ASSESSMENT UNDER MODEL GST ACT

[Mr. M. GOVINDARAJAN]

Chapter XII of the model GST Act (‘Act’ for short) provides the procedure for assessment under GST regime.  This chapter provides the following types of assessments-

• Self assessment;
• Provisional assessment;
• Best judgment assessment; and
• Summary assessment.

Self Assessment

Section 44 of the Act provides that every  person registered under the Act shall himself assess the tax payable him for a tax period.  After such assessment he shall file the returns required under Section 27.

Explanation to Section 44 provides that where goods received as an inward supply is returned by the recipient to the supplier within six months from the date of relevant invoice, the tax payable on such supplies shall be equal to the input tax credit availed earlier on such inward supply.   This provision ensures that if the recipient returns the goods to the supplier within six months of the date of its original supply, his tax liability on such returned goods will be the same as was at the time of the original supply.  If the goods are returned after six months of the date of the original supply invoice, the rate of tax applicable will be the rate prevailing on date of such return.

Provisional Assessment

Section 44A provides the procedure for provisional assessment.  If the taxable person is unable to determine the value of goods and/or services or determine the rate of tax applicable thereto provisional assessment may be done at the request of that person.  The procedure involved in this assessment is as follows-

• The taxable person is to request the proper officer in writing giving reasons for payment of tax on a provisional basis;
• The proper officer may pass an order allowing payment of tax on provisional basis at such rate or on such values as may be specified by him;
• The taxable person has to execute a bond in the prescribed form and with such surety or security as the proper officer may deem fit;
• The bond is binding the taxable person for payment of the different between the amount of tax as may be finally assessed and the amount of tax provisionally assessed;
• The proper officermay require such information for finalizing the assessment;
• On sufficient cause being shown and for reasons to be recorded in writing, the above period of six may be extended-
  • By the Joint/Additional Commissioner for a further period not exceeding six months; and
  • By the Commissioner for such further period as he may deem fit.
• The taxable person shall be liable to pay interest on any amount payable to the Central/State Government consequent to the order for final assessment at the rate specified from the first day after the due date of payment of tax in respect of the said goods and/or services till the date of actual payment, whichever such amount is paid before or after the issue of order for final assessment;
• If the taxable person is entitled to a refund consequent to the order of final assessment, interest shall be paid on such refund.

Best judgment assessment

Section 46 and 47 provides the circumstances under which the best judgment assessment can be done by the proper officer.

Section 46 provides that if a registered taxable person fails to furnish the return the proper officer has to issue a notice to such defaulting taxable person requiring him to furnish the return within a specified period of time.  Such period shall not exceed more than 15 days.  If the taxable person fails to file the return within the time given by the proper office in the notice the proper officer shall proceed to assess the tax liability of the return defaulter to the best of his judgment taking into account all the relevant material available with him. 

If the taxable person filed a valid return for the default period within 30 days of the receipt of the best judgment assessment order, then the best judgment order passed by the proper officer shall automatically stand withdrawn.

Section 47 provides the procedure of making best judgment assessment if the taxable person fails to register himself with the authority.  Section 47 provides that a proper officer can assess the tax liability and pass an order to his best judgment for the relevant tax period.  Such an order must be passed within five years from the due date for filing the annual return for the financial year to which nonpayment of tax relates.  Such order cannot be passed without giving a show cause notice to the taxable person and afford him a reasonable opportunity of being heard.

Summary assessment

Section 48 provides for the summary assessment to protect the interest of revenue when-

• The proper officer has evidence that a taxable person has incurred a liability to pay tax under the Act; and
• The proper officer believes that delay in passing an assessment order will adversely affect the interest of revenue.

Such order cannot be passed without getting permission from the Additional Commissioner/Joint Commissioner.

A taxable person against whom a summary assessment has been passed can apply for its withdrawal to the jurisdictional Additional/Joint Commissioner within 30 days from the date of receipt of the order.   If the Additional/Joint Commissioner finds that the order is erroneous he can withdraw the summary assessment order.  He shall direct the proper officer to carry out the determination of tax liability.  The Additional/Joint Commissioner can follow a similar course of action in his own motion if he finds the summary assessment order is erroneous.

Where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be assessed and pay tax and amount due under this section.

Discussions to this article

[Ganeshan Kalyani]

Nice article.

The implementation of provisional assessment option is in my view would be in lesser situation. Otherwise who will be willing to apply to the authority and inviting to come to their premises and do the assessment.

Sir which all would be the situation where this provision would have been used .

[MARIAPPAN GOVINDARAJAN]

In respect of GST the payment of taxes by the normal taxpayer is to be done on monthly basis by the 20th of the succeeding month. Therefore provisional assessment may not rise maximum.