GST -Assessment and Audit
MGL= Model GST Law
Q 1. Who is the person responsible to make assessment of taxes payable under the Act?
Ans. Every person registered under the Act shall himself assess the tax payable by him for a tax period and after such assessment he shall file the return required under section 27.
Q 2. Is there any provision in MGL for tax treatment of goods returned by the recipient?
Ans. Yes, Explanation to Section 44 of MGL has such a provision. It provides that where goods received as an inward supply is returned by the recipient to the supplier within six months from the date of the relevant invoice, the tax payable on such supplies shall be equal to the input tax credit availed earlier on such inward supply. This provision essentially ensures that if the recipient returns the goods to the supplier within six months of the date of its original supply, his tax liability on such returned goods will be the same as was at the time of the original supply. If goods are returned after six months of the date of the original supply invoice, the rate of tax applicable will be the rate prevailing on date of such return.
Q 3. ‘A’ supplied goods to ‘B’ in April 2017, these goods were returned by ‘B’ to ‘A’ on June 2017. The tax rate charged by ‘A’ on such goods was 18%. In May 2017, the rate was amended to 18.5%. What is the tax payable on return of such inward supply by ‘B’ to ‘A’?
Q 4. When can a taxable person pay tax on a provisional basis?
Ans. As a taxpayer has to pay tax on self-assessment basis, a request for paying tax on provisional basis has to come from the taxpayer which will then have to be permitted by the proper officer. In other words, no tax officer can suomoto order payment of tax on provisional basis. This is governed by section 44A of MGL. Tax can be paid on a provisional basis only after the proper officer has permitted it through an order passed by him. For this purpose, the taxable person has to make a written request to the proper officer, giving reasons for payment of tax on a provisional basis. Such a request can be made by the taxable person only in such cases where he is unable to determine:
a) the value of goods or services to be supplied by him, or
b) determine the tax rate applicable to the goods or services to be supplied by him.
In such cases the taxable person has to execute a bond in the prescribed form, and with such surety or security as the proper officer may deem fit.
Q 5. What is the latest time by which final assessment is required to be made?
Ans. The final assessment order has to be passed by the proper officer within six months from the date of the communication of the order of provisional assessment. However, on sufficient cause being shown and for reasons to be recorded in writing, the above period of six months may be extended:
a) by the Joint/Additional Commissioner for a further period not exceeding six months, and
b) by the Commissioner for such further period as he may deem fit
Q 6. Where the tax liability as per the final assessment is higher than in provisional assessment, will the taxable person be liable to pay interest?
Ans. Yes. He will be liable to pay interest from the date the tax was due to be paid originally till the date of actual payment.
Q 7. What recourse may be taken by the officer in case proper explanation is not furnished for the discrepancy detected in the return filed under section 45 of MGL?
Ans. If the taxable person does not provide a satisfactory explanation within 30 days of being informed (extendable by the officer concerned) or does not take corrective action within a reasonable period after accepting the discrepancies, the Proper Officer may take recourse to any of the following provisions:
(a) Proceed to conduct audit under Section 49 of the Act;
(b) Direct the conduct of a special audit under Section 50 which is to be conducted by a Chartered Accountant or a Cost Accountant nominated for this purpose by the Commissioner; or
(c) Undertake procedures of inspection, search and seizure under Section 60 of the Act; or
(d) Initiate proceeding for determination of tax under Section 51 of the Act.
Q 8. Whether Proper Officer is required to give any notice to taxable person before completing assessment u/s 46?
Ans. As this provision relates to ‘best judgment assessment’, giving a notice to the taxable person is not required.
Q 9. If a taxable person fails to file the return required under law (under section 27 or 31), what legal recourse is available to the tax officer?
Ans. The proper officer has to first issue a notice to the defaulting taxable person under section 32 of MGL requiring him to furnish the return within a specified period of time, which has to be a minimum of fifteen days as per section 46 of MGL. If the taxable person fails to file return within the given time, the proper officer shall proceed to assess the tax liability of the return defaulter to the best of his judgement taking into account all the relevant material available with him. This power is given under section 46 of MGL.
Q 10. Under what circumstances can a best judgment assessment order issued under section 46 be withdrawn?
Ans. The best judgment order passed by the Proper Officer under section 46 of MGL shall automatically stand withdrawn if the taxable person furnishes a valid return for the default period (i.e. files the return and pays the tax as assessed by him), within thirty days of the receipt of the best judgment assessment order.
Q 11. What is the time limit for passing order u/s 46 and 47?
Ans. The time limit for passing an assessment order under section 46 or 47 is three or five years from the due date for filing the annual return.
Q 12. What is the legal recourse available in respect of a person who is liable to pay tax but has failed to obtain registration?
Ans. Section 47 of MGL provides that in such a case, the proper officer can assess the tax liability and pass an order to his best judgment for the relevant tax periods. However, such an order must be passed within a period of five years from the due date of filing of the annual return for the financial year to which non-payment of tax relates.
Q 13. Under what circumstances can a tax officer initiate Summary Assessment?
Ans. As per section 48 of MGL, Summary Assessments can be initiated to protect the interest of revenue when:
a) the proper officer has evidence that a taxable person has incurred a liability to pay tax under the Act, and
b) the proper officer believes that delay in passing an assessment order will adversely affect the interest of revenue.
Such order can be passed after seeking permission from the Additional Commissioner / Joint Commissioner.
Q 14. Other than appellate remedy, is there any other recourse available to the taxpayer against a summary assessment order?
Ans. A taxable person against whom a summary assessment order has been passed can apply for its withdrawal to the jurisdictional Additional/Joint Commissioner within thirty days of the date of receipt of the order. If the said officer finds the order erroneous, he can withdraw it and direct the proper officer to carry out determination of tax liability in terms of section 51 of MGL. The Additional/Joint Commissioner can follow a similar course of action on his own motion if the finds the summary assessment order to be erroneous (section 48 of MGL)
Q 15. Is summary assessment order to be necessarily passed against the taxable person?
Ans. No. In certain cases like when goods are under transportation or are stored in a warehouse, and the taxable person in respect of such goods cannot be ascertained, the person in charge of such goods shall be deemed to be the taxable person and will be assessed to tax (section 48 of MGL).
Q 16. Who can conduct audit of taxpayers?
Ans. As per section 49 of MGL, any officer of CGST or SGST authorized by his Commissioner by a general or specific order may conduct audit of a taxpayer. The frequency and manner of audit will be prescribed in due course.
Q 17. Whether any prior intimation is required before conducting the audit?
Ans. Yes, prior intimation is required and the taxable person should be informed at least 15 days prior to conduct of audit.
Q 18. What is the period within which the audit is to be completed?
Ans. The audit is required to be completed within 3 months from the date of commencement of audit or within a further period of a maximum of 6 months subject to the approval of the Commissioner.
Q 19. What is meant by commencement of audit?
Ans. The term ‘commencement of audit’ is important because audit has to be completed within a given time frame in reference to this date of commencement. Commencement of audit means the later of the following:
a) the date on which the records/accounts called for by the audit authorities are made available to them, or
b) the actual institution of audit at the place of business of the taxpayer
Q 20. What are the obligations of the taxable person when he receives the notice of audit?
Ans. The taxable person is required to:
a) facilitate the verification of accounts/records available or requisitioned by the authorities,
b) provide such information as the authorities may require for the conduct of the audit, and
c) render assistance for timely completion of the audit.
Q 21. What would be the action by the proper officer upon conclusion of the audit?
Ans. The proper officer must without delay inform the taxable person about his findings, reasons for findings and the taxable person’s rights and obligations in respect of such findings.
Q 22. Under what circumstances can a special audit be instituted?
Ans. A special audit can be instituted in limited circumstances where during scrutiny, investigation, etc. it comes to the notice that a case is complex or the revenue stake is high. This power is given in section 50 of MGL.
Q 23. Who can serve the notice for special audit?
Ans. The Assistant / Deputy Commissioner is to serve the 132 133 notice for special audit only after prior approval of the Commissioner.
Q 24. Who will do the special audit?
Ans. A Chartered Accountant or a Cost Accountant so nominated by the Commissioner may undertake the audit.
Q 25. What is the time limit to submit the audit report?
Ans. The auditor will have to submit the report within 90 days or within the further extended period of 90 days.
Q 26. Who will bear the cost of special audit?
Ans. The expenses for examination and audit including the remuneration payable to the auditor will be determined and borne by the Commissioner.
Q 27. What action the tax authorities may take after the special audit?
Ans. Based on the findings / observations of the special audit, action can be initiated under Section 51 of the MGL.