‘Self-Assessment is the first important step to all Assessments’

Introduction

Now, everyone is entering into the third successful year of GST, describing the same as a settled    phase, lets understand the coverage of Assessments under the GST laws in a simple manner.

Earlier, CBIC came out with the best relief scheme called Sabkha Vishwas (Legacy Dispute Resolution) Scheme, 2019 wherein it provided one time major benefit for liquidation of past disputes of Central Excise and Service Tax and also provided good opportunity to all the non-compliant tax payers based on the line of voluntary disclosure. The said scheme paved way for clearance of almost all long pending legacy cases which were hanging on as old baggage.

Assessments

The main reason behind the aforesaid scheme was to utilise the maximum time of all the officers towards the GST Assessments since then all the taxpayers would be completing the filing of their first annual return i.e. for FY 2017-18 which clearly acts as emerging indicator for initiating the assessments.

List of Assessments under GST

Type of Assessment Governing Section (CGST Act, 2017)
Self-Assessment Section 59
Provisional Assessment Section 60
Scrutiny Assessment Section 61
Assessment of Non-filers of returns
Section 62
Assessment of unregistered persons Section 63
Summary Assessment in special cases
Section 64

Self-Assessment under GST

This type of assessment outlines that every registered person shall make a self-assessment of his output GST payable and furnish the same in his respective monthly / annual return after discharging the aforesaid computed liability.

This can be considered as the most important assessment since the same is the base/root cause for all the assessments

Provisional Assessment under GST

This type of assessment clearly describes the action point of the taxable person where if he is unable to determine the value of goods/services/both or determine the rate of tax applicable on his transaction then such person can request the proper officer in writing detailing all the reasons for payment of tax on provisional basis.

The said provisional payment would be allowed by the officer only upon execution of bond in the prescribed format along with surety/security towards the differential ta payment that may arise due to the difference between the finally assessed tax and provisionally assessed tax.

Further, such proper officer to whom the application is filed shall pass an order with in 90 days from the date of receipt of such application by allowing the provisional payment at such rate / value as may be specified by him and within 6 months form the date of order, final assessment should be completed.

The aforesaid period may be further extended by the following officers if proper/sufficient reason exists

Power to extend first 6 Months – Joint Commissioner (JC) / Additional Commissioner

Power to extend the further period (post 6 months) upto 4 Years – Commissioner

Further, the registered person is liable to pay the interest on the delayed payment of provisional tax and he is also entitled for the refund along with interest on the excess payment made. The said excess amount could be arrived based on the difference between the outcome of the two orders namely Provisional order and Final Assessment Order.

Scrutiny Assessment under GST

This assessment triggers where there exist any discrepancies in the returns and related information furnished by the registered person as identified during the proper officer’s examination

The possible Outcomes could be in two ways which are completely dependent on the explanations/submissions made by the registered person to the proper officer and the same is provided below for quick understanding:

Outcome 1: Explanation given by the registered person is acceptable – No further action

Outcome 2: Explanation given by the registered person is not satisfactory –

  • Where the registered person is not able to provide proper explanations within 30 days from the date of intimation on the discrepancies found by the proper officer or such extended period or
  • The registered person after accepting the aforesaid discrepancy fails to take corrective action in his respective return, the proper officer may initiate appropriate action including the following
    • Audit by Tax Authorities (Section 65) Or
    • Special Audit (Section 66) Or
    • Inspection, Search or Seizure (Section 67) Or
    • Demand and Recovery Proceedings (Proceed to determine the tax and other dues under Section 73 /Section 74)

Assessment of Non-filers of returns under GST

This Assessment triggers when the registered person fails to furnish the returns even after serving the notice under Section 46 (Notice to return defaulters), the proper officer may proceed to assess the tax liability based on the best of his judgement after considering all the relevant materials/information which are available/ which he has gathered.

Also, the proper officer may issue an assessment order within a period of five years from the due date of furnishing annual return for the FY for which the tax has not been paid.

Further, If the registered person furnishes a valid return within 30 days from the date of service of the assessment order as referred above the said Assessment order shall be deemed to have been withdrawn. However, the liability to pay interest (Section 50) or late fee (Section 47) continue to exist.

Assessment of unregistered persons under GST

This Assessment comes to the picture only where a taxable person fails to obtain the GST registration or whose registration has been cancelled under Section 29(2) but who was liable to pay tax, the proper officer has to take two actions namely:

Action 1: Assess the tax liability to the best of the proper officer’s Judgement

AND 

Action 2: Issue an Assessment order within a period of five years from the due date of furnishing annual return for the FY for which the tax has not been paid.

However, no such assessment order shall be passed without giving the person an opportunity of being heard (Principle of Natural Justice)

Summary Assessment in special cases under GST

The proper officer may, on any evidence showing the tax liability of a person coming to his notice with the prior permission of ADC/JC, proceed to assess the tax liability of such person to protect the Interest of Revenue (IR) and  issue an assessment order, only if he has sufficient grounds to believe that any delay may adversely affect the IR.

If such liability relates to supply of goods and the taxable person is not ascertainable then the person in charge of such goods shall be deemed to be the taxable person and accordingly, such person would be liable to pay tax on the said goods.

Further, if an application made by the taxable person within 30 days from the date of receipt of aforesaid assessment order or on his own motion , if the ADC/JC considers that such order is erroneous, then he may withdraw such order and follow recovery proceedings (Section 73 or 74)

Conclusion: All the taxpayers should compulsorily follow the below mentioned steps which are pertaining to assessments:

  • Always avoid oral communication / Explanations over the call (In the current COVID situation, it is quite difficult to follow the said step. However, the same could be followed in the normal situation)
  • Obtain acknowledgement for all the reply letters (Annexures would be covered as part of reply letters) / additional documents submitted with the concerned authorities.
  • Always maintain a record of all the documents/information submitted with the concerned authorities (Scan copy as well as Hard copy)

Taxpayers Be ready, Your Assessments May Kickstart Any Time!

CA Sai Raghavendra Sumanth T

Writer can be reached at email: tsr.sumanth@gmail.com 

Disclaimer: The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. Copying and sharing of the material without prior permission is restricted.

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