Assessment of non-filers of returns

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Assessment of non-filers of returns 2017-04-14T00:01:05+00:00

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  • Ashish BadalaCA Ashish Badala
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    #962 |

    (1) Notwithstanding anything to the contrary contained in section 73 or section 74, where a registered person fails to furnish the return under section 39 or section 45, even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person 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 specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.

    (2) Where the registered person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.

    Priya MadrechaPriya Madrecha
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    62.1    Introduction
    Section 62 of the Act can be invoked only in case of registered taxable persons who have failed to file returns, as required, under Section 39 or as the case may be, or final return on cancellation of registration under Section 45 of the Act. Issuing notice under section 46 appears to be a pre-condition for initiating proceedings under Section 62 of the Act.
    62.2    Analysis of Provisions
    Non-compliance with the notice under Section 46 paves the way for intimating the proceedings under this section. If the assessee fails to furnish the return, the Proper Officer may after serving him notice under section 46 proceed to assess the tax liability to the best of his judgment, taking into account all the relevant material available on record, and issue an assessment order. This is also known as ‘best judgment assessment’. It can be completed without giving notice of hearing to the assessee.
    It may be noted that a return filed under Section 39 can be revised not later than the due date of furnishing of return for the month of September following the end of the financial year or actual date of filing annual return under Section 44, whichever is earlier.
    Therefore, issuance of notice under Section 46 is a necessity for commencing proceedings under Section 62. Non-issuance of notice under Section 46 closes the door on invoking Section 62 although other provisions are available to recover the tax dues.
    If, however, a registered person furnishes a ‘valid return’ within 30 days of the service of assessment order, the said assessment order shall be deemed to be withdrawn. ‘Valid return’ is defined in per Section 2(117) to mean a return filed under Section 39(1) of the Act on which self-assessed tax has been paid in full. In order to avail the facility of withdrawal of the assessment order passed, filing of a valid return is required, including payment of taxes declared therein.
    Time limit of 5 years (extended period for cases covered under Section73), is also applicable for issuing order under section 62.
    Consequence of late fee under Section 47 and interest under Section 50 will both be applicable in cases of conclusion of best judgement assessment made under this Section.
    An order passed under this section shall be communicated to the registered person in FORM GST ASMT 13
    62.3  Comparison with equivalent provisions in other laws
    It appears that Section 62 of the CGST Act is incorporated predominantly on the basis of provisions contained in the present State VAT Acts.
    At present, Section 72 of the Finance Act, 1994 provides for assessment of persons liable to pay service tax, but who has failed to furnish return under Section 70. However, procedure contained in Section 72 requires that every such person shall be given a reasonable opportunity of being heard before the order is passed.
    62.4 Related Provisions
    Section / Rule / Form      Description
    Section 2(117)     Valid return
    Section 39     Returns
    Section 45     Final return
    Section 46     Notice to return defaulters
    Section 47     Late fee
    Section 50     Interest
    62.5 FAQ’s
    Q1. Whether Proper Officer is required to give any notice to taxable person before completing assessment u/s 62?
    Ans. The assessment u/s 62 can be initiated only after the service of notice under section 46
    i.e. Notice to return defaulters.
    Q2. If a registered person files a return after receipt of notice u/s 46 but fails to make the payment disclosed by him in the return, can assessment order u/s 62 be passed in this case?
    Ans. An assessment order u/s 62 is deemed to have been withdrawn if the registered person furnishes a valid return (including payment of taxes).
    62.6 MCQ’s
    Q1.     What is the time limit for issuing order under section 62?
    (a)    15 days from the date of service of notice
    (b)    30 days from the date of service of the assessment order
    (c)    Yet to be prescribed
    (d)    None of the above Ans. (d) None of the above.
    Q2. The proper officer can complete assessment under section 62 without issuing any notice to the registered taxable person before passing assessment order.
    (a)    True
    (b)    False
    Ans. (b) False
    Q3.     What is the time limit for issuing order under section 62?
    (a)    9 months from the end of financial year.
    (b)    3 years for cases covered U/s 73 or 5 years for cases covered under 74 (c)     5 years for cases covered U/s 73 or 3 years for cases covered under 74
    (d)     5 years from the due date of filing annual return.
    Ans.  (d) 5 years from the due date of filing annual return
    Q4.     The assessment order u/s 62 shall be deemed to be cancelled if:
    (a)    Where the registered person furnishes a valid return within 30 days of the service of the assessment order.
    (b)    Where the registered person within 90 days of the service of the assessment order.
    (c)    Assessment order under section 46 cannot be cancelled.
    (d)    Where assessee intimates to the Proper Officer that he has filed the valid return.
    Ans. (a) Where the registered person furnishes a valid return within 30 days of the service of the assessment order.
    Q5. After serving of notice u/s 46,the proper officer is not required to give notice of hearing to the registered tax person before passing assessment order.
    (a)    True
    (b)    False Ans. (a) True.

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