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Best Judgement Assessment Under GST

There may be situations where a tax officer needs to assess the income of a person without having all the necessary information in hand. Such an assessment is called ‘Best Judgement Assessment’ since the tax officer tries to estimate the tax liability by himself based on the limited information available.

When Can A Tax Officer Carry Out Best Judgement Assessment?

The Best Judgement Assessment can be carried out in the following situations:

  • Assessment of non-filers of returns (Section 62)
  • Assessment of unregistered persons (Section 63)

Assessment of non-filers of returns

The proper officer shall issue a notice to registered persons who fail to furnish regular returns u/s 39 or the final return u/s 45 of the CGST act, requiring/asking them to file their return within 15 days. If the registered persons fail to do so, the proper officer has the power to proceed with the Best Judgement Assessment based on relevant material available with him or gathered by him.

Time limit to pass Assessment Order

The proper officer shall issue the Assessment Order within 5 years from the due date for furnishing the annual return for the financial year to which non-payment of tax relates. Such an order will be prepared in Form ASMT-13. The summary will be available in Form GST DRC-07.

However, if the registered person furnishes the return within 30 days of service of the assessment order, the Best Judgement Assessment shall stand withdrawn.

Assessment of unregistered persons

The proper officer can assess the tax liability of an unregistered person to the best of his judgement in the following situations:

  • Where a taxable person fails to obtain registration despite being liable to do so;
  • Where a person’s registration has been cancelled due to the following reasons:
    • They have contravened the provisions of the Act or the rules; or
    • In case of a composition taxpayer, they have not furnished returns for 3 consecutive tax periods; or
    • In case of a regular taxpayer, they have not furnished returns for a continuous period of 6 months; or
    • A person who had taken voluntary registration had not commenced business within 6 months from the date of registration; or
    • The registration had been obtained through fraud, wilful misstatement or suppression of facts.

Time limit to reply to the notice

The proper officer has to mention the grounds on which the assessment is proposed to be made (reasons for Best Judgement Assessment) in the notice issued to the taxpayer. Such show-cause notice will be available in summary Form DRC-01. The taxpayer will have to submit a reply within 15 days of receiving such notice.

Time limit to pass Assessment Order

The proper officer shall issue the Assessment Order within 5 years from the due date for furnishing the annual return for the financial year to which the non-payment of tax relates to. Such order will be prepared in a summary form GST DRC-07.

Note: It is pertinent to note that where a taxable person liable for registration does not get registered on time, the time limit of 5 years will apply from the due date of annual return relating to the financial year in which the taxable person crosses the applicable threshold limit for registration.

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