PROVISIONAL ASSESSMENT - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

6. PROVISIONAL ASSESSMENT 6.1 General features of Provisional Assessment: (i) The major factors for determining the tax liability are generally the applicable tax rate and the value. There may be situations when these factors might not be readily ascertainable and may be subject to the outcome of a process that requires deliberation and time. In such scenario it may not be possible for the taxpayer to carry out the self-assessment and determine the exact duty liability. (ii) To deal with such scenario, Section 60 of the CGST Act, 2017 provides for provisional assessment in two possible situations (a) when the taxpayer is unable to determine the value of supply; and (b) when the taxpayer is unable to determine the rate of tax. Apart from the above two scenarios, provisional assessment cannot be applied by the taxpayer for any other purpose. (iii) The taxpayer has to make request in writing, along with the relevant documents and giving reasons for payment of tax on provisional basis. (iv) The proper officer shall pass an order, allowing payment of tax on a provisional basis at such rate or on such value, as may be specified by him, if the taxpayer executes a bond in the prescribed form with surety or security as determined by the proper officer, binding himself for payment of the differential tax amount on finalization of the assessment. (v) The final assessment order should be passed by the proper officer within six months from the date of communication of provisional assessment order. The period of six months can be extended by the Joint Commissioner or Additional Commissioner for further period not exceeding six months and by the Commissioner for further period not exceeding four years, if sufficient cause is shown and reasons are recorded in writing. (vi) On finalization of the provisional assessment, any amount that has been paid on the basis of such assessment is to be adjusted against the amount that has been finally determined as payable. In case of short payment, the same has to be paid with interest from the first day after the due date of payment of tax in respect of the supplies subjected to provisional assessment till the date of actual payment. (vii) The taxpayer is entitled for refund of tax paid in excess consequent to the order of final assessment and interest is payable to the taxpayer on such refund in terms of Section 56 of the CGST Act, 2017. 6.2 Procedure for Provisional Assessment: (i) The procedure for provisional assessment is laid down in Rule 98 of the CGST Rules, 2017. (ii) As per Rule 98(1) of the CGST Rules, 2017 the taxpayer has to make request to the proper officer, i.e. the jurisdictional Assistant/ Deputy Commissioner of Central Tax, electronically in FORM GST ASMT-01 on common portal, along with the relevant documents and giving reasons for payment of tax on provisional basis. (iii) The proper officer will scrutinize the application of the taxpayer made in FORM GST ASMT-01. In case additional information or documents in support is required to decide the case, then in terms of Rule 98(2) of the CGST Rules, 2017 the proper officer shall issue notice in FORM GST ASMT-02 to the taxpayer requesting for submission of the same. As provided under Rule 98(2) of the CGST Rules, 2017 the taxpayer may file a reply to the notice in FORM GST ASMT 03 , and can also appear in person before the said proper officer, if he so desires, to explain his case. (iv) As per Rule 98(3) of the CGST Rules, 2017, the proper officer, on being satisfied with the reasons given by the taxpayer for seeking provisional assessment, will issue an order in FORM GST ASMT-04 within a period of ninety days from the date of receipt of the request, allowing the payment of tax on a provisional basis. The order should indicate the value or the rate or both on the basis of which the assessment is to be allowed on a provisional basis and the amount (including the amount of Integrated tax, Central tax, State tax or Union territory tax and cess payable in respect of the transaction), for which the bond is to be executed along with the security to be furnished. The security will not exceed twenty-five percent of the amount covered under the bond. (v) In terms of Rule 98(4) of the CGST Rules, 2017 the taxpayer has to execute the bond in FORM GST ASMT-05 along with a security in the form of a bank guarantee for an amount, as mentioned in FORM GST ASMT-04. The bond furnished to the proper officer under the State Goods and Services Tax Act or Integrated Goods and Services Tax Act shall be deemed to be a bond furnished under Central Goods and Services Tax Act 2017. (vi) On executing the bond, the process of the provisional assessment is complete and the supplier can supply the goods or services or both and pay the tax at the rate or on the value that has been indicated in the order in FORM GST ASMT-04 . 6.3 Finalisation of provisional assessment: (i) The provisional assessment will be finalized within a period of six months from the date of issuance of FORM GST ASMT-04. The time limit for finalization of provisional assessment can be extended by the Joint Commissioner or Additional Commissioner for a further period not exceeding six months and by the Commissioner for such further period not exceeding four years, if sufficient cause is shown and reasons are recorded in writing. (ii) As per Rule 98(5) of the CGST Rules, 2017, the proper officer, i.e. the jurisdictional Asst. Commissioner/Dy. Commissioner of Central Tax will issue a notice in FORM GST ASMT-06 , calling for information and records required for finalization of assessment. He shall issue a final assessment order, specifying the amount payable by the taxpayer or the amount refundable, if any, in FORM GST ASMT-07. 6.4 Interest liability: (i) In case any tax amount becomes payable subsequent to finalization of the provisional assessment, then interest at the specified rate will also be payable by the taxpayer from the first day after the due date of payment of the tax till the date of actual payment, whether such amount is paid before or after the issuance of order for final assessment. (ii) In case any tax amount becomes refundable subsequent to finalization of the provisional assessment, then interest at the specified rate will be payable to the taxpayer, subject to the eligibility of refund and absence of unjust enrichment. 6.5 Release of Security: (i) Rule 98(6) of the CGST Rules, 2017 provides that after issuance of the order in FORM GST ASMT-07 mentioned above, the taxpayer has to file an application in FORM GST ASMT- 08 for the release of the security furnished. (ii) On receipt of the application in FORM GST ASMT-08, the proper officer shall issue an order in FORM GST ASMT 09 prescribed in Rule 98(7) of the CGST Rules, 2017 within a period of seven working days from the date of the receipt of the application, releasing the security after the amount payable as per the order, if any, as specified in FORM GST ASMT-07 , has been paid.