Assessments, Advance Rulings, Demand & Recovery under GST | Detailed Blog 2022
Category: GST, Posted on: 26/09/2022 , Posted By: Webtel
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Assessment under GST

What are Assessments under GST?

As per Section 2(11) of the CGST Act, Assessment means determination of tax liability under the CGST Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.
Let us understand each one of them in detail.

  1. Self-Assessment- Like VAT and Excise, GST also promotes the concept of self-assessment tax wherein every registered taxable person shall himself assess the tax payable and furnish the return for the period concerned.
    Although it is a self-assessment tax regime, the government authorities have the power to re-assess or perform assessments by themselves and determine if there is any short payment of tax.

  2. Provisional Assessment- If the assessee is unable to determine the value of goods or services or both or the applicable rate of tax applicable thereon, the assessee may make a request to the officer for provisional assessment.

  3. Procedure for provisional assessment:

    1. The taxable person has to make a return request to the GST officer for the conduct of provisional assessment.
    2. Mention the specific grounds/reasons and furnish all the documents and necessary information and also the period for which provisional assessment has to be carried out.
    3. The registered person will then sign a bond, binding himself to pay the difference amount of tax arising during the final assessment.
    4. After assessing the application, the GST officer if satisfied with the genuineness of the application, will pass an order maximum within 90 days, from the date of receipt of the request, for carrying out the provisional assessment and clearly stating the grounds on which order has been passed. Among other things mention the following:
      • The rate at which the tax is to be provisionally paid.
      • The amount for which the bond is to be executed.
      • The amount of security or surety may be fixed by the proper officer.

    The final assessment order has to be passed within 6 months from the date of passing of the provisional assessment order.

  4. Best Judgement Assessment- When a taxable person is liable to get registered under GST and fails to obtain the registration or whose registration has been cancelled but has a liability to pay tax, the GST officer can 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 of the CGST Act for furnishing the annual return for the financial year to which the tax liability relates.

  5. Summary Assessment-This type of assessment is carried out to protect the interest of revenue. A GST officer can proceed to assess the tax liability of a person showing a tax liability on any evidence. To perform this assessment the authorized officer has to obtain the prior permission of an additional commissioner or joint commissioner.

  6. Scrutiny Assessment-Since GST is a self-assessment tax regime, so to verify the correctness of the returns, the proper officer can scrutinize them, as per the provisions of Section 61 of the CGST Act.
    In case of any discrepancy found, the proper officer shall furnish notice of the same to the registered person, for seeking a reply from the person. The registered person may accept the discrepancy and pay the taxes, interest and any amount due and inform the same to the proper officer. In case the discrepancy is not accepted by the registered person then they shall inform the same to proper officer.

  7. Assessment of unregistered person:Where the registration of a taxable person has been cancelled or taxable person fails to obtain registration even though liable to do so and there exists a tax liability and it has not been paid off yet, then the officer can initiate the assessment as per Section 63 of the CGST Act.

Advance Ruling under GST

What is Advance Ruling?

An advance ruling is a written interpretation of tax laws provided by the authority or appellate authority of advance ruling to an applicant on matters or questions specified in Section 97(2) or Section 100(1) of the CGST Act in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

Why is an advance ruling necessary for GST?

GST is a big-tax reform. There are continuous amendments made in the act and rules and regulations. Sometimes there is not much clarity as to the applicability of the provisions in a particular circumstance. Also, when the act was initially rolled out, not many people were aware of this and hence the concept of the advance ruling was bought under the GST Act.
Not to forget, GST being a self-assessment tax regime makes it more vital to establish an authority that could provide more clarity as to the provisions.

Practical benefits of the advance ruling:

  1. By ruling out the uncertainties and providing a better understanding and interpretation of the provisions for the activities proposed to be undertaken by the applicant.
  2. It attracts Foreign Direct Investments (FDI).
  3. It reduces litigation
  4. It increases transparency in an inexpensive manner.

Under what situation applicant can ask for an advance ruling:

An applicant who is desirous of obtaining an advance ruling, may make an application in the prescribed form and manner and accompanied by such fees as may be prescribed. The questions on which advance ruling can be sought is as follows:

  1. Classification of any goods and services.
  2. For determining the applicability of the notifications issued under the provisions of this act.
  3. Determination of time and value of supply of goods or services or both.
  4. Admissibility of the input tax credit of tax paid or deemed to have been paid.
  5. For determination of the liability to pay tax on any goods or services or both.
  6. Whether the applicant is required to be registered or not.
  7. Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.

Process of advance ruling under GST:

  1. On receipt of the application by the advance ruling authority: The authority shall forward a copy to the concerned officer, if necessary, the officers shall call upon the assessee to furnish the relevant records.
  2. The authority may, after examining the application and giving an opportunity of being heard to the applicant and concerned officer, by order, admit or reject the application.
  3. The authority shall also state the reasons, why the application is being rejected.
  4. A copy of every order made under this shall be sent to the applicant and concerned officer as well.

To whom the advance ruling is applicable:

The advance ruling so pronounced is only applicable to the applicant and the concerned officer. That means an advance ruling is not applicable to similarly place other taxable persons in the state. It is only limited to the person who has applied for it.

Time limit on the applicability of advance ruling:

There is no such time limit prescribed under the law, as to the time up to which the advance ruling shall remain in force. However, its applicability will continue till the time any new advance ruling replaces it, or there has been a change in the law that replaces the advance ruling.

Voidability of the advance ruling:

Any advance ruling sought by the way of fraud, misrepresentation, or through any illegal means, and gets discovered by the authority of advance ruling or appellate authority of advance ruling, it shall be void-ab-initio.

Authorities of Advance ruling and their power:

Both the authorities Authority for advance rulings (AAR) and Appellate Authority for advance rulings (AAAR) shall have the same powers as are vested in the Code of Civil Procedure, 1908. They have the power to examine, record attendance and check all the books of accounts and other documents of the concerned person.


Both the authorities are given the status of civil courts for the purpose of Section 195 of the Code of Criminal Procedure, 1908.
The proceeding conducted by the court will be deemed to be a judicial proceeding for the purpose of Section 196 of the Indian Penal Code.

Demand and Recovery under GST

What are demand and recovery?

Earnings in the form of taxes are a very vital source of income for the government. When the suppliers supply goods or services, the government demands tax from the consumers or the supplier as the case may be. GST is a self-assessment tax regime, the taxpayer self-assesses the tax and deposits it to the government. Due to self-assessment, sometimes the tax can be shortly paid, either done intentionally or unintentionally. Such short payments when accumulated nationwide will lead to a loss of revenue for the government in large sums. So, to avoid such revenue leakage, the government then adopts to recover such shortly paid taxes from the public. The government adopts strict measures to recover taxes from defaulters.

Determining the tax which is short or not paid or refunded erroneously (Section 73 of the CGST Act)

When any tax has been short paid by the assessee or has not been paid or erroneously refunded and where input tax credit has been wrongly utilized or availed for any of the reasons other than fraud, will-full misstatements, or any suppression of tax. In such a situation, the proper officer shall send a show-cause notice as to why the taxable person should not pay the tax amount and interest mentioned in the notice. The proper officer shall also mention the amount of penalty, if any, to be paid by the assessee.

The time period for notice: The notice shall be served by the proper officer at least three months before the time limit specified in Section 73(10) of the CGST Act for issuance of order

Service of the statement: Among other things the proper officer shall serve a statement along with the notice to the concerned assessee. The statement shall include all the details relating to the tax shortly paid, not paid, erroneously refunded or wrongly availed ITC.

If the concerned person, upon the notice being served, pays the tax along with interest, within 30 days of issuance of a notice, then the penalty shall not be levied and all the proceedings against that person relating to the notice shall be considered as complete.

If the concerned person fails to pay the tax and makes a representation to the proper officer, the officer shall take into account the same and determine the amount of tax, interest, and a penalty equal to 10% of the tax or Rs.10,000 (whichever shall be higher) which is due from the person liable to pay the tax. After this, the proper officer shall pass an order.

Adjudication and limitation for recovery of tax:

In case of non-fraud: In such case adjudication order shall be passed within a period of three years from the date of filing of annual return for the prevailing financial year.

In case of an erroneous refund: In this case, the erroneous refund that is received by the assessee in the adjudication order shall be passed within a period of three years from the date the erroneous refund was credited to the account of the assessee.

The order of decision shall be passed by the proper officer, within three years from the due date of furnishing the annual return for the financial year.

Determination of tax shortly paid, or not paid or refunded erroneously and input tax credit has been availed by the means of fraud, will-full misstatement or suppression of facts: (Section 74 of the CGST Act)

When it comes to the notice of the proper officer that any tax has been short paid or not paid or erroneously refunded or where input tax credit has been wrongly availed by the reason of fraud, will-full misstatement, or suppression of facts, the proper officer shall issue a show-cause notice to the defaulting assessee seeking reasons as to why the mentioned amount of tax, interest or penalty in the notice shall not be paid by the assessee.

The time period for notice: The notice shall be served by the proper officer at least 6 months before the issuance of an order under Section 74(10) of the CGST Act.

Service of the statement: Among other things the proper officer shall serve a statement along with the notice to the concerned assessee. The statement shall include all the details relating to the tax shortly paid, not paid, erroneously refunded, or wrongly availed ITC.

The defaulting person, before the notice being served, shall pay the tax, including interest and penalty at the rate of 15% of the tax. Inform the proper officer in writing about the payment.
When the notice is being served, defaulting person shall pay the tax along with interest and penalty at the rate of 25% of tax payable within 30 days of issuance of notice.

Adjudication and limitation for recovery of tax: When the default occurs on account of fraud, or suppression of facts, the case shall be adjudicated within a period of five years from the due date of filing of the annual return for the prevailing financial year.

In case the assessee has received an erroneous refund the case shall be adjudicated within a period of 5 years. The limitation for 5 years shall be counted from the date the refund was credited into the account of the assessee.

Tax collected but not paid to the government (Section 76 of the CGST Act)

If a person collects tax from another person, such tax shall be deposited to the government, irrespective of the fact whether the goods or services supplied are taxable or not.

If any person who is liable to pay tax to the government, fails to make such payment, then the proper officer shall serve a show-cause notice to the defaulting person as to why he should not pay the amount of tax, interest and penalty if any, mentioned in the notice, to the government.

The opportunity of being heard shall be given to the defaulting assessee, if he makes a written request. After the representation by the assessee, it shall pay the tax as mentioned in the notice.

Adjudication and limitation for recovery of tax.

The order shall be passed by the public officer within one year from the date of issuance of the notice.

For the purpose of computing one year, the period of stay order passed by the appellate court shall be excluded.


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