ASSESSMENT OF NON-FILING OF RETURNS UNDER THE

GOODS AND SERVICES ACT, 2017

Section 62 of the GST Act 2017: Assessment of Non-Filers of Returns

(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 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assessment order shall be deemed to have been withdrawn, but the liability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 the payment of
late fee under section 47 shall continue.

Introduction:

This section begins with a non-obstante clause, which means that when the
provisions of sections 73 or 74 of the Act apply, the provisions of section 62 of the Act
cannot be invoked. Section 62, on the other hand, can only be used by registered
taxable persons who have failed to file required returns under section 39 or, as the
case may be, a final return on cancellation of registration under section 45 of the Act.
The issuance of a notice under section 46 of the Act appears to be a pre-condition for
initiating proceedings under section 62. Section 62, on the other hand, cannot be
used to justify not filing GSTR-1, GSTR-2, or GSTR-9. As a result, every
registered person is expected to self-assess the amount of tax due and file prescribed
valid returns for each tax period within the specified time frame.

Analysis of the Provision:

A failure to comply with the notification issued as per Section 46 triggers the
initiation of proceedings under this section, in case the assessee fails to file the return
within 15 days of receiving the notice under section 46, the Proper Officer may
evaluate the tax liability in accordance with Rule 100, that is, to the best of his
judgement, taking into account all relevant information on file, and issue an
assessment order. If the returns are not filed within 15 days, the relevant authority
will issue an assessment order, which will be issued electronically in FORM GST
ASMT-13. The proper officer shall make this order of assessment to the best of his
ability, taking into account all relevant material that is available or that he has
gathered, and shall issue an assessment order within five years of the date specified
under section 44 for filing the annual return for the financial year in which the tax
not paid relates. This is commonly known as the “best judgement assessment”, which
can be completed without giving any notice of hearing to the assessee. But the only
criteria that need to be fulfilled is that the best judgement assessment should be
made based on the material available or gathered by the proper officer. Suppose the
registered person files a reasonable return within thirty days of receiving FORM GST
ASMT-13. In that case, the assessment order will be presumed withdrawn, but the
registered person's obligation to pay interest under section 50 sub-section (1) or the
late charge under section 47 would continue. Returns under section 39 and section
45 are covered by section 62. The non-filing of GSTR 3 or (3B) and GSTR 10 (final
return) will attract the best judgement assessment. A failure to file GSTR 1 does not
attract the provisions under Section 62.

Time limit:

Section 62 requires that an order be granted within five years of the date specified in
section 44 for filing an annual return for the financial year in which the tax not paid
applies. According to Section 44(1), the annual return must be filed on or before the
31st December following the end of the financial year to which it relates. However, an
extension of the deadline for filing the annual return may be considered.

The failure to issue a notification under Section 46 precludes utilising Section 62,
albeit other options for recouping tax debt exist. The assessment order is presumed
to be withdrawn if a registered individual submits a "valid return" within 30 days of
receiving the assessment order. A return filed under Section 39(1) of the Act on
which self-assessed tax has been paid in full is referred to as a "valid return" in
Section 2(117).

The words 'notwithstanding anything contradictory to sections 73 and 74' begin

section 62. Sections 73 and 74 provide a Show Cause Notice and an opportunity to be
heard before issuing tax demand orders. Furthermore, if the existence of omissions
and commissions, as defined in section 74, is proven, the tax might be required for
the period specified in that section. The non-obstante clause u/s 62 seeks to
overcome the pre-condition of issuing a Show Cause Notice, which provides the
opportunity to be heard for seeking tax for the period stipulated under section 74 in
the presence of omissions and commissions listed under section 74.

Best Judgement Assessment under GST:

In the best judgement assessment, an assessing officer assesses based on his

reasoning and using the information available or so collected. The assessment shall
be then made without any bias. Two situations under which the best judgement
assessment under GST becomes applicable.

a. When a taxable person has not filed a return

In the case of Assessment of Non-filers of return, the proper officer shall first issue a
notice to the registered persons who fail to furnish regular returns as prescribed
under section 39 or the final return under section 45 of the GST Act and where the
notice shall require them to file their return within 15 days and in case the registered
persons fail to do so then the proper officer has the authority to proceed with the
Best Judgement Assessment based on the material either available to him or
gathered by him. There shall also be a time limit imposed to pass the Assessment
Order, and the proper officer shall issue the Assessment Order within five years from
the due date to furnish the annual return for the financial year to which the non-
payment of taxes relates. Form ASMT-13 will be used to issue such an order. The
summary will be prepared in Form GST DRC-07. The Best Judgement Assessment
will be revoked if the registered person submits the return within 30 days of service
of the assessment order.

b. When a person has not registered for GST, even though he is liable

In the case of Assessment of unregistered persons, the proper officer can assess the
tax liability of such a person to the best of his judgement in such situations as where
a taxable person failed to obtain registration despite there being a liability to do so,
or the person’s registration has been cancelled due to contravention of the provisions
of the act, where a composition taxpayer has not furnished returns for three
consecutive tax periods. In the case of a regular taxpayer, returns have not been
provided for a continuous period of six months or in the case where the registration
has been acquired through fraud, wilful misstatement or suppression of facts.

Conclusion:

In order for effective implementation of the GST Act, timely filing of valid returns by
the registered person by making correct self-assessment is of significance. This is the
main reason behind this provision. If a registered person fails to make a self-
assessment, the Proper Officer has jurisdiction under section 62 of the act to issue
the best judgement assessment to recover the tax due for that tax period. Even if the
assessment is completed, if the aggrieved registered person fails to submit a valid
return within 30 days, the aggrieved registered person has three months from the
date of receipt of the decision to file the first appeal under section 107 of the act. It is
preferable to submit specified returns within the prescribed time limit to avoid future
litigation.