1. Under Scheme of CGST act, persons who are to liable for registration requires to obtain registration. Every registered person, has to determine his tax liability by making self-assessment, and after making of payment of tax, is required to furnish correct and complete prescribed returns, as per provisions of the act and rules. Correctness and completeness of such returns will examined by the proper officer, by way of scrutiny of returns, audit survey and other proceeding and short payment of taxes if any is recovered from the registered person, by passing such adjudication order under the provisions of the act. These are important stages in the implementation of the act. In this background, furnishing of prescribed returns is key factor. Under the GST act main thrust is on self compliance by taxpayers. Therefore, separate section 59 inserted in the act for self assessment by registered persons. Accordingly, every register person has required made to self assess the tax payable and to furnish prescribed valid returns for each tax period within prescribed time limit. Various provisions has been inserted in the act, to compel defaulting registered person to furnish valid returns. One of the provision is to make unilateral assessment of return defaulting person.
DEFINITION OF ASSESSMENT
2. As per section 2 (11) of the act, assessment means determination of tax liability under the act and it includes self assessment, reassessment, provisional assessment, summary assessment and best judgment assessment.
ASSESSMENT OF NON FILERS OF RETURNS
3. It is provided in section 62 rule 100 that, where a registered person fails to furnish a return under section 39 or section 45, a notice in FORM GSTR-3A shall be issued, electronically requiring him to furnish such return within fifteen days. If within 15 days the returns are not furnished, the proper officer will make an order of assessment and it shall be issued electronically in FORM GST ASMT-13. This order of assessment shall be made by the proper officer 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. If the registered person furnishes a valid return within thirty days of the service of FORM GST ASMT-13, 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.
PERSONS COVERED SECTON 62
4. Registered persons who have failed to furnish valid returns for a tax period, within 15 days from receipt of notice u/s 46 ( GSTR -3A ), are covered within ambit of this section. Accordingly, proper officer may pass unilateral assessment. Passing of assessment order under this section is discretionary. It is not mandatory to pass such order in each and every case.
OPPORTUNITY OF HEARING
5. This section does not provide for any opportunity to the registered person to produce books of accounts or of hearing heard, before passing of assessment order, considering intent and purpose. However, he get one opportunity by way of notice issued u/s 46,to furnish returns of the defaulted tax period. After receipt of his notice, it is clear that if return are not filed within 15 days, Proper Officer may proceed to assess to the best of his judgment. Moreover, defaulted person has an option to furnish returns within 30 days to get cancel the assessment order.
BASIS FOR ASSESSMENT
6. This is unilateral assessment. As per provision, while making assessment Proper Officer must take in to account all available relevant material or material gathered and pass assessment order to the best of his judgment.This may includes E way bill data,returns, assessment or audit record of previous or next period if available. Best judgment assessment is not defined in the act.It suggest that it must not be arbitrarily. There must be basis for determination of turnover.
TIME LIMIT TO PASS ASSESSMENT ORDER
7. As per section 62 (1) of the act, proper may pass assessment order within five years from the due date of furnishing of annual return for the financial year to which tax not paid relates. He can pass such order at any time after noticing return default even after giving notice u/ 46 of the act.
8. In the case of M/S Amani Machine vs State Tax Officer Hon Kerala High Court WP no 2757of 2020 decided on 30-07-2020, petitioner has contended that assessment u/s 62 can not be completed before due date of filing of annual return of relevant financial year.In this context Hon High Court has held that assessment under said section can be done immediately after detection of failure to file the return despite service of notice. Relevant observation reproduced hereunder
9. I find it difficult to accept the proposition canvassed by the learned counsel for the petitioner, with reference to Section 62 r/w Section 44 of the Act. In my view, the reference to Section 44 of the Act, in Section 62, is only for the purpose of determining the five year period within which the assessing officer has to complete the best judgment assessment. It does not, in my view, mandate that the steps for completing the best judgment assessment should be initiated only after 31st December, following the end of the financial year, in which the default as regards filing of monthly returns occured. In other words, Section 62 of the Act must be seen as enabling an Assessing Officer to proceed to assess the tax liability of a person, who has not furnished the returns inter alia under Section 39, even after service of notice under Section 46, on best judgment basis, and thereafter issue the assessment order within a period of five years from the date indicated under Section 44 for furnishing of the annual returns. Hence, while the best judgment assessment can be done immediately after detection of the failure to file the returns despite service of notice, the outer time limit for completing the best judgment assessment is five years from the date specified under Section 44 of the Act. The time limit of five years indicated in S. 62 (i) has to be seen as the outer limit prescribed by the statute for the exercise of power by the assessing authority, and not as indicative of any particular point in time from when, after detection of the default committed by the assessee, the assessing authority can proceed to complete the assessment on best judgment basis.
DEEMED WITHDRAWL OF ASSESSMENT ORDER
10. If registered person furnished valid return within 30 days from the date of service of assessment order, then such assessment order shall be deemed to be withdrawn and it will be cancelled automatically. There is no need to file any application or intimation for withdrawn of order.
EXTENSION IN TIME LIMIT OF 30 DAY / CONDONATION OF DELAY
11. It is pertinent to note that person should file the return of defaulted period within 30 days from the date of receipt of order, to get benefit of cancellation of such order.There is no provision in the act, to extend such time limit of 30 days or condone the delay for any reason. So it is very important to adhere this time limit. This issue was involved before Hon Kerala High Court in the case of M/S Bridge Hyegiene services Vs State Tax Officer, W P No 25066 of 2019 decided on 23-09-2019. Hon High Court has held this time limit can not be extended. Relevant para is reproduced.
12. In my view, the statutory prescription of 30 days from the date of receipt of the assessment order passed under sub section (1) of Section 62 has to be strictly construed against an assesse and in favour of the revenue, since this is a provision in a taxing statute that enables an assessee to get an order passed against him on best judgment basis set aside. The provision must be interpreted in the same manner as an exemption provision in a taxing statute. This Court may not be justified in granting an extension of the period contemplated under sub section (2) of Section 62, so as to enable the assessee to file a return beyond the said period for the purposes of getting the benefit of withdrawal of an assessment order passed on best judgment basis under Section 62(1) of the GST Act. Under such circumstances I find that the prayer sought for in the writ petition cannot be granted. The writ petition therefore fails, and is accordingly dismissed.
13. For the effective implementation of GST act, timely filing of valid returns by the registered person by making correct self assessment has great importance. This is the main reason behind this provision. If registered person failed to make self assessment then Proper Officer assumed jurisdiction u/ s 62 of the act, to pass best judgment assessment to recover tax involved in such tax period. Even after completion of such assessment, if failed to furnish valid return within 30 days, then aggrieved registered person can file first appeal under section 107 of the act within three months from date of receipt of order. In order avoid such further litigation it is better to furnish prescribed returns within prescribed time limit.
(Author M M Kanadje is Retired Joint Commissioner of State Tax, Pune)