What If a taxable person is unable to determine

1. Value of Goods/Services or both or

2. The rate at which he is required to pay tax to the government.

The answer of this question is in Section 60 of CGST Act, 2017 which talks about the Provisional Assessment. Provisional assessment provides a method for determining the tax liability in case the correct tax liability cannot be determined at the time of supply.

While going for the Provisional Assessment the Taxable Person should consider the following points.

A. In a situation where the taxable person is unable to determine the value at which or the rate at which he is required to pay tax to the government. Then, he will request in writing to Proper Officer to allow him to pay tax provisionally at such rate or value as may be specified by the Proper Officer.

B. The Proper Officer shall pass an order within a period of 90 days from the date of receipt of request allowing him to pay the tax provisionally.

Note 1: -The Proper officer will pass the order only when the taxable person executes the bond along with the security/surety of the amount as the Proper Officer may deem fit.

Note 2: – The bond and the surety/security will bind the taxpayer to pay the difference (if at the time of final assessment, the tax liability is more than the tax liability paid at the time of provisional assessment).

C. The Proper Officer shall within a period of 6 months from the date of communication of provisional assessment order (i.e. date when such order is received by the taxpayer) shall pass the final assessment order.

Note: – The period of 6 months can be extended by further 6 months by Additional Commissioner or Joint Commissioner and up to 4 years by Commissioner by  communicating a sufficient cause by the proper officer or the taxable person.

D. If at the final assessment the tax liability is more than the provisional tax, then taxpayer is required to pay tax along with the interest @ 18% p.a. from the first day after the due date till the date of payment no matter whether the tax is paid before or after the final assessment order.

For Example: Suppose Mr. X is unable to determine its value of goods for the purpose of payment of tax to the government for the month of January, 2018. For taking the solution to his problem he approaches to proper officer to determine the value of goods on which he is required to pay tax to the government. The proper officer has done his assessment provisionally on 19.02.2018 and determine its provisional tax Rs. 25000/- which he paid on 20.02.2018. Now at the time of final assessment the proper officer has decide his tax Rs. 35000/- on 30.04.2018. Now lets take two situation:-

i. Where he pays 5000/- on 20.03.2018 (before the final assessment order) and balance 5000/- on 02.05.2018 (after the final assessment order)

ii. Where he pays 10,000/- on 02.05.2018 (after the final assessment order)

In case (i) above the assessee is required to pay interest @18 % on the first 5000/- from 21.02.2018(next day after the due date of payment of tax for January) to the date of payment i.e. 20.03.2018 and on the balance 5000/- from from 21.02.2018(next day after the due date of payment of tax for January) to the date of payment i.e. 02.05.2015 

In case (ii) above the assessee is required to pay interest @18 % on 10000/- from

from 21.02.2018(next day after the due date of payment of tax for January) to the date of payment i.e. 02.05.2018. 

E. Whereas, where as a result of final assessment, the tax liability is less than the tax liability paid on provisional assessment, then subject to provision of Section 54(6), amount shall be refunded to the taxpayer (subject to the eligibility of refund and absence of unjust enrichment) along with the interest @ 6% p.a  If the amount is  paid after the expiry of 60 days from the date of final assessment order to the date of grant of refund.

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