Sec 63 – Assessment of unregistered

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Sec 63 – Assessment of unregistered 2017-04-16T23:16:17+00:00

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  • Ashish BadalaCA Ashish Badala
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    Notwithstanding anything to the contrary contained in section 73 or section 74, where 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 judgment for the relevant tax periods 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:
    Provided that no such assessment order shall be passed without giving the person an opportunity of being heard.

    Priya MadrechaPriya Madrecha
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    an opportunity of being heard
    63.1  Introduction
    This Section is applicable to unregistered persons i.e., persons who are liable to obtain registration under Section 22 and have failed to obtain registration will come within scope of operation of this Section. This provision also covers the cases whose registration was cancelled as per section 29 (2) claiming of the GST Act. Section 29(2) of the Act covers 5 instances as follows:
    (a)     A person who contravenes the provisions of this Act or Rules made thereunder; (b)     A composition person who fails to furnish returns for 3 consecutive tax periods.
    (c)    A person other than composition person who fails to furnish returns for 6 consecutive months.
    (d)    A person who has sought voluntary registration but has failed to commence business within 6 months.
    (e)    Where registration has been obtained by way of fraud, willful misstatement or suppression of facts.
    63.2    Analysis
    This Section is applicable to unregistered taxable persons. In such cases, the proper officer is required to give a reasonable opportunity of being heard to such persons before proceeding to assess such person. The section begins with the phrase “Notwithstanding anything to the contrary contained in section 73 or section 74”. It therefore appears that, assessment under section 63 can be completed independent of section 73 and Section 74, however, procedures contained in section 73 or 74 to the extent they are not inconsistent with section 63 need to be followed, while completing the assessment on principles governing best judgment assessment. Even though no return would have actually been filed in such cases, the authority to pass such assessment order is extinguished on the expiry of 5 years from due date applicable for filing annual return for the year to which tax not paid relates.
    For assessment under this section, notice has to be issued in FORM GST ASMT-14 by the proper officer. The notice would contain the grounds on which the assessment is proposed to be made on best judgment basis. The registered person is allowed a time of 15 days to furnish his reply, if any. After considering the said explanation, the order has to be passed in FORM GST ASMT- 15.
    63.3    Comparison with equivalent provisions in other laws:
    Section 23(4) of the MVAT Act contains similar provision as that in Section 63 of the GST Act.
    63.4    Related Provisions
    Section      Description
    Section 22     Registration
    Section 73 & 74     Determination of tax not paid, short paid, erroneously refunded
    63.5    FAQs
    Q1.     What is the time limit for passing order u/s 63?
    Ans. The proper officer has to pass an assessment order u/s 63 within a period of five years from the due date for filing the annual return for the year to which such tax unpaid relates to.
    Q2. Can an assessment order be passed without affording an opportunity of being heard to the person liable to be registered?
    Ans. No, an assessment order cannot be passed without giving him an opportunity of being heard.

    63.7 MCQs
    Q1.     What is the time limit for passing order u/s 63?
    (a)    5 years from the date due date for filing of the annual return for the year to which tax not paid relates.
    (b)    5 years from the end of financial year in which tax not paid relates to (c)     No time limit
    Ans. (a) 5 years from the date due date for filing of the annual return for the year to which tax not paid relates
    Q2.     No Notice is required to be given before passing assessment order under section 63?
    (a)    True
    (b)    False
    Ans. (b) False
    Q3.     Section 63 deals with
    (a)    Assessment of taxable persons who have failed to file the returns.
    (b)    Assessment of registered taxable person who have filed returns as per the law.
    (c)    Assessment of unregistered taxable persons.
    (d)    Assessment of any taxable person, whether registered or unregistered.
    Ans. (c) Assessment of unregistered taxable persons

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