of adjudicating authority.

Release of Security consequent to Finalization-On conclusion of the final assessment order the applicant can file an application under Rule 98(6) in FORM GST ASMT- 08 for release of security furnished.

Section 61- Scrutiny of Returns

(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 taxable 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 or Section 66 or Section 67, or proceed to determine the tax and other dues under Section 73 or Section 74.

 Analysis-Section 61 deals with the powers vested in the proper officer to scrutinize the returns filed by registered persons with a view to verifying the correctness of the return. Scrutiny of returns means-

• Scrutiny of which ‘returns’– Only GSTR-1/GSTR-3B as once GSTR 9 or 9A has been filed, no further scrutiny of the underlying returns (say, GSTR 1/3B) can be taken up.
• Proper Officer – only the Proper Officer under whose jurisdiction taxpayer is registered and filing returns is authorized to scrutinize returns.
• Discrepancy – is an inconsistency or inaccuracy which is a very important requirement to invoke section 61 that the Proper Officer must ‘discover’ from within the returns itself.

Discrepancy is a ‘lack of compatibility’ arising from within the returns and not from any external source of additional information

• Now a taxpayer has three ways to respond-

1. Admission and rectification.

2. Non-Admission

3. Admission but inaction by Taxpayer 

In case of non –admission and no action by taxpayer-Proper Officer is welcome to then invoke –

a. Initiate departmental audit as per section 65 of the Act; or

b. Initiate Special Audit as per section 66

c. Initiate inspection, search and seizure as per section 67 of the Act

d. Issue show cause notice u/s 73 & 74 of the CGST Act. 

Section 62- Assessment of non-filers of returns 

(1) Notwithstanding anything to the contrary contained in section 73 or section 74,where a registered taxable person fails to furnish the return under Section 39 or Section 45, 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 judgement 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 the payment of late fee under section 47 shall continue. 

Analysis-The provisions of section 62 can be invoked only in case of registered taxable persons who have failed to file returns, as required, under section 39 or as the case may be, or final return on cancellation of registration under section 45 of the Act. Section 62 cannot be invoked for non-filing GSTR-1, GSTR-2 and GSTR-9. In other words, non-filing of GSTR 3 (or 3B) and GSTR 10 (final return) will attract best judgement assessment.

• Non-compliance with the notice issued under Section 46 paves the way for initiating the proceedings under this section.
• If the assessee fails to furnish the return within 15 days of issue of notice under section 46 then the Proper Officer may assess the tax liability in accordance with the provisions of Rule 100 i.e. to the best of his judgment, taking into account all the relevant material available on record, and issue an assessment order. This is also known as ‘best judgment assessment.
• Order under section 62 must be issued within a period of five years from the date specified under section 44 for furnishing annual return for the financial year to which the tax not paid relates. Section 44(1) states that due date for furnishing the annual return is on or before 31st December following the end of financial year to which such annual return pertains.
• If, however, a registered person furnishes a ‘valid return’ within 30 days of the service of assessment order, the said assessment order shall be ‘deemed to be withdrawn’. Liability to pay interest and late fees as per Section 50 and Section 47 continue to be levied.
• Also whenever the provision of section 73 or 74 applies, the provisions of section 62 of the Act cannot be invoked.
• An order passed under this section shall be communicated to the registered person in FORM GST- ASMT 13.

Section 63-Assessment of unregistered persons

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 judgement 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.

 Analysis-The provisions of section 63 of the Act cannot be invoked whenever the provision of section 73 or 74 applies.

• This Section is applicable to unregistered persons i.e., persons who are liable to obtain registration under Section 22 and have failed to obtain registration, will come within scope of operation of this Section. This provision also covers cases where registration was cancelled under section 29(2).There are five instances where registration cancelled u/s 29(2)-

(a) A person who contravenes the provisions of this Act or Rules made there under; or

(b) A composition person who fails to furnish returns for 3 consecutive tax periods; or

(c) A person other than composition person who fails to furnish returns for 6 consecutive months or

(d) A person who has sought voluntary registration but has failed to commence business within 6 months; or

(e) Where registration has been obtained by way of fraud, willful misstatement or suppression of facts. 

• This Section applies to taxable person means all ingredients to establish a person to constitute ‘taxable person’ as per 2(107) must be satisfied.
• Fails to obtain registration– means being conscious of the requirement to obtain registration still not registered.
• Registration cancelled but liable to pay tax -It is not taxable persons responsibility if Proper Officers decides to cancel registration (in the five circumstances mentioned in Section 29(2)) and then proceeds to invoke jurisdiction under section 63 to pass a best judgement order without issuing SCN.
• For assessment under this section, notice has to be issued as per Rule 100(2) in FORM GST ASMT-14 by the proper officer. The notice would contain the reasons / grounds on which the assessment is proposed to be made on best judgment basis. The registered person is allowed a time period of 15 days to furnish his reply, if any. After considering the said explanation, the order has to be passed in FORM GST ASMT- 15.

Section 64- Summary assessment in certain special cases

(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/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 any 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 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.

Analysis- -. In the GST Act, ‘’ Summary Assessment’’- Those assessments which are completed ex-parte and on priority basis when there is reason to believe that there will be loss of tax revenue, if such assessment is delayed.  

• The Proper Officer must have evidence that there may be a tax liability.
• The Proper Officer has obtained prior permission of Additional / Joint Commissioner to assess the tax liability summarily. The proper officer must have sufficient ground to believe that any delay in passing assessment order would result in loss of revenue.
• Summary assessment where there are sufficient grounds to believe that taxable person will fail to make payment of any tax, penalty or interest, if the assessment is not completed immediately
• The section allows the person who is assessed and is served with the order so passed, to come forward and make an application in accordance with Rule 100(4) in FORM GST ASMT–17 to the Additional / Joint Commissioner, who will examine the same and if the Additional/ Joint Commissioner is satisfied, the summary assessment order may be withdrawn.
• Besides, the Additional / Joint Commissioner may, on his own motion, withdraw such order and follow the procedure laid down in Section 73 or as the case may be Section 74 for determination of taxes not paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised if he considers that such order is erroneous.
• On receipt of application the proper officer has to pass the order of withdrawal or, rejection of the application in accordance with Rule 100(5) in FORM GST ASMT-18.

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