Assessments under Punjab Vat Act 2005

Assessment under the Punjab VAT Act 2005 is made u/s 29. The assessment under Punjab VAT Act is made after the filing of the VAT 20 i.e. annual return except in the case of Provisional Assessment. The assessment of Tax under section 29 of Punjab VAT Act 2005 can be done by two ways which can be discussed as follows:

Assessment on the basis of return filed by the dealer: Assessment  may  be  framed  on  the  basis  of  the  return or  returns  filed  by  the  taxable  persons u/s 29(1) . Where  the  return  is filed under  Sec.26 the  assessing  officer  under  Rule  43   scrutinizes  the  same and proceed to make assessment  under  Sec. 29(1) of the Act. Section 29(1) of Punjab VAT Act 2005 runs as under:

Where a return has been filed under sub section (1) or sub-section (2) of section 26 or in response to a notice under sub section (6) of section 26, if any tax or interest is found due on the basis of such return, after adjustment of any tax paid on self-assessment and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the person specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under sub-section (11) and all the provisions of this Act shall apply accordingly :

Provided that except as otherwise provided in this sub-section, the acknowledgment of the return shall be deemed to be an intimation under this sub-section in case, either no sum is payable by the person or no refund is due to him:

Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of financial year in which the return is filed.

Thus the assessment u/s 29(1) can be by and large called as assessment on the basis of self assessment of tax done by the dealer in the returns filed.

Scrutiny of returns Rule 43 is relevant to section 29(1) of Punjab VAT Act which provides for the procedure for scrutiny of every return filed u/s 26 for the purpose of section 29(1).

If on scrutiny of return it is found that a less tax has been paid than actually payable as per return, the notice is served upon the assessee to rectify the same and to pay the tax due along with interest u/s 32 and produce the treasury receipts before the designated officer within the time specified in the notice. If the assessee deposit the tax due and furnish the treasury receipts before designated officer complying with the notice under rule43(1) then the scrutiny of return is closed.

However an assessee can object to the notice issued under rule 43(1) in writing by stating the reasons for such objection and the designated officer if satisfied with the reasons, can decide accordingly or if not satisfied then the matter is referred for audit u/s 28 of Punjab VAT Act.

Assessment on the basis of Information received: The  Commissioner  or  the  Designated  officer  has been  vested  with  a  power  to  frame  assessment  on  his  own  motion  or  on  the  basis  of  information  received  by  him  to  the  best  of  his  judgment .Section 29(2) provides that  Notwithstanding  anything  contained  in  sub-section (1),  the  Commissioner  or  the  designated  officer,  as  the  case  may  be, ,may  on  his own  motion  or  non  the  basis  of  information  received  by  him,  order  or  make  an  assessment of  the  tax  payable  by  a  person  to  the  best  of  his  judgment  and determine  the tax  payable   by  him,  where-

a person fails to file a return under section 26 ; or

there are definite reasons to believe that a return filed by a person is not correct and complete; or

there are reasonable grounds to believe that a person is liable to pay tax, but has failed to pay the amount due; or

a person has availed input tax credit for which he is not eligible; or
provisional assessment is framed.

Section 29(3) further empowers commissioner either on his own motion or on the basis of information received by him, to direct the designated officer by an order in writing to make assessment of the tax payable by any person or any class of persons for such period as he may specify in his order.

Section 29(4) provides that the assessment u/s 29(2) and 29(3) may be made within three years after the date when the annual statement was filed or due to be filed, whichever is later. However the period of limitation u/s 29(4) can be enhanced by the commissioner under proviso to section 29(4) for assessment of a taxable person or a registered person, if circumstances so warrant by an order in writing after three years, but not later than six years from the date, when annual return was filed or due to be filed by such person, whichever is later.

Notice for assessment is must: For making assessment u/s 29 a prior notice must be served upon the assessee stating therein the grounds for proposed assessment and the time place and manner for filing objections if any. The notice must also provide the period for which assessment is to be made and provide a time of not less than 10 days for production of books documents etc as specified in the notice.
The purpose of issuing a notice and providing time in the notice of at least 10 days is to provide a reasonable opportunity of being heard to the assessee.

Reasonable opportunity of being heard must be provided: The assessee after being served with a proper notice for assessment must be provided with fair and reasonable opportunity of being heard before making the assessment.

The designated officer, after considering the objections and documentary evidence, if any, filed by the person, shall pass an order of assessment in writing, determining the tax liability of such a person. The assessment order must be a speaking one i.e. it must state the reasons for assessment [Rule 48(2)]. The certified copy of order along with tax demand notice shall be provided to the assessee free of cost [Rule 48(3)].

Amendment in assessment: The designated officer may, with the prior permission of the Commissioner, within a period of three years from the date of the assessment order, amend an assessment, made under sub-section (2) or sub-section (3), if he discovers under–assessment of tax, payable by a person for the reason that,-
such a person has committed fraud or willful neglect; or
such a person has misrepresented facts; or
a part of the turnover has escaped assessment:
Amendment in any assessment shall not be made without affording an opportunity of being heard to the affected person.

Procedure for amendment in assessment : Rule 49 provides that before making an amendment in assessment  a notice shall be issued by the designated officer, to the person, clearly stating the grounds for the proposed amendment, the date, time and place ,fixed for such amended assessment. After hearing , the person  concerned  and making such enquiry, as the designated officer may consider necessary, he  may proceed to amend the orders as he deems fit
subject, to the following conditions, namely :-

No amendment, which has the effect of enhancing the amount of tax, shall be made by the designated officer, unless he has given notice to the person concerned of its intention to do so and has allowed him a reasonable opportunity of being heard.

Where such amendment has the effect of enhancing the amount of the tax or penalty, the designated officer, shall serve on the person a Tax Demand Notice in Form VAT – 56 as required under sub-section (11) of section 29 and thereupon, the provisions of the Act and these rules shall apply, as if such notice had been served in the first instance.

Where any amendment made under sub-section (7) of section 29 has the effect of reducing the tax or penalty, the designated officer shall order refund of the amount, which may be due to the person and the procedure for refund laid down in rule 52 shall apply.

Rectification in the assessment order: Sub Section 8 of section 29 provides that the designated officer may, within a period of one year from the date of the assessment order, rectify an assessment, made under sub-section (2) or sub-section (3), if he discovers that there is a mistake apparent from record:

Provided that no order rectifying such assessment shall be made without affording an opportunity of being heard to the affected person.

Provisional Assessment: Under section 30 of Punjab VAT act the designated officer has been given power to make provisional assessment of any person where fraud or willful neglect has been committed with a view to evade or avoid the payment of tax or due tax has not been paid or a return has not been filed, after recording the reasons in writing for provisional assessment. Provisional assessment u/s 30 is independent and separate to the assessment proceedings u/s 29 since section 30 starts with the words “Notwithstanding anything contained in section 29”.

Although the word provisional assessment has not been defined anywhere under the act. But the word provisional means the thing which is not final and can be made for any period, subject to the condition that the tax liability of such a person shall be assessed finally after he files return in the prescribed manner. The Provisional assessment can be made in the following cases only:-

1. Fraud – Where  fraud  has  been  committed  with  a  view  to  evade or  avoid  the  payment  of  tax,  the  designated  officer  may,  for  the  reasons  to  be   recorded in writing, make  provisional  assessment  for  any  period  to  determine  the  tax  liability  so  evaded,  avoided  or  unpaid . Provided  that  tax  liability  of  such  a  person  shall  be  assessed  finally  after  he  files  his  return  in the  under  the  provisions  of  sec. 26 [section 30(1)].

2. Willful  neglect – When there is willful  neglect  with  a  view  to  evade  or  avoid  the  payment  of  tax,  the  designated  officer  may,  for  the  reasons  to  be  recorded  in  writing,  make  provisional  assessment  for  any  period  to  determine  the  tax  liability  so  evaded,  avoided  or  unpaid . Provided  that  tax  liability  of  such  a  person shall  be assessed  finally after  he  files  his  return  in  the  under  the  provisions  of  section 26 [section 30(1)].

3. Due  tax  has  not  been  paid –  Non  payment  of  due  tax  is  the  another  reason  for  making  the  provisional  assessment . The  designated  officer  may,  for  the  reasons  to be  recorded  in writing,  make  provisional  assessment  for  any  period  to  determine  the  tax  liability  so  evaded,  avoided  or  unpaid . Provided that  tax  liability  of  such  a  person  shall  be  assessed  finally after  he  files  his  return  in  the  under  the  provisions  of  sec 26 [section 30(1)].

4. Non  filling  of  return – Where  a  return  has  not  been filed  by  or  on  behalf of  a person,  the designated  officer  may, for  the  reasons  to  be  recorded  in  writing,  make  provisional  assessment  for any  period  to  determine  the tax  liability  so  evaded,  avoided  or  unpaid . Provided  that  tax  liability of  such a  person  shall  be  assessed  finally  after  he  files  his  return in t he  under  the provisions  of  section  26 [section 30(1)].

Time Limit for Provisional assessment: The Provisional assessment shall be made within a period of six months from the date of detection[section 30(2)]. The commissioner may  for reasons to be recorded in writing, extend the said period by another six months in a particular case referred to him by the designated officer.[Section 30(3)].
Procedure for Provisional assessment like issuing of notice, reasonable opportunity of being heard etc is similar as is in the regular assessment and must be followed before making assessment.

Author Amit Bajaj Advocate, Jalandhar city
Email: [email protected]
M +919815243335