Assessment, Provisional Assessment &

Audit

Arun Kumar Mishra,

Joint Secretary,
CTD, Bihar.

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 Assessment
• Assessment is the statutorily required recording of the tax
liability (Section 6203 of Revenue and Taxation Code, IRS, USA)
• Assessment is the final determination of tax liability
• Defined as determination of tax liability under this Act {Section
2(12)}
• Self assessment (Section 44) is the default rule under GST
• Scrutiny of Returns (Section 45)
• Other modes of assessment under GST:
– Provisional Assessment (Section 44A)
– Assessment of non-filer (Section 46)
– Assessment of un-registered persons (Section 47)
– Summary Assessment (Section 48)
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 Assessment
• Based on manner and circumstances, following
kinds of assessments:-
– Self assessment
– Summary assessment
– Regular assessment
– Provisional assessment
– Best judgment assessment
– Protective assessment

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 Self Assessment
• Taxes due during any tax period to be assessed by
concerned registered taxable person and
– such person to file a return under Section 27
– filing of return prescribed by Section 27 implies self
assessment.
• In case of goods returned within 6 months of receipt,
amount of ITC availed earlier in respect of such receipt
to be included in self assessed return.
[Explanation to Section 44]

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 Provisional Assessment
• If taxable person unable to determine—
– The value of goods and/or services or
– The applicable rate of tax
• Upon furnishing of bond with security/surety, the proper officer may permit
payment of tax provisionally at rate or value specified in order
[Section 44A(1) & (2)]
• Final order to be passed within six months (extendible by Additional/Joint Commissioner
by 6 months and by Commissioner beyond six months)
[Section 44A(3) ]
• If amount paid provisionally < amount determined finally, interest to be paid
[Section 44A(4)]
• If amount paid provisionally > amount determined finally, excess to be refunded
if –
– It relates to exports/inputs for exports, except in case of goods subject to export duty
– It has accumulated as ITC on account of inverted duty structure
• Interest as per section 39 to be paid on such refund [Section 44A(5)]
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 Scrutiny of Returns
• Every return to be scrutinized
– in accordance with pre-defined parameters to
– verify correctness thereof [Section 45(1)]
• Discrepancies
– to be communicated in manner prescribed
– if explained satisfactorily, to be informed and no further action to be taken
[Section 45(2) & (3)]
• If no satisfactory explanation furnished within 30 days or tax not
paid after accepting discrepancy then proper officer may initiate-
– Tax audit, or
– Special audit, or
– Inspection, search and seizure, or
– Adjudication for recovery
[Section 45(4)]
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 Assessment of…
• Non-filer
• If a registered taxable person does not furnish
• the monthly/quarterly or
• final return
– within 15 days of service of notice then
– proper officer may pass a best judgment assessment order within
• 5 years of due date of annual return, in case there is evidence of any fraud,
or
• 3 years of due date of annual return, in any other case
• If valid return furnished within 30 days of service of such
order then the order deemed to have been withdrawn
• Interest or late fee, as applicable, to be paid.
[Section 46]
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 Assessment of…

• Un-registered Person
• If a person liable to be registered in terms of Schedule III
does not obtain registration
• Proper officer may pass a best judgment assessment
order within 5 years of due date of annual return
• Such order to be passed only after granting reasonable
opportunity of being heard to said person
[Section 47]

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 Summary Assessment

• If proper officer has

– evidence of any tax liability of a person and
– reason to believe that delay in assessment will adversely affect interest of revenue
• Such officer, to protect interest of revenue, may pass an assessment order
• The order to be passed only with prior sanction of Additional/Joint Commissioner
• If, in case of goods, person chargeable with tax not ascertainable then person in
charge of goods shall be deemed to be such person
• If—
• upon application within 30 days of receipt of order, or
• suo moto—
– order considered erroneous by Additional/Joint Commissioner then
– such order may be withdrawn and Section 51 to apply
[Section 48]

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 Departmental Audit
• Audit is detailed examination of records, returns and other documents to
– verify correctness of the contents relating to
– turnover, claims, taxes
– assess level of compliance
• Commissioner/Authorized Officer, by general/specific order
– direct audit of taxable person
– for prescribed period and frequency
• Tax payers to be selected for audit on the basis of risk analysis
• Risk scores and risk profiling to be done
• Some selection criteria:
– Total tax/tax throughput
– Refund claim
– Export/zero rating
– History of delinquency
– Unusual deviations from “norms”/”standards”
[Sections 49(1) & (2)]
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 Departmental Audit
• Auditee to be informed by notice at-least 15 days in advance
• Audit to be preceded by compilation and collation of
– Records/documents relating to auditee
– Records/documents relating to ‘industry norms/standards’
– Questionnaire
– Checklist
• Desk/Field audit to be conducted
– in transparent manner in accordance with manual/SOP
– within 3 months of commencement, extendable by Commissioner
by maximum 6 months
– “commencement” is the earlier of the date
• on which is records are furnished, or
• institution of audit at place of business [Section 49(3) & (4)] 11
 Departmental Audit
• Auditee to provide facility to verify records and furnish
information required by audit authority
• Audit authority to
– verify and examine records and responses
– carry out cross verification from external sources
– assess evidence
• Upon conclusion, proper officer to communicate to auditee
– findings of audit and reasons there for
– rights and obligations of auditee
• Proceedings u/s 51 to be initiated if audit reveals
– detection of tax not paid/short paid or
– ITC erroneously availed or
– tax erroneously refunded
[Section 49(6) &12(7)]
 Special Audit
• Special audit is an audit of records on specific issues and originates from
Section 233A of Companies Act, 1956
• If any officer not below rank of Deputy/Assistant Commissioner during
any
– scrutiny
– enquiry
– investigation or
– any other proceeding
• is of the view that
– value has been incorrectly declared or
– credit availed is not within “normal limits”
• then he may, by written notice, direct audit/examination of accounts and
record by such Chartered or Cost Accountant nominated by Commissioner
• Such audit can be directed only with prior approval of Commissioner
[Section 50(1)]
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 Special Audit

• The auditor to furnish audit report within 90 days to officers

ordering such audit
• The 90 days period may be extended, by a further 90 days, by
the proper officer
– on application made by
• the auditee or
• the auditor or
– for any material and sufficient result
• Special audit, if ordered, to be in addition to any other
statutory audit
• Expenses of such audit to be determined and borne by
Commissioner
[Section 50 (2) to
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(4)]
 Special Audit
• Proceedings u/s 51 to be initiated if audit reveals
– detection of tax not paid/short paid or
– ITC erroneously availed or
– tax erroneously refunded
• Auditee to be afforded opportunity of hearing if findings
of special audit are to be used in any proceeding against
him
[Section 50 (5) & (6)]

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  Value CGST SGST
Goods sold by A to B on 01.08.16 1000 100 110
ITC taken by B in respect of August
2016   100 110
Goods returned by B to A on 15.01.17 500 50 55
Amount to be added by B in respect of
January 2017   50 55

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THANK YOU

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