GST was introduced in the Country on 1st Jul., 2017 and was promised by the Government to be a Good and Simple Tax. However, we have observed that day in and day out we are being served various Notices from the department either to file the Returns or to Reconcile the differences between the Filed GSTR 1, GSTR 2A and GSTR 3B. GST practitioners have to deal with these types of Notices on a Regular Basis. Even after the announcement of Nationwide Lockdown due to the ongoing Pandemic Covid – 19, we are being served Notices of the kind mentioned above. In this article, an attempt has been made to throw some light on Assessment Procedures by the Department in case of Non Filing of GST Returns and how to deal them.
As per Section 46 of CGST Act, 2017 read with rule 68 of CGST Rules 2017, Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a Notice shall be issued requiring him to furnish such return within fifteen days in FORM GSTR 3A electronically.
Return u/s 39 is a Monthly Return under form GSTR 3B (as of now). Currently the Tax Liability for the month is discharged only by way of this Return.
Return u/s 44 is an Annual Return under Form GSTR 9. The details of Outward Supplies (include Inward supplies on which the Tax Liability is to discharged on Reverse Charge Mechanism) along with the respective Tax Liability for the Financial Year, the details of ITC availed for and during the Financial Year and the details of Tax discharged or to be discharged are reported in this Return.
Return u/s 45 is the Final Return under Form GSTR 10. The details of Inputs, Capital Goods held in stock and Tax paid in respect of them is reported in this Return.
Thus, before jumping to assessment, the officer issues a Notice in Form GSTR 3A asking the registered person to file the Returns within a certain time subject to a maximum of 15 days.
Sub section (1) to Section 62 of CGST Act, 2017 states, “Notwithstanding anything to the contrary contained in section 73 or section 74, where a registered 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 (FORM GST ASMT-13) 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”.
As per CGST Circular No. 3/3/2017 – GST dated 5th July, 2017, the Proper Officer under CGST Act, 2017 for exercising powers under Section 62(1) of CGST Act, 2017 is the Jurisdictional Superintendent of Central Tax.
As per Andhra Pradesh SGST latest Circular CCW/GST/74/2015 dated 29th Nov., 2019, the Proper Officers under AP SGST Act, 2017 for exercising powers under Section 62(1) of CGST Act, 2017 is the Jurisdictional Assistant Commissioner State Taxes (AC[ST]).
Thus, the officer is obliged to pass the order only after taking into account all the relevant material which is available or which he has gathered and not merely on the basis of rough estimates. We have observed many Notices wherein, the officer has passed the order stating that during the month of Mar., 2019, the Turnover was ₹ 14,50,000 and thus during Mar., 2020 the Turnover is ₹ 15,50,000. This sort of Assessment Order cannot be said to be a Best Judgement Assessment Order and the same may be challenged in an Appeal. The officer is obliged to gather the information from various sources such as GSTR 2A, Eway Bill Information, Information as per GSTR 1 or any other source from which he might be able to gather any other information which might aid him in assessment and pass a reasonable order in FORM GST ASMT-13 to the best of his judgement.
Subsection (1) to Section 62 of CGST Act, 2017 states, “Where the registered person furnishes a valid return within thirty days of the service of the assessment order under subsection (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”.
As per Section 2(117) of CGST Act, 2017, Valid Return means a return furnished under sub-section (1) of section 39 on which self-assessed tax has been paid in full. As due date for Filing GSTR 2 is extended, Return under Section 39(1) is to be furnished in GSTR 3B. Since GSTR 3B does not permit filing of Return before our Output Tax Liability is set off, filing of GSTR 3B will be treated as a Valid Return. Thus, where a Return is filed within 30 days of receipt of Notice, the Order is deemed to be withdrawn.
In view of the outbreak of Covid – 19, The Central Govt by way of Notifications 31/2020, 32/2020 – Central Tax provided a relief to the Tax Payers by way of Conditional Lowering of Interest Rates u/s 50 and Conditional Waiver of Late Fee u/s 47 for the Returns of Feb, Mar, Apr 2020. However, no extension of due date for furnishing the Returns were provided.
Thus, the officers exercising the power u/s 46 of CGST Act, 2017 started serving Notices in Form 3A to file the Returns within 15 days failing which order u/s 62 of CGST Act, 2017 shall be passed.
However, the Central Govt by way of Notification 35/2020 – Central Tax extended due date of Compliance by any authority or by any person which falls during the period from the 20th Mar., 2020 to 29th Jun., 2020 and where completion or compliance of such action has not been made within such time to 30th Jun., 2020 which include
(a) completion of any proceedings, or passing of any order or issuance of any Notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above.
(b) filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts stated above.
Thus, by virtue of this notification, even if the Order (GST ASMT-13) u/s 62(1) is passed, If the return is filed by 30th Jun., 2020, the said assessment order shall be deemed to have been withdrawn.
However, it is always suggested not to ignore any Notices received from the department and to always atleast reply to the Notices where the directions given in the Notice could not be complied. Thus, if any Notice u/s 46 of CGST Act, 2017 has been served to us during this period of Lockdown, it is highly suggested to atleast file a reply stating that we intend to avail the benefit of Notifications 31/2020, 32/2020 and 35/2020 and we intend to file it as per the said date. This would prevent any further action from the side of Department and even if it does, it would greatly help us in defending our case.
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