Chapter 13

Assessment
Sections Rules
59. Self-assessment 98. Provisional Assessment
60. Provisional assessment 99. Scrutiny of returns
61. Scrutiny of returns 100.Assessment in certain cases
62. Assessment of non-filers of
returns
63. Assessment of unregistered
persons
64. Summary assessment in certain
special cases

Statutory Provisions

59. Self-assessment
Every registered person shall self-assess the taxes payable under this Act
and furnish a return for each tax period as specified under section 39.

Related provisions of the Statute

Section or Rule Description

Section 2(94) Definition of ‘Registered Person’
Section 2(97) Definition of ‘Return’
Section 39 Furnishing of returns
Chapter VIII of the CGST Rules, Returns
2017

59.1 Introduction
In terms of section 2(11) of the Act, “assessment” means determination of tax
liability under this Act and includes self-assessment, re-assessment,
provisional assessment, summary assessment and best judgement
assessment. It is important to note that there is no provision permitting a
Proper Officer to re-assess the tax liability of taxable person. The provisions
of the law permit a registered person to rectify any incorrect particulars
furnished in the returns. In terms of section 39(9), if a registered person
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discovers any omission or incorrect particulars furnished in a return, he is

required to rectify such omission or incorrect particulars in the return to be
furnished for the tax period during which such omission or incorrect
particulars as are noticed (on payment of due interest), unless the same is as
a result of scrutiny, audit, inspection or enforcement activity by the tax
authorities, or such rectification is time barred (i.e., after 30 th November
following the end of the financial year, or the actual date of furnishing of
relevant Annual Returns, whichever is earlier).
It is normally understood that an Assessment is conducted by a Proper Officer.
In terms of section 2(91) of the CGST Act, 2017, a “Proper Officer” in relation
to any function to be performed under this Act, means the Commissioner or
the officer of the central tax who is assigned that function by the
Commissioner.
The CGST Act contemplates the following types of Assessments:
 Self-assessment (Section 59)
 Provisional Assessment (Section 60)
 Scrutiny of returns filed by registered taxable persons (Section 61)
 Assessment of non-filers of returns (Section 62)
 Assessment of unregistered persons (Section 63)
 Summary Assessment in certain special cases (Section 64)
(i) Self-assessment in terms of Section 59 refers to the assessment
made by registered person himself / itself while all other
assessments are undertaken by tax authorities.
(ii) Provisional Assessment under Section 60 is an assessment
undertaken at the instance of the registered person. Provisional
Assessment is followed by a final Assessment.
(iii) Scrutiny under section 61 is a form of re-assessment (since the
self-assessment is made by the registered person himself / itself).
A scrutiny of returns conducted by the Proper Officer who checks
for the correctness of the returns filed and intimates the registered
person of any discrepancies noticed.
(iv) Assessment of non-filers under section 62 and Assessment of un-
registered person under section 63 are in the nature of ‘best
judgement’ assessments.
(v) Summary Assessment under Section 64 is a form of protective
assessment based on information gathered from the tax authorities
in a particular case.

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59.2 Analysis
Self-assessment means an assessment by the registered person himself and
not an assessment conducted or carried out by the Proper Officer. The GST
regime continues to promote the scheme of self-assessment. Hence, every
registered person would be required to assess his tax dues in accordance
with the provisions of GST Act and report the basis of calculation of tax dues
to the tax administrators, by filing periodic tax returns.
Tax which is self-assessed consists of self-determination of (i) supply not
excluded by schedule III (ii) taxability of supply not covering alcohol, 5-petro
product or securities (iii) classification – goods or services (iv) exemption (v)
liability on taxable person on forward charge and not on recipient on reverse
charge basis (vi) valuation with inclusions and exclusions (vii) admissibility of
input tax credit and (viii) determination of ‘net tax’ liability. This liability stands
‘disclosed’ in statement filed under section 37 in Form GSTR-1 and liability
disclosed is ‘discharge’ in returns filed under section 39 in Form GSTR-3B. In
a self-assessment tax system, the determination of liability may be carried out
privately in the invoice issued under section 31. For this reason, experts hold
the view that the invoice (tax invoice or bill of supply) is the self-determination
document prepared by the Registered Person in terms of the authority
conferred by section 59.
The provisions of the law permit a registered person to rectify any incorrect
particulars furnished in the returns. In terms of section 39(9), if a registered
person discovers any omission or incorrect particulars furnished in a return,
he is required to rectify such omission or incorrect particulars in the return to
be furnished for the tax period during which such omission or incorrect
particulars are noticed (on payment of due interest), unless the same is as a
result of scrutiny, audit, inspection or enforcement activity by the tax
authorities, or such rectification is time barred (i.e., before 30 th of November
following the end of the financial year to which such details pertains or the
actual date of furnishing of relevant Annual Returns, whichever is earlier).
Further, Para 4 of Circular No. 26/2017-GST dated 29.12.2017, clarifies that
in case of summary returns like Form GSTR-3B, where there are no separate
tables for reflecting tax effects of amendments for past periods, the figures
pertaining to the current month can be adjusted for past month amendments.
These provisions exhort the concept of self-assessment.
It is important to note that ‘self-assessment’ does not confer authority of an
assessing officer (called Proper Officer) on the taxpayer. A taxpayer must
exercise this liberty to assess tax liability voluntarily with the perils of interest
and penalty for any miscalculations or misinterpretations without usurping the
role of proper officer.

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For e.g., if tax is charged in excess to a customer and the same has been
reported in Form GSTR 1 and paid in Form GSTR 3B, whether taxpayer on
realizing the error, is required to file a refund claim under section 54 or free to
adjust the excess with any other dues. And if the tax is correctly charged to
customer but error is in Form GSTR 1 and Form GSTR 3B, whether taxpayer
is still liable to file refund under section 54 or does section 59 permit taxpayer
to suo-moto adjust the excess by reducing any other tax payable.
Experts are of the view that taxpayer must submit to the jurisdiction of proper
officer to examine and sanction refund in case the tax charged to customer is
in excess by filing a refund application and limit suo moto rectification only in
respect of errors of reporting noted in Form GSTR 1 and/or Form 3B but not in
tax invoice issued to customer.
The point therefore is about the ‘limits’ to this authority of self-assessment
cannot be lost sight of while complying with GST. Self-assessment does not
mean ‘unsupervised self-administration’.

59.3 Related provisions of the Statute

Section Rule Form
Self-Assessment by Regular Assessee and Casual 61 Form GSTR
Taxable Person under section 39(1) 3B
Self-Assessment by Composition Dealer under 62 Form GSTR
section 39(2) 4
Self-Assessment by Non-Resident Taxable Person 63 Form GSTR
under section 39(5) 5
Self-Assessment of OIDARS provided by person 64 Form GSTR
located outside India to non-taxable person in India 5A
under section 39(1)
Self-Assessment by ISD under section 39(4) 65 Form GSTR
6
Self-Assessment of Tax Deducted at Source under 66 Form GSTR
section 39(3) 7
Self-Assessment of Tax Collected at Source under 67 Form GSTR
section 52(4) 8
Self-Assessment for purpose of Refund by persons 82 Form GSTR
having UIN under section 39(1) 11
59.4 Issues and Concerns

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In respect of discharge of any additional tax liability that may arise on account
of any re-working or re-computation etc., (for example - Reversal of input tax
credit on account of obtaining completion certificate required under any law
for the time being in force by a builder in the construction sector), the
proportionate input tax credit ought to be reversed (in this example, in case of
unsold flats).
Reference may be had to section 75(12) where ‘undisputed arrears’ permits
recovery action by tax authorities without affording an opportunity to be heard.
Finance Act, 2021 has inserted an explanation to section 75(12) which
essentially permits direct access to recovery provisions in section 79 when
there is a liability ‘disclosed’ in GSTR-1 which is not ‘discharged’ in GSTR-3B,
even without issuing a show cause notice. There have been several decisions
of High Courts striking down recovery action without issuing notices such as
Refex Industries Ltd. v. ACCE 2020 (74) GSTR 274 (Mad.) and UoI v. LC
Infra Projects Pvt. Ltd. 2020 (81) GSTR 281 (Kar). In spite of these decisions,
Finance Act, 2021 has made this amendment empowering tax administration.
Revenue’s perspective shared by experts is that when tax is self-assessed
and disclosed in GSTR-1 but not discharged in GSTR-3B, there remains no
further reason to give yet another opportunity (notice) to explain why amount
of self-assessed liability that Registered Person has voluntarily disclosed in
Form GSTR-1 should not be recovered if rectification is not carried out within
3 months (as required by section 78 before taking any recovery action under
section 79) but left undischarged in Form GSTR-3B. Clearly, undischarged
self-assessed and voluntarily disclosed liability is an ‘undisputed arrear’ and
not a ‘disputed arrear’ to attract the requirement to issue a notice. This new
amendment is yet to reach the Courts and stand the test of law. And if the
Court grant their seal of approval, experts caution that there would be
aggressive tax administration and Registered Persons must exercise great
caution in filing GSTR-1 and not only in filing Form GSTR-3B. To err is human,
but to leave errors unrectified by more than 3 months attracts the wrath of this
new amendment.
59.5 FAQ
Q1. Who is the person responsible to make self-assessment of taxes
payable under the Act?
Ans. Every registered person shall self-assess the taxes payable under this
Act and furnish a return for each tax period as specified under section 39.

Statutory Provisions
60. Provisional Assessment

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(1) Subject to the provision of sub-section (2),where the taxable person is

unable to determine the value of goods or services or both or
determine the rate of tax applicable thereto, he may request the proper
officer in writing giving reasons for payment of tax on a provisional
basis and the proper officer shall pass an order within a period not later
than ninety days from the date of receipt of such request, allowing
payment of tax on provisional basis at such rate or on such value as
may be specified by him.
(2) The payment of tax on provisional basis may be allowed, if the taxable
person executes a bond in such form as may be prescribed, and with
such surety or security as the proper officer may deem fit, binding the
taxable person for payment of the difference between the amount of
tax as may be finally assessed and the amount of tax provisionally
assessed.
(3) The proper officer shall, within a period not exceeding six months from
the date of the communication of the order issued under sub-Section
(1), pass the final assessment order after taking into account such
information as may be required for finalizing the assessment:
Provided that the period specified in this sub-section may, on sufficient
cause being shown and for reasons to be recorded in writing, be
extended by the Joint/Additional Commissioner for a further period not
exceeding six months and by the Commissioner for such further period
not exceeding four years.
(4) The registered person shall be liable to pay interest on any tax payable
on the supply of goods or services or both under provisional
assessment but not paid on the due date specified under subsection
(7) of section 39 or the rules made thereunder, at the rate specified
under sub-Section (1) of Section 50, from the first day after the due
date of payment of tax in respect of the said supply of goods or
services or both till the date of actual payment, whether such amount is
paid before or after the issuance of order for final assessment.
(5) Where the registered person is entitled to a refund consequent to the
order of final assessment under sub-Section (3), subject to the
provisions of sub-Section (8) of Section 54, interest shall be paid on
such refund as provided in Section 56.

Extract of the CGST Rules, 2017

98. Provisional Assessment

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(1) Every registered person requesting for payment of tax on a provisional

basis in accordance with the provisions of sub-section (1) of section 60
shall furnish an application along with the documents in support of his
request, electronically in FORM GST ASMT-01 on the common portal,
either directly or through a Facilitation Centre notified by the
Commissioner.
(2) The proper officer may, on receipt of the application under sub-rule (1),
issue a notice in FORM GST ASMT-02 requiring the registered person
to furnish additional information or documents in support of his request
and the applicant shall file a reply to the notice in FORM GST ASMT –
03, and may appear in person before the said officer if he so desires.
(3) The proper officer shall issue an order in FORM GST ASMT-04
allowing the payment of tax on a provisional basis indicating the value
or the rate or both on the basis of which the assessment is to be
allowed on a provisional basis and the amount for which the bond is to
be executed and security to be furnished not exceeding twenty-five per
cent. of the amount covered under the bond.
(4) The registered person shall execute a bond in accordance with the
provisions of subsection (2) of section 60 in FORM GST ASMT-
05 along with a security in the form of a bank guarantee for an amount
as determined under sub-rule (3):
Provided that a bond furnished to the proper officer under the State
Goods and Services Tax Act or Integrated Goods and Services Tax Act
shall be deemed to be a bond furnished under the provisions of the Act
and the rules made thereunder.
Explanation. - For the purposes of this rule, the expression “amount”
shall include the amount of integrated tax, central tax, State tax or
Union territory tax and cess payable in respect of the transaction.
(5) The proper officer shall issue a notice in FORM GST ASMT-06, calling
for information and records required for finalization of assessment
under sub-section (3) of section 60 and shall issue a final assessment
order, specifying the amount payable by the registered person or the
amount refundable, if any, in FORM GST ASMT-07.
(6) The applicant may file an application in FORM GST ASMT- 08 for the
release of the security furnished under sub-rule (4) after issue of the
order under sub-rule (5).
(7) The proper officer shall release the security furnished under sub-rule

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(4), after ensuring that the applicant has paid the amount specified in
sub-rule (5) and issue an order in FORM GST ASMT–09within a period
of seven working days from the date of the receipt of the application
under sub-rule (6).

Related provisions of the Statute

Section or Rule Description
Section 2(11) Definition of ‘Assessment’
Section 39 Furnishing of returns
Section 50 Interest on delayed payment of tax
Section 54 Refund of Tax
Section 56 Interest on delayed refunds

60.1 Introduction
Provisional assessment can be resorted to in the following situations:
(i) At the outset, “unable to determine” does not mean “difficult”. Inability
due to unavailability of facts relevant for determination of tax liability. For
e.g. if rate of tax was dependent on ‘percentage of copper content’, then
unless this fact (percentage of copper content) is determined by a
laboratory, neither taxpayer nor tax administration can arrive at the
applicable rate of tax. This is just one example and there are others.
Provisional assessment cannot be treated to be a substitute for Advance
Ruling.
(ii) It would be abdication of self-assessment responsibility by taxpayers to
‘claim’ inability to determine tax liability and remarkably place that
responsibility before the proper officer. Except for facts, inability to
determine tax liability on account of interpretation of law does not come
within the operation of section 60.
60.2 Analysis
The facility of provisional assessment is available only in the cases of
valuation and determination of rate of tax. The provisions of this section
cannot be extended for any other purpose or subject matter. For example,
there may be uncertainty about the kind of tax (IGST or CGST-SGST)
applicable, time of supply, supplies to be treated as “supply of goods” or
“supply of services”, determination of mixed or composite supply is a rate
dispute, admissibility of ITC, quantum of reversal of ITC, whether a particular

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action is supply or not. In the aforesaid kind or classes of cases, recourse is

not available to provisional assessment.

Procedure
(i) In terms of Rule 98(1), the process of provisional assessment
commences on furnishing of an application by the registered person
along with the necessary supporting documents in Form GST ASMT-01,
electronically through the common portal.
The provisional assessment cannot be resorted to by the Proper Officer
on suo-motu basis.
(ii) The Proper Officer will thereafter issue a notice in Form GST ASMT-02.
As per ASMT-2, reply is required to be given within 15 days to the
registered person and if required seek additional information or
documents. At this stage the proceedings are deemed to have
commenced and the applicant is required to file his objections / make
submissions in Form GST ASMT – 03. The registered person can also
appear in person and be heard provided he makes a specific request for
a personal hearing.
(iii) On due consideration of the reply so filed, and after providing a
reasonable opportunity of being heard, the Proper Officer must issue an
order in FORM GST ASMT – 04, by allowing payment of tax on
provisional basis, indicating the value or rate or both on the basis of
which assessment is allowed on a provisional basis The Proper Officer,
in the normal course, cannot pass an order rejecting the application of
provisional assessment. Since section 60(1) employs the term ‘shall’
pass order ‘allowing’ payment of tax provisionally. The word “shall” in
this circumstance cannot be construed as “may”.
(iv) The order so passed should also indicate the amount for which bond has
to be executed in Form GST ASMT – 05 by the applicant. The security
has to be furnished in the form of bank guarantee not exceeding 25% of
the bond ‘amount’ which shall include IGST, CGST, SGST or UTGST
and cess (if any) payable in respect of the transaction. A bond furnished
to the Proper Officer under State Goods and Services Tax Act or
Integrated Goods and Services Tax Act shall be deemed to be a bond
furnished under the provisions of Central Goods and Services Tax Act
and the rules made thereunder.
If the bond and security prescribed in ASMT-05 is not provided within the
period specified in notice, the provisional assessment permitted in ASMT-04
shall lapse.

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Finalization of provisional assessment

Once the above process is complete the Proper Officer by issue of a notice
in Form GST ASMT-06, will call for information and records required for
finalization of assessment. On conclusion of the due process of hearing, a
final assessment order shall be passed by the Proper Officer in Form
GST ASMT-07, specifying the amount payable or refundable to the registered
person within a period of 6 months from the date of communication of
provisional assessment order. However, on sufficient cause being shown and
for reasons to be recorded in writing, this period can be extended by Joint /
Additional Commissioner or by the Commissioner for such further period as
mentioned below:
Additional / Joint Commissioner Maximum of 6 months
Commissioner Maximum of 4 years
It may be noted that, in the statement of outward supply to be furnished by a
registered person under section 37(1) i.e., in Form GSTR-1, the invoices in
respect of which tax is paid under provisional assessment are required to be
mentioned.
Further, CBIC vide Circular 122/41/2019-GST dated 05.11.2019 as amended
by Circular 128/47/2019-GST dated 23.12.2019 clarified the implementation
of the electronic generation of Document Identification Number (DIN) for all
communications sent by its offices to taxpayers. Therefore, no communication
of provisional assessment order is made without a computer- generated
Document Identification Number, on or after 08.11.2019.
Interest liability
If the amount of tax determined to be payable under final assessment order,
is more than the tax which is already paid along with the return filed in terms
of section 39, the registered person shall be liable to pay interest on the
shortfall, at the rates specified in section 50(1) of the Act [i.e., @18%], from
the first day after due date of payment of tax in respect of the said goods
and/or services or both, till the date of actual payment, irrespective of whether
such shortfall is paid before or after the issuance of order for final
assessment1. Likewise, when the registered person is entitled to refund
consequent upon the order for final assessment, interest shall be paid on
such refund at the rates specified in proviso to section 56 @ 9% because
refund is arising out of order of adjudicating authority. The interest on refund

1
To overcome the decision of Ceat Limited V. CCE, 2015 (317) ELT 192 (Bom),
maintained by the Supreme Court in Commissioner V. Ceat Ltd., 2016 (342) ELT
A181 (SC).

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shall run from 61st date from the date of receipt of application for refund till
the date of refund.
As such, the registered person must avail this opportunity of provisional
assessment after much thought and careful consideration. Any claim for
refund of taxes paid in excess under this section would be processed in
accordance with section 54 (refund provision) and is subject to the concept of
‘unjust enrichment’ under section 54(8)(e). Hence, if where the registered
person has not borne the incidence of tax and has passed on the burden to
some other person, then instead of granting refund to the applicant, it shall be
credited to consumer welfare fund. Except for authorizing refund, this section
does not by itself sanction refund. The application for refund is required to be
made within 2 years from the relevant date defined in clause (f) of Explanation
2 to section 54 i.e., within 2 years from the date of adjustment of tax after the
final assessment.
Release of security consequent to finalization
On conclusion of the final assessment order, the applicant can file an
application under Rule 98(6) in FORM GST ASMT- 08 for release of security
furnished. On receipt of such application, the Proper Officer ought to release
the security furnished, after ensuring that the payment of the amount specified
in the final assessment order and issue an order in FORM GST ASMT–09.
This order has to be issued within a period of 7 working days from the date of
receipt of the application for release of security.
Rejection of Application
If taxpayer’s application seeking provisional assessment fails to establish the
‘facts affecting’ the determination of tax liability, then Proper Officer is
welcome to reject the application. In all other cases, since the taxpayer is
imperilled by interest liability, Proper Officer would not reject the application.
60.3 Issues and Concerns
The provisional assessment provides a discretionary power to Joint
Commissioner or Additional commissioner and Commissioner to extend the
proceedings or pass the order or decree upto 6 months or 4 years. If for any
reasons, the time limit stands extended till the 4th year, the registered person
shall have to pay interest from the due date of original return filed under
section 39(7) of the CGST Act, inspite of the taxable person paying tax as per
provisional order passed by Proper Officer.
60.4 FAQs
Q1. When is a taxable person permitted to pay tax on a provisional basis?

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Ans. Tax payments can be made on a provisional basis only when a Proper
Officer passes an order permitting the same. For this purpose, the
registered person has to make a written request to the Proper Officer,
giving reasons for payment of tax on a provisional basis. The reasons for
this purpose may be a case where the registered person is unable to
determine the value of goods and/ or services or determine the
applicable tax rate, etc. Further, the registered person may also be
required to execute a bond in the prescribed form, and with such surety
or security as the Proper Officer may deem fit.
Q2. What is the latest time by which final assessment is required to be made?
Ans. It is the responsibility of the Proper Officer to pass the final assessment
order after taking into account such information as may be required for
finalizing the assessment, within six months from the date of the
communication of the order for provisional assessment. However, on
sufficient cause being shown and for reasons to be recorded in writing,
the timelines may be extended by the Joint/Additional Commissioner for
a further period not exceeding six months and by the Commissioner for
such further period not exceeding 4 years as he may deem fit.
60.5 MCQs
Q1. Where the tax liability as per the final assessment is higher than tax paid,
at the time of filing of return under section 39, the registered person
shall_______________.
(a) not be liable to interest, provided he proves that his actions were
bona fide
(b) be liable to pay interest from due date till the date of actual
payment
(c) be liable to pay interest from date of the final assessment till the
date of actual payment
(d) be liable to pay interest from due date till the date of the final
assessment
Ans. (b) be liable to pay interest from due date till the date of actual payment
Q2. Provisional assessment under the GST law is permitted to be:
(a) At the instance of the taxable person
(b) At the instance of the tax authorities on a best judgment basis in
absence of adequate details or response from registered person
(c) Either of (a) and (b)
(d) Available only to certain notified persons

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Ans. (a) At the instance of the taxable person

Q3. On the grounds of sufficient reasons being provided by Proper Officer,
the time period for passing final assessment order can be extended by
Joint/ Additional Commissioner for further period of not exceeding
(a) 2 months
(b) 4 months
(c) 6 months
(d) No time limit.
Ans. (c) 6 months
Q4. On the grounds of sufficient reasons being provided by Proper Officer,
the time period for passing final assessment order can be extended by
Commissioner for further period of
(a) 2 months
(b) 4 years
(c) 6 months
(d) No time limit.
Ans. (b) 4 years

Statutory Provisions
61. Scrutiny of Returns
(1) The proper officer may scrutinize the return and related particulars
furnished by the registered person to verify the correctness of the
return and inform him of the discrepancies noticed, if any, in such
manner as may be prescribed and seek his explanation thereto.
(2) In case the explanation is found acceptable, the registered person
shall be informed accordingly and no further action shall be taken in
this regard.
(3) In case no satisfactory explanation is furnished within a period of thirty
days of being informed by the proper officer or such further period as
may be permitted by him or where the taxable person, after accepting
the discrepancies, fails to take the corrective measure in his return for
the month in which the discrepancy is accepted, the proper officer may
initiate appropriate action including those under Section 65 or Section
66 or Section 67, or proceed to determine the tax and other dues
under Section 73 or Section 74.

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Extract of the CGST Rules, 2017

99. Scrutiny of returns
(1) Where any return furnished by a registered person is selected for
scrutiny, the proper officer shall scrutinize the same in accordance
with the provisions of section 61 with reference to the information
available with him, and in case of any discrepancy, he shall issue a
notice to the said person in FORM GST ASMT-10, informing him of
such discrepancy and seeking his explanation thereto within such
time, not exceeding thirty days from the date of service of the notice
or such further period as may be permitted by him and also, where
possible, quantifying the amount of tax, interest and any other amount
payable in relation to such discrepancy.
(2) The registered person may accept the discrepancy mentioned in the
notice issued under sub-rule (1), and pay the tax, interest and any
other amount arising from such discrepancy and inform the same or
furnish an explanation for the discrepancy in FORM GST ASMT- 11 to
the proper officer.
(3) Where the explanation furnished by the registered person or the
information submitted under sub-rule (2) is found to be acceptable,
the proper officer shall inform him accordingly in FORM GST ASMT-
12.

Related provisions of the Statute

Section or Rule Description
Section 2(97) Definition of Return
Chapter IX of the CGST Returns
Act
Section 65 Audit by tax authorities
Section 66 Special audit
Section 67 Power of inspection, search and seizure
Section 73 Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly
availed or utilised for any reason other than
fraud or any wilful-misstatement or suppression
of facts
Section 74 Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly

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availed or utilised by reason of fraud or any

wilfull-misstatement or suppression of facts

61.1 Introduction
Section 61 deals with the powers vested in the Proper Officer to scrutinize the
returns filed by registered persons with a view to verify the correctness of the
return. In legal parlance, it is considered to be a pre-adjudication process.
61.2 Analysis
At the outset, it is important to recognize that email or text messages cannot
be sent to taxpayers if a query arises in the mind of the Proper Officer with
respect to the returns filed. It has been noted that such informal
communication has been sent and even responded by taxpayers. Scrutiny of
returns requires the following ingredients:
 Returns – identify which is a ‘return’ in respect of which scrutiny is being
carried out. Return is defined in section 2(97) which does not refer to
any specific section but states ‘any’ return ‘prescribed or otherwise
required to be furnished’. This requires careful consideration as there is
room to gloss over this important document. Any of the “GSTR” series of
documents will be a ‘return’ to which scrutiny provisions will apply.
Experts are of the view that once GSTR 9 or 9A has been filed, no
further scrutiny of the underlying returns (say, GSTR 1/3B) can be taken
up for scrutiny as the information may, as it was filed or altered and now
reported in GSTR 9/9A. Scrutinizing documents that are no longer
current (GSTR 1/3B) or already rectified in another return filed later in
time (GSTR 9/9A) may be an exercise in futility;
 Proper Officer – only the Proper Officer under whose jurisdiction
taxpayer is registered and filing returns is authorized to scrutinize
returns. Any cross-empowered officer may collect or access the returns
but is not vested with authority under section 61 to scrutinize. Such
Officer may even scrutinize but take action under other provisions and
not under section 61. Reference may be had to the detailed discussion
regarding listing of jurisdiction and powers conferred under section 3 to
6 of CGST Act along with relevant notifications and related circulars;
 Discrepancy – is an inconsistency or inaccuracy which is a very
important requirement to invoke section 61 that the Proper Officer must
‘discover’ from within the returns itself. Section 61 does not permit
investigation into new things not emerging from the returns as there are
other provisions with checks and balances to undertake investigation. It
is very clear provision ‘conferring jurisdiction’ by this expression

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‘discrepancy’. Discrepancy is not a doubt or confusion about what might

have been the transactions carried out by taxpayer. Discrepancy is a
‘lack of compatibility’ arising from within the returns and not from any
external source of additional information. Any inquiry without this
jurisdiction makes the entire proceedings void. Where a notice is issued
under section 61, care must be taken to identify whether the issue
involved can pass must be of being a ‘discrepancy’. While self-
assessment has been stated NOT to be ‘unsupervised self-
administration’ system, at the same time, self-assessment does not
empower wide-ranging assessment in the name of scrutiny. The scope
is large but not unlimited scope that Proper Officer is permitted to carry
out in the name of scrutiny under section 61. Responding to notice under
section 61 does not amount to admission of wrongdoing.
 Resolution – taxpayer may take three routes (a) admission and
rectification or explanation (b) non-admission and (c) Admission but
inaction by Taxpayer. Based on this, further steps to be taken by Proper
Officer are prescribed. Proper Officer cannot routinely call for books and
records of taxpayer. Proper Officer is welcome to then invoke sections
65 or 66 to audit the books of taxpayer, but those sections have other
prerequisites (which are discussed later). Carrying out inspection is not
permissible without prior permission from JC, there’s a special ingredient
of ‘reason to believe’ to involve given in section 67 (discussed later).
Most important aspect is that proper officer CANNOT carry out any
assessment under section 61. Care must be taken to object to any
attempt at carrying out assessment where tax liability is being
determined on an apprehension based on the discrepancy. Discrepancy
must conclude and be resolved in one of the three ways listed in the
section. There can be no ‘order of demand’ arising out of section 61
itself. Yes, scrutiny can give rise to a show cause notice under section
73 or 74 which will be adjudicated on its own merits but the proceedings
under section 61 will conclude.
Now, to reiterate the process permitted under section 61, when a return
furnished by a registered person is selected for scrutiny, the Proper Officer
scrutinizes the same with reference to the information available with him, and
in case of any discrepancy, he shall issue a notice to the said person in
FORM GST ASMT-10, under rule 99(1), informing him of such discrepancy
and seeking his explanation thereto. The proper officer shall quantify the
amount of tax, interest and any other amount payable in relation to such
discrepancy, wherever possible.

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An explanation shall be furnished by the registered person, in reply to the

aforesaid notice, within a maximum period of 30 days from the date of service
of the notice or such further period as may be permitted by the Proper Officer.
The registered person may accept the discrepancy mentioned in the notice
issued under rule 99(1), and pay the tax, interest and any other amount
arising from such discrepancy and inform the same OR furnish an explanation
for the discrepancy in FORM GST ASMT- 11 to the Proper Officer.
Where the explanation furnished by the registered person or the information
submitted under Rule 99(2) is found to be acceptable, the Proper Officer shall
inform the registered period in FORM GST ASMT-12.
In case, explanation is not furnished OR explanation furnished is not
satisfactory OR after accepting discrepancies, the registered person fails to
take corrective measures, in his return for the month in which the discrepancy
is accepted by him, the Proper Officer, may, take recourse to any of the
following provisions:
 Initiate departmental audit as per section 65 of the Act; or
 Initiate Special Audit as per section 66 of the Act;
 Initiate inspection, search and seizure as per section 67 of the Act;
 Issue show cause notice under section 73 and 74 of the CGST Act.
The first stage in return scrutiny denotes a prima facie scrutiny, in order to
ascertain whether the information furnished by the assessee in returns is
prima facie valid and not internally inconsistent or inadequate. The second
stage appears to be a detailed assessment calling for records and
determination of tax liability under sections 73 to 75.
While doing so, the proper officer is entitled to exercise the powers vested in
him under section 67 of the Act, which deals with power of inspection, search
and seizure.
From the language employed in section 67, it appears that these powers are
required to be exercised not in routine manner, but only under circumstances
when there is reasonable belief regarding suppression or intention to evade
tax.
It’s important to note that section 61(3) empathetically provides that in case
the explanation given by the taxpayer in response to discrepancies informed
by the Proper Officer, if found acceptable, the registered person shall be
informed accordingly in FORM GST ASMT-12 and no further action shall be

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taken in this regard.

Taking pointers from Annual Returns, following is an illustrative list of what
may or may not constitute a ‘discrepancy’ to be taken up for scrutiny under
section 61:

Likely to be a ‘discrepancy’ Unlikely to be a ‘discrepancy’

Tariff notification prescribing credit Whether turnover reported as
restriction or credit ban, but credit ‘exports’ has been billed in foreign
found to be taken in returns currency or not
‘Net Tax’ payable being ‘negative’ EWB known to be generated for
throughout the year indicative of inward supply of motor vehicles, but
missing value addition or possibly no credit found to be disallowed or
investments in capital goods when reversed as ineligible
inverted rate structure known not to
exist
Taxpayer eligible to deemed value Balance sheet containing ‘amounts
under rule 32 found to be paying tax received from clients’ but tax not
at 18% found to be paid against ‘receipt
voucher’
GSTR 2A showing inward supplies Balance sheet showing ‘other
at 3% rate of tax but no outward service income’ but no turnover
supplies appearing at 3% rate of tax reported under chapter 99
Tax paid via DRC 03 for 2017-18 Tax paid via DRC 03 for 2019-20
utilizing credit relating RCM under 9(4) for the year
2018-19
Taxpayer operating SEZ unit found Company operating SEZ unit found
to have paid IGST and claimed input to claim all inward supplies 9(3) or
tax credit without availing tax-free 9(4) for 2017-18 to qualify as ‘zero-
inward supplies rated’
Taxpayer involved in non-seasonal Taxpayer involved in trading of
trading business filed ‘nil’ returns for goods found to have paid ‘nil’ tax
6 months of the year under 9(3) at 5% towards GTA
services likely to have been availed
Turnover in GSTR 1 and GSTR 3B Taxpayer reported to have received
mismatch or credit in GSTR 2A and notices from creditors under IBC,
GSTR 3B mismatch 2016 but no credit reversals reported

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under rule 37
Sale of scrap reported by taxpayer EWB raised for outward movement
(authorized service center or of goods by taxpayer with outward
electronics dealer) without any supplies only under chapter 99
inward supplies under 9(4) for 2017-
18
Regular amendments in outward ‘Nil’ EWB generated throughout the
supplies but no payment found year
towards ‘interest’

Caution is advised that above instances are meant to be a general guide to

help readers differentiate when questions arise ‘from the returns’ itself and be
eligible to be treated as a discrepancy and scrutinized under section 61 and
when questions, though valid, cannot be taken up for scrutiny under section
61. Also, these instances do not represent to be based on any circulars or
Court decisions but prepared based on understanding of underlying issues for
various contributors.
CBIC has prescribed standard operating procedure (SOP) for scrutiny of
returns for FY 2017-18 and FY 2018-19 vide Instruction No. 02/2022-GST
dated 22.03.2022.
CBIC has prescribed standard operating procedure (SOP) for scrutiny of
returns for FY 2019-20 onwards vide Instruction No. 02/2023-GST dated
26.05.2023.
61.3 Issues and Concerns
While filing the returns, the registered person should ensure that the value of
exempted supplies as well as non-taxable supplies, if any, made by him is
properly disclosed or else the same may be considered as suppression of
information and a notice under section 73 or 74 would stand issued or the
proper officer can take recourse for conducting an audit or special audit, as
the case may be.
In view of procedures under earlier tax regime, tax authorities are known to
make routing verification in the name of scrutiny under section 61 by calling
for ‘books and records’ and entertaining ‘personal hearing’ to examine the
correctness of returns filed. It is for registered person to cite the embargo in
section 160(2) and refrain from (i) entertaining such proceedings and (ii) to
question the validity of such proceedings at the earliest opportunity. By
responding to the requests, registered persons stand to forfeit their right to
lawful action under the lawful provisions of law.

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61.4 FAQs
Q1. Describe the recourse that may be taken by the officer in case proper
explanation is not furnished for the discrepancy in the return.
Ans. In case, satisfactory explanation is not obtained or after accepting
discrepancies, registered person fails to take corrective measures, in his
return for the month in which the discrepancy is accepted by him, the
Proper Officer may take recourse to any of the following provisions:
(a) Conduct audit at the place of business of registered person in a
manner provided in section 65 of the Act, or;
(b) Direct such registered person by notice in writing to provide his
records including audited books of account examined and audited
by a Chartered Accountant or Cost Accountant under section 66 of
the Act or;
(c) Undertake procedures of inspection, search and seizure under
section 67 of the Act; and
(d) Issue notice under sections 73 to 75 of the Act.
Q2. What does section 61 deal with?
Ans. Section 61 deals with scrutiny of returns filed by registered persons to
verify the correctness of such returns.
Q3. What is the proper officer required to do, if the information obtained from
assessee under section 61 is found satisfactory?
Ans. In case, the explanation is found acceptable, the registered person shall
be informed accordingly in Form GST ASMT-12 and no further action
shall be taken in this regard.
61.5 MCQs
Q1. Where the tax authorities notice a discrepancy in the details during the
scrutiny of returns, the registered person:
(a) would be liable for interest if he is unable to prove that the
discrepancy did not arise on his account and it was a fault of
another person
(b) is required to provide satisfactory/ acceptable explanation for the
same within 30 days or any extended timelines as may be
permitted
(c) must prepare documents to cover up the discrepancy.
(d) Both (a) and (b)
Ans. (b) is required to provide satisfactory/ acceptable explanation for the

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same within 30 days or any extended timelines as may be permitted

Q2. If the information obtained from taxable person is not found satisfactory
by the Proper Officer, he can pass assessment order under section 61
raising demand of disputed tax demand.
(a) True
(b) False
Ans. (b) False
Q3. What is the time limit after which action under section 61 cannot be
taken?
(a) 30 days from filing of return or such further period as may be
decided by Proper Officer.
(b) No time Limit
(c) Time limit mentioned in section 73 or 74 of the Act.
(d) None of the above
Ans. (c) Time limit mentioned in section 73 or 74 of the Act.
Q.4 What is the time limit, within which the registered person should take
corrective measures after accepting the discrepancies communicated to
him by Proper Officer?
(a) reasonable time
(b) 30 days from the date of communication of discrepancy.
(c) 30 days from date of acceptance of the discrepancy
(d) date of filing of return for the month in which the discrepancy is
accepted
Ans. (d) date of filing of return for the month in which the discrepancy is
accepted.

Statutory Provisions

62. Assessment of non-filers of returns

(1) Notwithstanding anything to the contrary contained in section 73 or
section 74,where a registered taxable 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

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issue an assessment order within a period of five years from the date
specified under section 44 for furnishing of the annual returns for the
financial year to which the tax not paid relates.
(2) Where the registered person furnishes a valid return within 2[sixty
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 for the payment of late fee under section 47 shall continue.
3
[Provided that where the registered person fails to furnish a valid
return within sixty days of the service of the assessment order under
sub-section (I), he may furnish the same within a further period of sixty
days on payment of an additional late fee of one hundred rupees for
each day of delay ‘beyond sixty days of the service of the said
assessment order and in case he furnishes valid return within such
extended period, the said assessment order shall be deemed to have
been withdrawn, but the liability to pay interest under sub-section (1)
of section 50 or to pay late fee under section 47 shall continue ]

Extract of the CGST Rules, 2017

[100. Assessment in certain cases
4

(1) The order of assessment made under sub-section (1) of section 62

shall be issued in FORM GST ASMT-13 and a summary thereof shall
be uploaded electronically in FORM GST DRC-07.
(2) *
(3) * ……………………
(4) * ……………………
(5) *……………………

*Referred to in the relevant section

Related provisions of the Statute

2
Substituted ‘thirty days’ vide The Finance Act, 2023 through Notf No. 28/2023-CT dt.
31.07.2023 w.e.f. 01.10.2023.
3
Inserted vide The Finance Act, 2023 through Notf No. 28/2023-CT dt. 31.07.2023
w.e.f. 01.10.2023.
4
Substituted vide Notf No. 16/2019-CT dt. 29.03.2019 w.e.f. 01.04.2019.
*Referred in relevant section

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Section or Description
Rule
Section 2(97) Definition of ‘Return’
Section 2(11) Definition of ‘Assessment’
Section 39 Furnishing of returns
Section 44 Annual return
Section 45 Final return
Section 47 Levy of late fee.
Section 50 Interest on delayed payment of tax.
Section 73 Determination of tax not paid or short paid or erroneously
refunded or input tax credit wrongly availed or utilised for
any reason other than fraud or any wilful-misstatement or
suppression of facts.
Section 74 Determination of tax not paid or short paid or erroneously
refunded or input tax credit wrongly availed or utilised by
reason of fraud or any wilfull-misstatement or suppression
of facts.

62.1 Introduction
This section commences with a non obstante clause, meaning that whenever
the provisions of section 73 or 74 apply, the provisions of section 62 of the Act
cannot be invoked. However, the provisions of section 62 can be invoked only
in case of registered taxable persons who have failed to file returns, as
required, under section 39 or as the case may be, or final return on
cancellation of registration under section 45 of the Act. Issuance of notice
under section 46 operates as a pre-condition for initiating proceedings under
section 62 of the Act. However, section 62 cannot be invoked for non-filing of
GSTR-1 or GSTR-9.
62.2 Analysis of Provisions
Non-compliance with the notice issued under section 46 paves the way for
initiating the proceedings under this section. So, a notice under section 46 is
inescapable and compulsory for any action under section 62 to be taken up.
Please note that with the applicability of ‘service by email’ and ‘service on
portal’ are permitted in GST, it is imperative to look out for any such notice
being sent to registered email or posted on portal. If the assessee fails to
furnish the return within 15 days of issue of notice under section 46 then the

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proper officer may assess the tax liability in accordance with the provisions of
rule 100 i.e., to the best of his judgment, taking into account all the relevant
material available on record, and issue an assessment order. This is also
known as ‘best judgment assessment’. It can be completed without giving
notice of hearing to the assessee. However, best judgment assessment
should be made on the basis of material available or material gathered by
proper officer.
Please note that only returns under sections 39 and 45 are covered by section
62. Annual Returns filed under section 44 cannot be treated under section 62.
Non-filing of Annual Returns will attract penalty and hence there can be no
‘best judgement assessment’ on this basis. It is important to question any
order under section 62 as to ‘how was jurisdiction acquired’ for such a
proceeding. In other words, non-filing of GSTR 3 (or GSTR 3B) and GSTR 10
(final return) will attract best judgement assessment. Failure to file GSTR 1
does not attract section 62 as GSTR-1 is not a return, rather a statement.
Order under section 62 must be issued within a period of five years from the
date specified under section 44 for furnishing Annual Returns for the financial
year to which the tax not paid relates. Section 44(1) states that due date for
furnishing the Annual Returns is on or before 31st December following the end
of financial year to which such Annual Returns pertains. However, extension
of the due date for furnishing the Annual Returns may be considered.
Non-issuance of notice under section 46 closes the door for invoking section
62 although other provisions are available to recover the tax dues. If, however,
a registered person furnishes a ‘valid return’ within 60 days of the service of
assessment order, the said assessment order shall be ‘deemed to be
withdrawn’. ‘Valid return’ is defined in section 2(117) to mean a return filed
under section 39(1) of the Act on which self-assessed tax has been paid in full.
Valid return may not (or does not necessarily imply to) be perfect in all
respects and is, therefore, not barred from containing (inadvertent) errors. In
other words, presence of such errors does not render the return ‘defective’
and become non-existent in the eyes of law. Erroneous return is also a valid
return. Errors may be of omission or commission. Experts advise that care
must be taken to file such valid return free of errors and after order passed
under section 62 being vacated, proper officer would take up proceedings
based on such valid returns under section 61.
Amnesty Scheme for deemed withdrawal of assessment orders issued
under section 62 of the CGST Act notified through Notification No.
06/2023 CT dated 31.03.2023.
The assessment order under section 62(1) of the CGST Act issued on or
before 28.02.2023 in respect of the registered person who had failed to

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furnish a valid return within a period of 30 days of the service of such

assessment order, was deemed to be withdrawn, if such registered person
furnished the said return on or before 30.06.2023 along with interest due
under section 50(1) and late fee payable under section 47. The above benefit
was available irrespective of whether or not an appeal has been filed against
such assessment order under section 107 or whether the appeal, if any, filed
against the said assessment order been decided.
Further vide Notification No. 24/2023 CT dated 17.07.2023, the date for
deemed withdrawal of assessment order issued under section 62 was
extended to 31.08.2023. This notification was deemed to come into force with
effect from 30.06.2023.
Section 62 starts with the words ‘notwithstanding anything contrary to section
73 and 74’. Sections 73 and 74 mandate the issue of SCN and providing
opportunity of being heard before passing order for demanding tax. Further,
tax can be demanded for the period as prescribed in section 74, if the
existence of omissions and commissions, as mentioned under section 74, are
proved. The pre-condition of issuing SCN, providing opportunity of being
heard for demanding tax for the period prescribed under section 74 in the
presence of omissions and commissions listed under section 74 is sought to
be overcome by the non-obstante clause under section 62. The assessment
under section 62 however, can be made only upto 5 years from the due date
of furnishing of Annual Returns under section 44. Consequence of late fee
under section 47 and interest under section 50 will both be applicable in
cases of conclusion of best judgement assessment made under this Section,
even if the assessment order under section 62 is withdrawn.
Proviso to section 62 has been inserted vide Notification No. 28/2023-CT dt.
31.07.2020, w.e.f. 01.10.2023, that where registered person fails to furnish a
valid return within sixty days of service of assessment order, he may furnish
the same within further period of sixty days with payment of additional late of
one hundred rupees for each day of delay in furnishing valid return beyond
the sixty days of serving of assessment order & in case the registered person
furnishes the valid return within the extended period, the said assessment
order shall be deemed to have been withdrawn, but liability to pay interest
under sub-section(1) of section 50 or late fee under section 47 shall continue.
Best Judgement Assessment:
‘Best judgement assessment’ must not be ‘worst’ judgement assessment, that
is, the determination of tax liability cannot be outlandish estimation of turnover
based on some arbitrary growth rate oblivious of the nature of business
activities and prevalent market conditions. Some experts are of the view that

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where turnover projection is made based on turnover of previous months,

there is nothing in section 62 to indicate that corresponding credits, also on
estimate basis, should not be included in arriving at liability on ‘best’
judgement basis. Best judgement assessment must not be worst judgement
and determine high turnover ignoring seasonal downward variations and even
benefit of estimate of credits available on proportionate basis. There is
nothing in the law to support the view that ‘tax liability’ to be determined on
best judgement basis should be ‘gross liability’ and not ‘net tax liability’. For
this reason, when outward supply that may not be existing, is being taxed on
‘best judgement’ basis with the information that has become available, credit
that is not claimed is not barred from being allowed in arriving at ‘tax liability’.
Instructions in Circular 129/48/2019-GST dated 24.12.2019 permit credit, at
least to the extent forthcoming from GSTR-2A must be allowed even though
not claimed as required in section 16(2)(d). As per the supra-Circular, for the
purpose of assessment of tax liability under section 62, the proper officer may
take into account the details of outward supplies available in the statement
furnished under section 37 (FORM GSTR-1), details of supplies auto
populated in FORM GSTR-2A, information available from e-way bills, or any
other information available from any other source, including from inspection
under section 71. Courts will have final say in the matter and when one has
failed to file returns, it is scarce that such a taxpayer can find favour of Courts
in the manner of arriving at best tax liability.
Another important aspect is, in case an order of best judgement is passed
under section 62 and returns are not filed within 60 days, the order becomes
final and even if returns are filed subsequently, the order CANNOT be
withdrawn. The only remedy will be to file such returns and also prefer appeal
under section 107.
As section 107 prescribes, maximum 3 months to file appeal before First
Appellate Authority which has a further time limit of 1 month to condone
explainable delay in filing appeal. Now, if after date of order under section 62,
a time of more than 6 months (60 days to file returns after order PLUS 3
months to file appeal PLUS 1 month of delay in filing appeal that may be
condoned) has passed, then the demand arising from this best judgement
order will be final and payable. And this will be recoverable even if in fact
there were no real taxable supplies made during the relevant tax period. Care
must be taken to monitor email or portal service of orders under section 62 so
as to avoid such irreversible demands due to lapse of time to redress.
An order passed under this section shall be communicated to the registered
person in FORM GST- ASMT 13 + DRC 7. Since DRC-7 will also be issued,
best judgement assessment under section 62 proceeds on the understanding

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that the demand made in order in ASMT-13 will lead to recovery of tax
assessed. It is for this reason, that if a valid return is not filed within 60 days
to vacate this order, to set aside this demand will be to file appeal under
section 107 is the only remedy.
62.3 Issues and Concerns
The consequence of non-filing of returns may lead to adverse GST
compliance rating which will have an impact on the matters such as claiming
of refund. Registered persons who are non-filers of returns will always be
under the scanner of the authorities for every activity carried out by such
registered person. Further, it also affects the vendor relationship due to non-
compliance of the provisions of the GST laws. A non-filer would not have filed
his periodic returns and therefore the Annual returns in Form GSTR- 9 and
Reconciliation Statement in Form GSTR- 9C would not be possible. However,
if they have filed returns for part of the year then Annual returns could be filed
considering such filed returns and based on his books of accounts.
62.4 FAQs
Q1. Whether the proper officer is required to give any notice to taxable
person before completing assessment under section 62?
Ans. The assessment under section 62 can be initiated only after the service
of notice under section 46 i.e., notice to return defaulters.
Q2. If a registered person files a return after receipt of notice under section
46 but fails to make the payment disclosed by him in the return, can
assessment order under section 62 be passed in this case?
Ans. An assessment order under section 62 is deemed to have been
withdrawn if the registered person furnishes a valid return (including
payment of taxes).
62.5 MCQs
Q1. The proper officer can complete assessment under section 62 without
issuing any notice to the registered taxable person before passing
assessment order.
(a) True
(b) False
Ans. (b) False
Q2. What is the time limit for issuing order under section 62?
(a) 9 months from the end of financial year.

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(b) 3 years for cases covered under section 73 or 5 years for cases
covered under section 74
(c) 5 years for cases covered under section 73 or 3 years for cases
covered under section 74
(d) 5 years from the due date of filing Annual Returns.
Ans. (d) 5 years from the due date of filing Annual Returns
Q3. The assessment order under section 62 shall be deemed to be cancelled:
(a) Where the registered person furnishes a valid return within 60 days
of the service of the assessment order.
(b) Where the registered person furnishes a valid return within 90 days
of the service of the assessment order.
(c) Assessment order under section 46 cannot be cancelled.
(d) Where assessee intimates to the proper officer that he has filed the
valid return.
Ans. (a) Where the registered person furnishes a valid return within 60 days
of the service of the assessment order.
Q4. After serving of notice under section 46, the proper officer is not required
to give notice of hearing to the registered tax person before passing
assessment order.
(a) True
(b) False
Ans. (a) True.
Statutory Provisions
63. Assessment of unregistered persons
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 judgement
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 returns 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.

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Rule 100. Assessment in certain cases

(1) *
(2) The proper officer shall issue a notice to a taxable person in
accordance with the provisions of section 63 in FORM GST ASMT-14
containing the grounds on which the assessment is proposed to be
made on best judgment basis and shall also serve a summary thereof
electronically in FORM GST DRC-01, and after allowing a time of
fifteen days to such person to furnish his reply, if any, pass an order
in FORM GST ASMT-15 and summary thereof shall be uploaded
electronically in FORM GST DRC-07.
(3) *
(4) *
(5) *

*Referred to in relevant section

Related provisions of the Statute
Section or Rule Description
Section 2(11) Definition of ‘Assessment’
Section 22 Person liable for Registration
Section 24 Compulsory Registration
Section 29 Cancellation of Registration
Section 44 Annual Return
Section 73 Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly
availed or utilised for any reason other than fraud or
any wilful-misstatement or suppression of facts
Section 74 Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly
availed or utilised by reason of fraud or any wilful-
misstatement or suppression of facts
Rule 100 Assessment in certain cases

63.1 Introduction

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This section commences with a non obstante clause, meaning whenever the
provisions of section 73 or 74 applies, the provisions of section 63 of the Act
cannot be invoked. 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 this section. This provision
also covers cases where registration was cancelled under section 29(2).
Section 29(2) of the Act covers 5 instances where registration may be
cancelled by Proper Officer:
(a) A person who contravenes the provisions of this Act or Rules made
thereunder; or
(b) A composition person who fails to furnish returns for a financial year
beyond 3 months from the due date of furnishing the said return; or
(c) A person other than composition person who fails to furnish returns for 6
consecutive months or 2 tax periods in case of quarterly returns; or
(d) A person who has sought voluntary registration but has failed to
commence business within 6 months from the date of registration; or
(e) Where registration has been obtained by way of fraud, willful
misstatement or suppression of facts.
63.2 Analysis
This is a remarkable provision where even when a taxable person is
‘unregistered’, proper office is vested with jurisdiction to not only identify
taxable transactions but also pass an order of assessment on best judgement
basis and fasten an enforceable demand. This section too begins with the
phrase “Notwithstanding anything to the contrary contained in section 73 or
section 74”. It therefore permits assessment under section 63 to be carried
out independent of section 73 and section 74, however, procedures contained
in section 73 or 74 to the extent they are not inconsistent such as 73(5) or
74(5) are to be followed while completing this assessment. As in the case of
section 62, this section 63 too contains a period of limitation of 5 years from
due date applicable for filing Annual Returns for the financial year to which
unpaid tax relates.
It is interesting to note the following ingredients for this section 63 to be
attracted:
 Taxable person – is the one in respect of whom this procedure may be
adopted. As a result, all ingredients to establish a person to constitute
‘taxable person’ as per section 2(107) must be satisfied. In the absence
of SCN, Proper Officer appears to come under great scrutiny for
invoking this jurisdiction. All aspects that the proper officer admitted at

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the time of invoking these provisions will need to stand scrutiny. But that
would be the proceedings by way of response to the notice granting
opportunity under section 63 (not section 73 or 74) or in further appellate
proceedings;
 Fails to obtain registration – is a positive act on the part of such taxable
person. ‘Fail’ is not the same as ‘omits’ to obtain registration. Clearly,
being conscious of the requirement to obtain registration will be required
and as such come in for examination. While no ‘intent’ needs to be
established for such failure but clearly it cannot be supported merely on
account of an inference about taxability or bona fide view on non-
taxability of a transaction or judicial interpretation;
 Registration cancelled but liable to pay tax – here, reference is provided
to cancellation under section 29(2). The entire section 29(2) is where
‘cancellation’ is done by proper officer. It is not taxable person’s
responsibility if Proper Officers decides to cancel registration (in the five
circumstances listed) and then proceeds to invoke jurisdiction under
section 63 to pass a best judgement order. It is a wonder that on one
hand Proper Officer will cancel registration under section 29(2) and then
proceed to fasten a demand on taxable person by an assessment order
under section 63 without issuing an SCN. Experts view that the use of
this section will come in for severe judicial scrutiny for failure to retain
the registration and issue SCN on all grounds that would afford taxable
person to not only defend the continuation of registration but also
suspected tax liabilities. It would be appropriate for the proper officer
‘suspend’ registration under rule 21-A (2) instead of cancelling the
registration.
Please refer discussion on ‘best judgement assessment’ under section 62.
For assessment under this section, notice has to be issued as per rule 100(2)
in FORM GST ASMT-14 + DRC 1 by the Proper Officer. The notice would
contain the reasons / grounds on which the assessment is proposed to be
made on best judgment basis. The registered person is allowed a time period
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 + DRC 7.
Special attention is to be paid to the appended forms in DRC-1 with the order
which contains the detailed grounds on which the said best judgement
assessment would be passed and then DRC 7 would accompany final
demand (see rule 100(2) for details).
Registration ousts jurisdiction to invoke section 63. Taxpayer who has
obtained registration is often found to be directed to submit information and

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records pertaining to period prior to date of registration and initiate

proceedings under section 63. There is no authority in section 63 for the
proper officer to secure ‘taxpayer’s involvement’ in investigation. Information
must be secured independently, say, from data available under section 150 or
151 or otherwise obtained, that points to the existence of liability of such
unregistered person.
Key aspect to note here is that such unregistered person should have ‘failed’
to obtain registration. As such, once registration is obtained use of best
judgement method permitted in case of unregistered persons cannot be
applied against registered persons even for the period prior to their date of
registration.
Section 63 permits ‘use of estimates’ in carrying out ‘best judgement’
assessment. Use of estimates is when no other method is possible. And
burden falls on taxpayer to overturn the presumptions made in this method.
Once taxable person is registered, such methodologies are unwelcome. Use
of estimate is permissible when there is a ‘failure’ by taxable person. Failure
is not to be equated with determination of non-taxability. The expression ‘fails’
is found in several places but some important ones are listed below:
Section Description
Second Failure to pay the value of invoice including tax to the supplier
proviso to as a post-condition to reverse input tax credit already claimed
section by the Recipient
16(2)
Section Failure (of taxable person) to obtain registration even though
25(8) liable to register
Section Failure (of registered person) to account for goods or services
35(6) providing jurisdiction to proper officer to demand tax ‘as if’
actually supplied to that extent
Section 46 Failure (of registered person) to file returns where there is a
statutory obligation to file returns under section 39, 44 or 45
voluntarily
Section 47 Failure (of registered person) to furnish details under section
37, 39, 45 or 52 within the due date
Section 50 Failure (of taxable person) to discharge liability existing in law
Section Failure (of registered person) to deposit amount deducted
51(6)
Section Failure (of registered person) to furnish information in notice
52(14) issued

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Section Failure (of registered person) to take corrective action (as

61(3) determined by PO). But corrective action taken bars POs
jurisdiction to initiate action
Section 62 Failure (of registered person) to file returns in spite of notice
under section 46
Section 63 Failure (of unregistered person) to obtain registration
Section Failure (of addressee of garnishee order) by not remitting to
79(1)(c)(iii) the Government, amounts belonging to taxpayer (stated to be
in default)
Section Failure (of taxable person) to pay tax which is collected
122(1)(iii)
Section Failure (of taxable person) to pay tax which is collected
132(1)(d)
Section Failure (of any person) to supply information
132(1)(k)

‘Fails’ in these provisions enjoins ingredients where (i) obligation or duty

exists (ii) actions (or inactions) contrary to such obligation. It appears that
‘deliberateness’ is a necessary ingredient to support ‘failure’. In the instance
of section 51(6) or 52(14), ingredient of ‘deliberateness’ is writ large but
inadvertent non-payment or non-response, do not appear to be placed on any
different footing so, every kind of non-payment or non-response, appear to
attract the consequences in those provisions. In the instance of section 61(3),
taxpayer may entertain a view that no tax is payable (in respect of the
discrepancy pointed out by the proper officer) and there is no ‘deliberate’ non-
payment of tax in such cases, yet proper officer’s dissatisfaction (due to
deviation from expected or suggested corrective action) procures jurisdiction
to initiate further action. In the instance of section 79, to impute added
ingredient of ‘deliberateness’ would implicate the addressee (of garnishee
order) with some greater mischief and this is no way for Revenue to prove
making this mode of recovery, ineffective.
But ‘deliberateness’ is necessary in the instance of section 122(1)(iii)
otherwise delay by more than prescribed period would attract punitive action.
The same goes for (iv), (v), (vi), (xi), (xvi) and (xvii). Evasion requires gains to
accrue to alleged offender. Absence of gains is incompatible with allegation of
evasion. Absence of gains is compatible with bona fide interpretation of non-
taxability of said transaction. Indirect or consequent benefits accruing to
alleged offender is difficult to disprove. And in the instance of section 132,

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failure is coupled with deliberateness and mischief.

On the basis of the above examination, it appears that there is nothing to
indicate necessity of ‘deliberateness’ to support ‘failure’ on all cases to attract
the consequences in these instances. Failure could arise out of
misinterpretation or neglect. Proper Officer needs to only show non-
compliance to attract the consequence in respective instances. In the
instance of second proviso to section 16(2) persons contracting contrary to
law are liable to the consequences of denial of credit, when the agreed terms
of credit for supply are more than 180 days. As to whether it is proper for the
law to interfere in matters of private contract is for Courts to decide but as
regards the ingredients in law are concerned, non-payment within 180 days
attracts interest (and reversal of credit).
It is important to note that the ‘failure’ in section 62 is the failure ‘to obtain
registration’. And once registered, there is no failure that can be taken
cognizance of. If past failure (for the years prior to registration) are open for
Proper Officer to act upon under section 63, the provisions of section 63 will
be ‘retroactive’ in granting jurisdiction. Persons presently registered cannot be
exposed to ‘best judgement’ action when they have already come under the
administrative oversight of the law by securing registration.
NOTE: ‘Retrospective’ alters the law that previously existed and authorizes
steps to be taken prospectively and give new consequences to old and
completed actions, subject to limitation. ‘Retroactive’ is to take steps
prospectively of anterior facts. Retroactive destroys vested rights from the
date of its coming into force.
To allow proper officer to take action against registered persons prior to their
date of registration would be presumption that their non-registration was
deliberate failure with intent to evade tax. When proper officer has power
under section 25(8) to grant registration (and then collect necessary
documents), the use of best judgement determination of liability without
granting registration is to inflict the burden far greater than necessary. If
registration were granted under section 25(8), taxpayer would be entitled to
credit under section 18(1) on stocks-on-hand. Registered persons may well
have taxable turnover but falling below threshold. No presumption of mischief
can be associated with non-registration of persons engaged in business.
63.3 Issues and Concerns
The application of the aforesaid section is a discretionary power vested in the
officer when it comes to his notice that a person although liable to registered
has not obtained registration. The powers vested in the section 63 can be
invoked only when the Proper Officer is in possession of information that is

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material for initiating the proceedings.

An unregistered person does not qualify as a registered person under section
2(94) of the CGST Act, 2017, hence Annual Returns and audit is not
applicable for him.
Judicial Review:
Any procedure that side-steps the ‘rule of law’ in the form of issuing an SCN is
always open for judicial review for (a) illegality, (b) irrationality, (c) procedural
impropriety and (d) proportionality. Judicial review is a remedy in public law
where HC or SC will interfere when failure of a public authority in discharging
its duties takes place. Civilized society must declare its ‘law’ and implement
those laws with ‘certainty’. Uncertainty of both the law and procedure, – are
the hallmarks of a society where there’s absence of ‘rule of law’ (which is also
referred as ‘due process’). Concept of ‘rule of law’ is well guarded in Article 21
of our Constitution.
It is important to invoke Court intervention when reason for judicial review
(four causes stated above) have occurred and this must be brought to Court’s
attention. When the proper officer, who is to follow the ‘rule of law’ is found to
violate these four grounds, then Courts are not reluctant to issue ‘writ’ or a
direction. High Court which has powers of judicial review will not go into
appreciating evidence or verification of claims, etc. It will only issue writ to the
public authority and:
(a) command public authority to (i) do what it ought to do or (ii) abstain from
doing what it is attempting to do;
(b) censure public authority carrying role of administrative tribunal (i) not to
steer from vested jurisdiction (ii) deviate from following natural justice (iii)
supervise and oversee discharge of that role and (iv) avoid manifest
error in law or procedure;
(c) prohibit proceedings before public authority that are not yet concluded
that would result in illegality (any of four causes types listed earlier) if the
said proceedings were permitted to continue;
(d) question ‘authority’ of the public authority right at the threshold when any
proceedings are commenced.
A rough test laid down in SL Hegde v. MB Tirumale AIR 1960 SC 137 where it
does not take prolonged arguments to bring it (cause for intervention by SC or
HC) to the surface, the Court will resort to the power of judicial review High
Courts will reject petitions if it is not found to be maintainable on grounds such
as (a) petitioner lacking any locus to approach Court (b) availability of
alternate remedy (c) mere apprehension of any violation without any real

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basis and (d) inordinate delay in approaching the Court. High Courts have
power not only to protect any instance of violation of fundamental rights but
also craft a remedy that threatens to be an affront to the ‘rule of law’ that is
committed in the Constitution.
63.4 FAQs
Q1. What is the time limit for passing order under section 63?
Ans. The Proper Officer has to pass an assessment order under section 63
within a period of five years from the due date for filing the Annual
Returns for the financial 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.
63.5 MCQs
Q1. What is the time limit for passing an order under section 63?
(a) 5 years from the date due date for filing of the Annual Returns for
the financial 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 Returns 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

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unregistered.
Ans. (c) Assessment of unregistered taxable persons
Statutory Provisions

64. Summary assessment in certain special cases

(1) The Proper Officer may, on any evidence showing a tax liability of a
person coming to his notice, with the previous permission of
Additional/Joint Commissioner, proceed to assess the tax liability of
such person to protect the interest of revenue and issue an
assessment order, if he has sufficient grounds to believe that any
delay in doing so may adversely affect the interest of revenue:
Provided that where the taxable person to whom the liability pertains
is not ascertainable and such liability pertains to supply of goods, the
person in charge of such goods shall be deemed to be the taxable
person liable to be assessed and liable to pay tax and any other
amount due under this section.
(2) On any application made by the taxable person within thirty days from
the date of receipt of order passed under sub-Section (1) or on his
own motion, if the Additional or Joint Commissioner considers that
such order is erroneous, he may withdraw such order and follow the
procedure laid down in Section 73 or section 74.

Rule 100. Assessment in certain cases

(1) …………………….
(2) …………………….
(3) The order of assessment under sub-section (1) of section 64 shall be
issued in FORM GST ASMT-16 and a summary of the order shall be
uploaded electronically in FORM GST DRC-07.
(4) The person referred to in sub-section (2) of section 64 may file an
application for withdrawal of the assessment order in FORM GST
ASMT–17.
(5) The order of withdrawal or, as the case may be, rejection of the
application under subsection (2) of section 64 shall be issued in
FORM GST ASMT-18.

Related provisions of the Statute

Section or Description
Rule

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Section 73 Determination of tax not paid, short paid, erroneously

refunded or input tax credit wrongly availed or utilized for
any reason other than fraud or any wilful misstatement or
suppression of facts
Section 74 Determination of tax not paid, short paid, erroneously
refunded or input tax credit wrongly availed or utilized by
reason of fraud or any wilful misstatement or suppression
of facts
Rule 100 Assessment in certain cases
64.1 Introduction
The word “summary assessment” is generally used in a tax legislation to
denote ‘fast track assessment’ based on return filed by the assessee. It allows
the Tax Officer to make prima facie adjustments based on errors or factors
based on the available information without an occasion for calling for further
information from an assessee or inspecting his records. In the GST Act, it is
used to denote those assessments which are completed ex-parte and on
priority basis when there is reason to believe that there will be loss of tax
revenue, if such assessment is delayed. This provision is only the first step in
invoking the machinery provided to enforce recovery of dues from potential
defaulters, and this requires an assessment of the tax liability. Such amounts
are commonly known as protective assessments which in a sense protects
Government revenue. This section pre-supposes the fact that the proper
officer must be in possession of sufficient grounds to believe that any delay
will adversely affect revenue.
64.2 Analysis
The summary assessment can be undertaken in case the following conditions
are satisfied:
 The proper officer must have evidence that there may be a tax liability. It
is this ingredient that furnishes jurisdiction for the proper officer to invoke
section 64. Experts hold the view that the ‘evidence’ is not merely ‘reason
to believe’ but something more. And if it were merely reason to believe,
then that would not have been open for examination in further proceedings.
Since it refers to something more by the words ‘evidence’ that supports
Proper Officer’s expectation of plausible tax liability, then such evidentiary
material can be called in for examination in further proceedings. Proper
Officer’s apprehension that there may be tax payable is not sufficient to
vest with necessary jurisdiction; and
 The proper officer has obtained prior permission of Additional / Joint

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Commissioner to assess the tax liability summarily. The Proper Officer

must have sufficient ground to believe that any delay in passing
assessment order would result in loss of revenue. Now, steps proposed by
the Proper Officer requires be fettered with some checks. Checks on the
exercise of this authority are ensured by permission from ADC/JC who
would appreciate the quality of such evidence and then grant permission.
Once ADC/JC has granted permission, proper officer may proceed to pass
the assessment order. Examination of the evidence after summary
assessment order has been passed would only help in establishing
impropriety of the entire proceedings in judicial review.
Summary assessment under this section of the CGST Act can therefore be
construed in some sense as a ‘protective assessment’ carried out in special
circumstances, where there are sufficient grounds to believe that taxable
person will fail to make payment of any tax, penalty or interest, if the
assessment is not completed immediately. Such failure to pay tax, interest or
penalty must be due to reasons attributable to the taxpayer (ex: insolvency,
instances of defaulting, absconding etc). Hence, summary assessment under
this Section is not a substitute for assessment that are nearing the time
limitation prescribed for issue of SCN. Further, mere possibility of non-
payment cannot be a ground for resorting to summary assessment, unless
there are factors indicating that such non-payment pertains to admitted or
undisputed tax liability. As per the provision of rule 100(3), the summary
assessment order should be in FORM GST ASMT-16 + DRC 7.
This section appears to overlap with section 62 and 63. However, please note:
 Persons who have obtained registration but have failed to file returns will
come within the operation of section 62; and
 Persons who are liable to obtain registration but have failed to seek
registration or whose registration has been cancelled under section 29(2)
will attract section 63.
Section 64, however, requires the ingredients discussed earlier to exist in
order for summary assessment to be undertaken. Please note that along with
summary assessment order, a demand order in DRC-7 is also to be passed
for proceedings with recovery unless further appeal is filed under section 107
to stay the demand.
The section allows the person who is assessed and is served with the order
so passed, to come forward and make an application in accordance with rule
100(4) in FORM GST ASMT–17 to the Additional / Joint Commissioner, who
will examine the same and if the Additional/ Joint Commissioner is satisfied,
the summary assessment order may be withdrawn. As regards the contents of

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this application, it may be understood that the applicant may attempt to

challenge the facts or reasons for the belief about risk of revenue loss and
further accept to be available to respond, if proceedings under section 73/74
were to be undertaken. Besides, the Additional / Joint Commissioner may, on
his own motion, withdraw such order and follow the procedure laid down in
section 73 or as the case may be section 74 for determination of taxes not
paid or short paid or erroneously refunded or where input tax credit has been
wrongly availed or utilised if he considers that such order is erroneous.
From the above, it appears that every summary assessment order so
withdrawn under sub-section (2), may be followed by a notice under section
73 or as the case may be section 74 of the Act.
On receipt of application, the proper officer has to pass the order of
withdrawal or, rejection of the application in accordance with rule 100(5)
in FORM GST ASMT-18.
Many times, summary assessments are undertaken in circumstances, when a
taxable person to whom liability pertains is not ascertainable. In such cases,
the law provides that, if the liability pertains to supply of goods, then person in
charge of such goods shall be deemed to be the taxable person liable to be
assessed and pay tax and amount due on completion of summary
assessment. There is no deeming provision when unpaid tax liability relates to
supply of services.
Within 30 days from passing of such summary assessment order, based on
application to ADC/JC by taxable person, such order may be withdrawn.
Please note that this provision in section 64(2), the main aspect is the ‘time
limit’ of 30 days provided to make this application. An order passed under
64(2) is an appealable order to be carried before First Appellate Authority
under section 107.
Summary assessment is NOT the same as best judgement assessment.
Summary assessment must be based on qualitative data and records far
superior than in the case of best judgement assessment. Experts opine that
determination of tax liability in this case would not be able to allow credits as
proper officer may not be in a position to ensure conditions of section 16(2)
are satisfied. However, while arriving at tax liability, credit availed cannot be
glossed over and must be adjusted to arrive at final net tax liability. Experts
hold the view that the meaning of the expression ‘tax liability’, all sister
provisions from 61 to 64 will be highly debated in Courts in the days to come.
64.3 Issues and Concerns
The law provides for treating the person in charge of goods as the “taxable
person” in cases where the person liable to pay tax cannot be ascertained.

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This provision will require the transporter to take due care to ensure that his
position in terms of compliance with the law will not be compromised, while
several transporters may themselves be unaware of the provisions of the law.
Awaiting disposal of application in ASMT-17, taxpayers can miss time limit in
section 107(1). And if the application were to be rejected in ASMT-18 and the
time to appeal is passed, taxpayer will be left without any remedy and liability
determined will be final and payable.
64.4 FAQ
Q1. When can Summary Assessment be initiated?
Ans. Summary Assessments can be initiated by a Proper Officer on seeking
permission from the Additional Commissioner / Joint Commissioner and
proving that the taxable person is liable to pay tax.
64.5 MCQ
Q1. What is the time period within which a person can apply to the
Additional/ Joint Commissioner for withdrawal of such order under this
Section?
(a) 30 days
(b) 45 days
(c) 60 days
(d) No time limit.
Ans. (a) 30 days

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