Section 62 of CGST- Assessment of Non-Filers of Return

Section 62 of Central Goods and Service Tax Act,2017, come into effect when a taxable person fails to file returns, as per requirements under section 39; or final return on cancellation of registration under section 45 of the Act, or; as the case may be. This blog talks all about section 62 Assessment under GST.

Meaning of Assessment

All taxpayer has to give their income details to the Income-Tax Department. After getting the return examination is the next process. The Income Tax Department is liable for all the examinations. The examination of return on income by officers is Assessment.

Assessment under GST

All the registered taxable person has to furnish a return. The return will include all the supplies made or; received and discharge resultant tax liability for the aforesaid tax period by the due date.

Section 46 of CGST, gives a time of 15 days to the taxable person to file a return. In case of failure to file then notice under section 62 will be sent.

The assessment procedure under GST is a self-assessment. Assessment of every taxable payer during the regime of VAT was on yearly basis, but under GST the authorities did not do so. The authorities do not have the power to interfere in the self-assessment until there is any discrepancy that comes to the notice of the authority.

Section 62 Assessment under GST (Assessment of Non-filers of Return)

Following are the words of section 62 of the Central Goods and Services Tax:

“(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 five years from the date specified under section n 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of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or payment of late fee under section 47 shall continue”.

Conditions for Section 62 Assessment under GST

Following are the four conditions under the section 62 of the Act:

• There should be a failure in filing a return under section 39 or section 45 by the registered taxpayer.
• The notice for not filing a return made by CSTR-3A under section 46 read with rule 68 CGST.
• After notice under section 46 the taxable person should furnish the return within 15 days.
• In case of failure to file the return after 15 days the person will receive a notice under section 62. In the FORM GST ASMT-13 and by uploading a summary electronically in FORM GST DRC-07 under rule one of the section. Further, the officers may start to assess the tax liabilities of the said person to the best of his judgement.

Best Judgment Assessment

An income tax assessment done by the assessing officer with limited knowledge about the financial status of the assesses is the Best Judgement.

The Best judgement assessment shall not become the worst judgement assessment. It means that the determination of tax liability cannot be a forceful valuation of turnover. Estimation cannot be based on some random growth rate unaware of the nature of business activities.

The law does not support the view that the tax liability determined on basis of best judgement should be ‘gross liability’ and not ‘net tax liability. Courts will have the decision in this matter and when one has failed to file returns. Unusually, taxpayers can find favours from courts in the manner of arriving at the best tax liability

However, the best judgement under section 62, when a return is not filed within 30 days that judgement becomes final. And even if returns are filed afterwards, the order cannot be withdrawn and the only remedy left will be to file such returns and appeal under section 107 of the Act. Section 107 says that there is a maximum of 3 months to file an appeal before the First Appellate Authority. It has a further time limit of 1 month to overlook the explainable delay in filing an appeal.

Lifelines to the Return Defaulter

There are two lifelines provided by the legislature to the non-filler of return. They are:

• If the return is already furnished within 15 days of the notice issued in FORM GSTR-3A under section 46 of the Act.
• If the valid return has been furnished within 30 days of the service of the assessment order issued as per section 62(1) of the CGST in FORM ASMT-13.

Assessment of Unregistered person

If a person

• Fails to get registration although they are liable to take registration;
• cancelled registration as per section 29(2) but has a liability to pay tax.

Then the authorized officer should issue a notice to such a taxable person. Notice will be in FORM GST ASMT-14 along with the grounds on which the assessment is proposed to be done on basis of best judgement. It shall give a summary by digital mode in FORM GST DRC-01. After notice under section 46, the taxable person should furnish the return within 15 days. In case of failure to file the return after 15 days, the person will receive a notice under section 62. Notice will be in the FORM GST ASMT-13 and uploading a summary electronically in FORM GST DRC-07 under rule one of the section. Further, the officers may start to assess the tax liabilities of the said person to the best of his judgement.

Want to get registration under GST?

Related Case Laws

There are many cases related to assessment under section 62 of CGST Act, 201, two of them are:

M/s Vinman Constructions Limited -2022-VIL-157-JHR

In this case, the court said that,

“The assessment order and the Summary of the Order in DRC-07 are set aside. The impugned assessment order passed under section 62 of the Act by Respondent No. 2 suffers from a serious lacuna due to the non-issuance of notice under section 46 of the Act. The assessment order itself suffers from serious infirmities for non-compliance with principles of natural justice and procedural requirement prescribed under the Act. In the absence of proper notice upon the petitioner, the impugned action has led to serious penal consequences which cannot be sustained given serious infirmities in the procedure adopted by the Assessing Officer”.

Associate Décor LTD – 2021-VIL-535-Kar

In this case, it was said that the period of 30 days as given under section 62(1), shall be reckoned with the permission of the Court.

The Court further, said that

“in light of permission granted by the court, the petitioner could continue to file the return within the time granted by the Court and the return filed was a return as contemplated under Section 62(2) which is to be construed to be return filed within the time. If that were to be so, the return filed in terms of the Court order was a return in terms of Section 62(2) and the best judgment assessment orders passed under Section 62(1) would stand withdrawn”.

Conclusion

Therefore, it is clear from the above that the section 62 assessment under GST is a self-assessment. The authorities do not have the power to interfere in the self-assessment until any discrepancy comes to notice. Section 46 gives a time of 15 days for the taxable person to file a return. After 15 days such taxpayer will receive notice as per section 62 in case of failure.