Limitation Period for Furnishing of Return for Deemed Withdrawal of BestJudgment AssessmentWhether Directory or MandatoryD. Ramachandra Rao

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The Tax Publishers GST--Best Judgment Assessment Limitation Period for Furnishing of Return for Deemed Withdrawal of Best-Judgment Assessment--Whether Directory or Mandatory D. Ramachandra Rao The learned author seeks to make an analytical study of the issue as to whether the limitation period for furnishing of returns for deemed withdrawal of best judgment assessment order, passed under sub-section (1) of section 62 of the Central Goods and Services Tax Act, 2017, is director or mandatory and whether the Proper Officer may extend the limitation period upon assessee showing the genuine reasons for delay in furnishing of the returns. The related issue is being discussed in the light of the Madras High Court decision in the case of Comfort Shoe Components, decided on 14-12-2023. 1. When is best judgment resorted to? As per sub-section (1) of section 62 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"), 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 judgment 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. Though for the purpose of making best-judgment assessment, the statute has provided a long time period of five years from the due date of furnishing of annual return, yet the GST authorities have been resorting to the best judgment assessment very frequently, even for failure to furnish the return for one or two tax periods. The delay in furnishing of return may occur for several reasons including shortage of funds, non-completion of accounts, health issues, etc. Further, the GST law provides late fees and interest for delay in furnishing of return. But passing of best judgment upon mere delay in furnishing of return for one or two tax period is very harassing action of the GST authorities. Though the GST authorities have a time period of five years for making best-judgment assessment, but they are not keen to wait even for two months. Passing of best judgment on such frequent basis causes undue hardship upon the bona fide taxpayers as they are compelled to furnish the return according to the schedule of the GST Authorities for withdrawal of the best-judgment assessment. 2. Deemed withdrawal of best judgment assessment The statute also provides the facility of deemed withdrawal of best-judgment assessment. As per sub-section (2) of section 62, where the registered person furnishes a valid return within 60 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. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Best Judgment Assessment

Limitation Period for Furnishing of Return for Deemed Withdrawal of Best-Judgment Assessment--Whether Directory or Mandatory

D. Ramachandra Rao

The learned author seeks to make an analytical study of the issue as to whether the limitation period for furnishing of returns for deemed withdrawal of best judgment assessment order, passed under sub-section (1) of section 62 of the Central Goods and Services Tax Act, 2017, is director or mandatory and whether the Proper Officer may extend the limitation period upon assessee showing the genuine reasons for delay in furnishing of the returns. The related issue is being discussed in the light of the Madras High Court decision in the case of Comfort Shoe Components, decided on 14-12-2023.

1. When is best judgment resorted to?

As per sub-section (1) of section 62 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"), 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 judgment 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.

Though for the purpose of making best-judgment assessment, the statute has provided a long time period of five years from the due date of furnishing of annual return, yet the GST authorities have been resorting to the best judgment assessment very frequently, even for failure to furnish the return for one or two tax periods.

The delay in furnishing of return may occur for several reasons including shortage of funds, non-completion of accounts, health issues, etc. Further, the GST law provides late fees and interest for delay in furnishing of return.

But passing of best judgment upon mere delay in furnishing of return for one or two tax period is very harassing action of the GST authorities. Though the GST authorities have a time period of five years for making best-judgment assessment, but they are not keen to wait even for two months.

Passing of best judgment on such frequent basis causes undue hardship upon the bona fide taxpayers as they are compelled to furnish the return according to the schedule of the GST Authorities for withdrawal of the best-judgment assessment.

2. Deemed withdrawal of best judgment assessment

The statute also provides the facility of deemed withdrawal of best-judgment assessment. As per sub-section (2) of section 62, where the registered person furnishes a valid return within 60 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.