Under GST, the term “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment. Normally, persons having GST registration file GST returns and pay GST every month based on self-assessment of GST liability. However, the Government at all times has the rights to re-assess or perform an assessment by itself and determine if there is a short payment of GST. In this article, we look at the various types of assessment under GST in detail.
The different types of assessment under GST are as under:
Section 59 – Self assessment of taxes payable
Section 60 – Provisional assessment
Section 61 – Scrutiny of tax returns filed by registered taxable persons
Section 62 – Assessment of registered taxable person who have failed to file the tax returns
Section 63 – Assessment of unregistered persons
Section 64 – Summary assessment in certain special cases
Section 59 – Self Assessment
The taxable person is required to pay tax on the basis of self-assessment done by him. Hence, all GST return filings are based on self-assessment by the taxpayer .In other words; Every registered taxable person shall himself assess the taxes payable and furnish a return for each tax period. This means GST continues to promote self-assessment just like the Excise, VAT and Service Tax under current tax regime.
Section 60 – Provisional Assessment
Provisional assessment can be conducted for a taxable person when the taxpayer is unable to determine the value of goods or service or both or determine the rate of tax applicable thereto.
Situations demanding 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. The major determinants of the tax liability are generally the applicable tax rate and the value. There might be situations when these determinants might not be readily ascertainable and may be subject to the outcome of a process that requires deliberation and time.
Where the taxable person is unable to determine ─
1. value of goods or services or both to be supplied by him; or
2. the rate of tax applicable to the goods or services to be supplied by him,
he may furnish an application in prescribed form stating therein reasons for payment of tax on a provisional basis along with the documents in support of his request, electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
Procedure for Provisional Assessment
Step 1: The taxable person has to give, the concerned GST officer, a request for provisional assessment in writing.
Step 2: The GST officer on reviewing the application, will pass an order, within a period not later than ninety days from the date of receipt of the request, allowing payment of tax on provisional basis or at a GST rate or on such value as specified by him
Step 3: The taxable person, who is making payment on provisional basis, has to issue a bond with a security promising to pay the difference between provisionally assessed tax and final assessed tax.
Step 4: The GST officer will pass final assessment, with a period not exceeding six months from the date of communication of order of provisional payment.
Interest Payable for Provisional Assessment
In case, after final assessment, the tax is held payable i.e. taxable person is held liable to pay more tax than tax paid at the time of provisional assessment, in such case, the taxable person will be liable to pay interest on such tax payment. Interest would be calculated from the actual due date of tax (please note original due date should be considered and not provisional tax payment date) till the date of actual payment of tax. The interest calculation position will remain same, even if the payment of tax is done before or after final assessment.
The proper officer may issue a notice in form ASMT-02, requiring additional information in relation to provisional assessment and registered person will furnish reply in form ASMT-03 or may appear in person before officer. After satisfaction, proper officer will issue order (ASMT-04, within 90 days of furnishing request) allowing payment of tax on provisional basis indicating rate or value or both on the basis of which provisional assessment be allowed along with amount for which bond to be executed and security to be furnished not exceeding 25 % of bond amount. Bond to be furnished in form GST ASMT-05 and security to be furnished in the form of bank guarantee. The proper officer will issue a notice in form ASMT-06 for calling records and documents for finalizing the assessment and shall issue final assessment order in Form GST ASMT-07 (within six months of provisional assessment order or within further extended period as allowed by commissioner), specifying amount payable or refundable to registered person. If balance is payable then interest to be paid by registered person @ 18% from the day next to due date till the payment date.After the payment of amount specified in assessment order, he may file application for release of security.
Refund under Provisional Assessment
In case of refund, interest will be paid on such refund as provided under section 56.
Section 61 – Scrutiny Assessment
GST Officers can scrutinize a GST return and related particulars furnished by the registered person to verify the correctness of the return. This is called a scrutiny assessment. In case there is any discrepancies noticed by the officer, he/she would inform the same to the registered person and seek his explanation on the same. On the basis of the explanation received from the registered person, the officer can take following action:
If the explanation provided is satisfactory, the officer will inform about the same to the registered person and no further action will be taken in this regard.
If the explanation provided is not satisfactory or the registered person has failed to take corrective measures after accepting the discrepancies, the proper officer will initiate appropriate action like conducting audit of registered person, conducting special audit, inspect and search the place of business of registered person, or initiate demand and recovery provisions.
The proper officer may scrutinize the same along with related particulars furnished by registered person, to verify the correctness of return. In case of any discrepancy is noticed, he shall issue a notice in b informing him of discrepancy and seeking explanation thereto within 30 days of service of notice. Wherever possible proper officer will quantify the amount of tax, interest and other dues in relation to discrepancy.
If proper officer agrees with explanation furnished by registered person in form ASMT-11, no further action will be taken. If registered person agrees with discrepancy, he will deposit the amount specified in notice and take the corrective action as specified in notice. And if registered person does not furnish explanation or satisfactory explanation is not furnished or does not take corrective measures in return for the month in which discrepancy is communicated, the proper officer may take appropriate action in accordance with section-65, 66 and 67
Section 62 – Failure to File GST Return – Best Judgement Assessment
When a registered person fails to furnish the required returns, even after service of notice under Section 46 an assessment would be conducted by the GST Officer. In such cases, the GST officer would proceed to assess the tax liability of the taxpayer 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 for furnishing of the annual return for the financial year to which the tax not paid relates. On receipt of the said assessment order, if the registered person furnishes a valid return within a period of 30 days from the date of issuance of assessment order, then in such case, the assessment order would deemed to have withdrawn. However, the registered person will be liable to pay interest under Section 50 (1) and/or liable to pay late fee under Section 47. The proper officer may proceed to determine the tax liability of such person to the best of his judgment considering all the relevant material he has gathered and pass the assessment order in form ASMT-13 within 5 years from the due date of furnishing annual return for the financial year for which tax not paid relates.
If registered person furnish the valid return within 30 days of service of assessment order, then the said assessment order deemed to be withdrawn (But liability to pay interest and late fees still be applicable).
Section 63 – Assessment of Unregistered Person – Best Judgement
When a taxable person fails to obtain GST registration even though liable to do so or whose registration has been cancelled under section 29 (2) but who was liable to pay tax, the GST officer can proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods 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. The proper officer may proceed to assess the tax liability of such person to the best of his judgment considering all the relevant material he has gathered within a period of 5 years from the due date of furnishing annual return for the financial year for which tax not paid relates.
For passing the assessment order under this section, the proper officer will issue a notice in form ASMT-14, containing the grounds on which assessment is proposed to be made and after considering the reply proper officer will issue order in form ASMT-15.
Section 64 – Summary Assessment
A GST Officer can on any evidence showing a tax liability of a person coming to his notice, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue. In order to undertake assessment under section 64, the proper officer is required to obtain previous permission of additional commissioner or joint commissioner. Such an assessment is called summary assessment. The summary assessment order shall be issued in form GST ASMT-16.The taxable person may file an application in form ASMT-17, within 30 days from receipt of order or commissioner may on his motion withdraw such order if he considers that such order is erroneous and follow the procedure laid down in section 73 to 74.