BEST JUDGMENT ASSESSMENT IN RESPECT OF NON-FILERS - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

8. BEST JUDGMENT ASSESSMENT IN RESPECT OF NON-FILERS 8.1 Assessment in respect of the non-filers of statutory returns is vital for maintaining compliance and identifying taxpayers who haven t met their filing responsibilities. To tackle non-compliance, the GST law has instituted diverse measures while aiming to prompt regular filing among taxpayers. 8.2 Continuous vigil is maintained on the GST portal to pinpoint registered taxpayers who fail to submit their returns by the specified deadlines. Through the GST system, reports and alerts are automatically generated for non-filers, aligned with the frequency of return filing, whether it s on a monthly, quarterly, or annual basis. 8.3 Intimations are sent to non-filers, outlining their failure to submit returns within the set timeframe. If the taxpayer disregards the intimation or fails to file the necessary returns within the specified duration after receiving the intimation/ notice, assessment proceedings can be initiated. 8.4 In case of absence of any of the essential points required for regular assessment, i.e., non-submission of documents and records by taxable person, proper officer not satisfied with the correctness of records submitted by taxable person or taxable person not co-operating with proper officer for enabling him to complete the regular assessment, in such cases, the proper officer will determine the tax liability of the taxable person to the best of his judgement on the basis of records, documents or any other information in possession of such proper officer. 8.5 In such cases either no documents or records are furnished/claims are not substantiated or the records and/or evidence produced before the proper officer are rejected as being unreliable or incomplete/incorrect, either wholly or in part. 8.6 Section 62 of the CGST Act, 2017 provides for Best judgement assessment in respect of such non-filers of returns prescribed under Section 39 or Section 45 of the CGST Act, 2017 ibid. 8.7 Section 46 of the CGST Act, 2017 read with Rule 68 of CGST Rules, 2017 provides for issuance of notice in FORM GSTR-3A to the person who fails to file the statutory returns, viz, GSTR-3B return and GSTR-10 (Final Return), prescribed under Section 39 and 45 of the CGST Act, 2017, respectively. Issuance of notice under Section 46 operates as a pre-condition for initiating proceedings under Section 62 of the CGST Act, 2017. 8.8 Section 62 of the CGST Act, 2017 states that if a registered taxable person fails to furnish the return under Section 39 or Section 45 of the CGST Act, 2017 even after the service of a notice under Section 46, which provides for issuance of notice to the non-filers, the proper officer may assess the tax liability of such person to the best of his judgement taking into account all the relevant material available or which he has gathered and issue an assessment order within a period of five years from the due date for furnishing of the annual returns for the financial year to which the tax not paid relates 8.9 The provisions of Section 62 of the CGST Act, 2017 can be invoked only in case of registered taxable persons who have failed to file returns, as required, under Section 39 of the CGST Act, 2017or final return on cancellation of registration under Section 45 of the Act. Section 62 of the CGST Act, 2017 cannot be invoked for non-filing of GSTR-1 or GSTR-9 Annual Return. 8.10 If the taxpayer fails to furnish the return within 15 days of issue of notice under Section 46 of the CGST Act, 2017 then the proper officer may assess the tax liability in accordance with the provisions of Rule 100 of the CGST Rules, 2017. 8.11 The best judgement Assessment has to be made on the basis of the material available on record and the information gathered by the proper officer and the circumstances of each case. 8.12 In terms of Rule 100 of the CGST Rules, 2017, the order of assessment made under Section 62(1) of the CGST Act, 2017 has to be issued in FORM GST ASMT-13 and a summary thereof shall be uploaded electronically in FORM GST DRC-07 . 8.13 If the taxpayer furnishes a valid return within 30 days of the service of the above said assessment order in FORM GST ASMT-13, the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under Section 50(1) of the CGST Act, 2017 or for the payment of late fee under Section 47 of the CGST Act, 2017 shall continue. However, if the taxpayer fails to furnish a valid return within sixty days of the service of the said assessment order, he may furnish the same within a further period of sixty days on payment of an additional late fee of one hundred rupees for each day of delay beyond sixty days of the service of the said assessment order and in case he furnishes valid return within such extended period, the said assessment order shall be deemed to have been withdrawn, but the liability to pay interest or to pay late fee will remain. 8.14 In case returns are not filed within 30 days even after the order of best judgement is passed under Section 62 of the CGST Act, 2017, the order becomes final and even if returns are filed subsequently, the order cannot be withdrawn. 8.15 Since FORM GST DRC-07 will also be issued, best judgement assessment under section 62 of the CGST Act, 2017 will lead to recovery of tax assessed and demand made in order in FORM GST ASMT-13 . 8.16 CBIC, vide its Circular No. 129/48/2019, dated 24.12.2019 has issued Standard Operating Procedure in respect of the assessment of non-filers.