CAN THE GST DEPARTMENT EDIT OR REDUCE THE GST AMOUNT BY A RESOLUTION PROFESSIONAL?

Powers of Resolution Professional of the GST department stays hand tied as considered powerless to amend the prices of GST. Access to the power to alter GST prices stays with limited hands to maintain the integrity of the functions performed by the GST. Hence, limited assigned powers to the specific bodies in the GST support the good functionality and support authenticity of the responsibilities and duties performed by each department. In this article, all the relevant sections will be covered at the beginning and then conclude with a case based on the topic.

Under the GST Act 2017, the term “assessment” means a determination of tax liability mentioned in Sec.2(11) of CGST which includes self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment. 

“Section 2(11) of CGST “assessment” means a determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment;” 

The main object of assessment procedures is to collect revenue accurately, effectively, and efficiently. Normally, persons having GST registration file GST returns and pay GST every month based on self-assessment of GST liability. However, the Government can re-assess or perform an assessment by itself and determine if there is a short payment of GST. 

 Under the GST Act, 2017 there are various types of assessment-

1. Self-assessment of taxes (Sec. 59).
2. Provisional assessment (Sec. 60).
3. Scrutiny of tax returns filed by registered taxable persons (Sec. 61).
4. Assessment of non-filers of returns (Sec. 62).
5. Assessment of unregistered persons (Sec. 63).
6. Summary assessment in certain special cases (Sec. 64).

 

SELF ASSESSMENT

The taxable person is required to pay tax on the basis of self-assessment done by himself. Hence, all GST return filings are based on self-assessment by the taxpayer.

Sec. 59 of the Act states – “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.”

PROVISIONAL ASSESSMENT

When the assessee is unable to find actual Value, Rate and liability then the assessee can approach the Assessing officer with written application and AO pass an order on provisional and conditional basis, assesse deposit tax liability as specified in order on provisional basis.

Procedure

1. The taxable person has to give a request for provisional assessment in writing to the GST officer.

1. On reviewing the application, the GST officer will pass an order within a period not later than ninety days from the date of receipt of the request, allowing payment of tax on a provisional basis or at a GST rate or on such value as specified by him.

1. The taxable person, paying on a provisional basis, has to issue a bond with security promising to pay the difference between a provisionally assessed tax and final assessed tax.
2. The GST officer will pass a final assessment, with a period not exceeding six months from the date of communication of the order of provisional payment.

Interest Payable for Provisional Assessment

After the final assessment, suppose, the taxable person is liable to pay more tax than the tax paid at the time of provisional assessment, then the taxable person should pay the interest on such tax payment. Interest would be calculated from the actual due date of tax till the date of actual payment of tax. The interest calculation position will remain the same, even if the payment of tax is made before or after the final assessment.

Sec. 60 of the Act states – 

“(1) Subject to the provisions 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 subsection may, on sufficient cause being shown and for reasons to be recorded in writing, be extended by the Joint Commissioner or 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 sub-section (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 Consumer Welfare Fund. Utilizations of Fund. Self-assessment. Provisional assessment 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.”

Scrutiny Assessment

Scrutiny means a crosscheck and verification. In the process of scrutiny if any discrepancies are found in return, then the officer initiates the scrutiny process and crosscheck and then verify that the registered person has followed the process defined under this act or not also ensure that the assessee submitted correct information in proper manner or not.

The officer then serves a notice to submit correct particulars and rectify discrepancy, if satisfactory reply and corrective action is not taken by the registered person in a specified time period then appropriate action may be taken by the assessing officer.

Sec. 61 of the Act states-

“ (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 registered 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.”

Best Judgement Assessment Failure to file Return: –

Every registered person liable to file return, when registered person have not furnish return under sec 39 or sec 45 even after service of notice then 

• the officer shall pass an order in their best judgement and 
• If the registered person furnishes a valid return, then the proper officer drops the assessment only if all tax and any sum payable has been deposited in full.

Failure to File GST Return

When a registered person fails to furnish the required returns, even after service of notice under Section 46, the GST officer would proceed to assess the tax liability of the taxpayer to the best of his judgment taking into account all the relevant material which is available or gathered and issue an assessment order within a period of five years from the date for furnishing of the annual return for the financial year to which the tax not paid relates.

If the registered person furnishes a valid return within a period of 30 days from the date of issuance of the assessment order, then the assessment order would be deemed to have withdrawn. However, the registered person will be liable to pay interest under Section 50 (1) and/or liable to pay a late fee under Section 47.

Sec. 62 of the Act states –

“(1) Notwithstanding anything to the contrary contained in section 73 or section 74, where a registered person fails to furnish the return under section 39 or section 45, even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.

(2) Where the registered person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.”

Assessment of Unregistered Person

The assessment proper officer assess in case where a taxable person is liable to obtain registration but he fails to obtain or whose registration has been cancelled but liable to pay tax, then the proper officer may initiate Suo moto proceedings on the basis of information obtained, during inspection or survey, through any information available intelligence unit, or any other means.

Sec. 63 of the Act states –

“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 judgment 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 return 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.”

Summary Assessment

Whenever the proper officer has come to know and also has reason to believe that an assessment order must be passed to taxable person for protect the interest of revenue then with prior permission of additional commissioner and joint commissioner, he shall assess the tax liability of such person and issue an assessment order,

Also, if the taxable person is not ascertainable then the person in charge of such goods shall be deemed to be taxable person and liable to be assessed and paid.

Sec. 64 of the Act states –

“(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 Commissioner or 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 an 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 Commissioner 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.

BIJOY PRABHAKARAN PULIPRA VS STATE TAX OFFICER, SGST (NCLAT), 7th October 2021

Appeal No- Company Appeal (AT) (CH)(Insolvency) No. 42 of 2021

1. Bijoy Pulipra i.e the Appellant filed an appeal against an Order passed by the National Company Law Tribunal (NCLT), Kochi Bench in MA/205/KOB/2020 in MA/140/KOB/2020 in TIBA/11/KOB/2019.
2. In that order, the NCLT under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) held that there is no error in the Order in MA/140/KOB/2020.
3. The Appellant therefore filed an appeal which seeks clarification about assessment of GST amount payable by Corporate Debtors in the National Company Law Appellate Tribunal (“NCLAT”), Chennai.
4. The appeal was dismissed by the NCLAT and held that the Resolution Professional (“RP”) who committed an error in exercising their power and exercised the powers of GST Authorities, under Regulation 14 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”), which was not held to be sustainable.
5. After verification of the GST claims with Corporate Debtor’s books, the NCLAT noted that the Appellant revised the admitted claim of GST dues filed by The State Tax Officer, SGST (“the Respondent”).
6. Moreover, the NCLAT stated that the revision of the GST assessment order was beyond the jurisdiction of the RP.
7. Regulation 14 of the CIRP Regulations only authorizes the RP to exercise power where the claim is not precise due to any contingency or other reasons.
8. Observations were made by the NCLAT that the GST amount is an amount of tax levied under the assessment order as per GST Law and the same cannot be edited or reduced by RP.
9. If the RP was aggrieved by the said order, they should have filed the appeal under Central Goods and Services Tax Act, 2017(“CGST Act”)/State Goods and Services Tax Act, 2017 (“SGST Act”).
10. The NCLAT further stated that any revision of assessment orders also cannot be made under Section 238 of IBC. 
11. In addition, the NCLAT stated that the Committee of Creditors (“COC”) cannot exercise judicial power under commercial wisdom and has no role in acceptance or rejection of claim and considered that the statutory provision and suggested filing an Appeal before NCLAT.
12. Lastly, the NCLAT concluded that the said act of the RP is without jurisdiction and not sustainable in law.

CONCLUSION 

Therefore, the above case has took a clear picture about the powers and limitations of the GST Department. In addition, it is evident that the Act neither confers any power or role in changing or reducing the GST amount nor has a part in accepting or rejecting a claim.