Assessment under GST

Goods and Services Tax (GST) has revolutionized the way tax is collected in India. One of the key features of GST is its self-assessment system. This means that taxpayers are required to self-assess their tax liability and file their returns accordingly. However, the government has the power to verify the correctness of the returns filed by taxpayers. This is done through the process of assessment under GST

Assessment under GST is a crucial process that helps ensure that taxpayers are complying with the GST laws and regulations

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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.

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

Self-Assessment: This is the first level of assessment, which is done by the taxpayers themselves. In self-assessment, the taxpayer calculates and pays their own tax liability, and files the returns accordingly. This is done on a monthly, quarterly or annual basis, depending on the turnover of the taxpayer. The relevant section under GST for self-assessment is Section 59.

Provisional Assessment: Provision assessment can be resorted to only in two possible scenarios

1st is when the registered person is unable to determine the value of supply and

2nd is when registered person is unable to determine the rate of tax.

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 90 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.
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

Scrutiny Assessment: Scrutiny assessment is done by the tax authorities to verify the correctness of the returns filed by taxpayers. This is applicable for only registered persons and not to unregistered persons. Notice under section 61 can be issued only if return has been filed by the registered persons. The tax authorities can issue a notice to the taxpayer, asking them to provide additional information or documents to support their returns. The tax authorities can also conduct an audit of the taxpayer’s records. Based on the information obtained, the tax authorities can issue an assessment order, which specifies the final amount of tax to be paid by the taxpayer. The relevant section under GST for scrutiny assessment is Section 61.

Best Judgment Assessment: Best judgment assessment is done when the taxpayer fails to furnish the return under Section 39 or Section 45, even after the service of a notice under Section 46, the proper office may assess the tax liability of the said person to the best of his judgement taking into account all the material which is available or he has gathered 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 relevant section under GST for best judgment assessment is Section 62.

Assessment of Unregistered Persons: When a taxable person fails to obtain registration even though liable to do so or whose registration has been cancelled under sub section (2) of Section 29 but who was liable to pay tax, the proper officer may proceed to assess the tax liability of such taxable person to the best of his judgement for the relevant tax periods. He will 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. No such assessment order shall be passed without giving the person an opportunity of being heard. The relevant section under GST for the assessment of unregistered persons is Section 63.

Summary Assessment: Summary assessment is done in certain special cases, such as when the tax authorities believe that the taxpayer is trying to evade tax or when there is a threat to revenue. There should be evidence available with the proper officer that tax is payable and remains unpaid. Prior permission is required from the Additional Commissioner and Joint Commissioner. It is believed that any delay in assessment would harm the revenue’s interest. If the taxpayer to whom the liability pertains is not ascertainable, then such liability is fastened to the person in charge of such goods. Generally summary assessment is resorted to in cases of absconding and defaulting taxpayers. There is no time limit prescribed for passing of order. The section does not mention that the said person should be given an opportunity of being heard. The relevant section under GST for summary assessment is Section 64.