Best Judgement Assessment Under GST: Understanding Your Obligations and Rights

In the realm of Goods and Services Tax (GST), assessment under GST aims to ensure tax compliance.

While self-assessment is the norm, tax authorities may resort to other methods when taxpayers fail to meet their obligations.

One such method is Best Judgement Assessment under GST. This assessment is carried out when a registered person fails to file their returns or does not comply with the scrutiny process.

DisyTax brings you a detailed guide to understanding GST Best Judgement Assessment, its implications, and how to navigate it effectively.

Best Judgement Assessment under GST is a type of assessment conducted by the proper officer when a registered person fails to furnish their GST returns as required under Section 39 or Section 45 of the GST Act, even after being served a notice under Section 46, or fails to cooperate with the tax authorities during the scrutiny of their returns.

In such situations, the proper officer assesses the tax liability of the person to the best of their judgment, based on all the relevant material available or gathered.

This provision is enshrined in Section 62 of the GST Act (Top Rank Keyword: Section 62 GST).

Best Judgement Assessment is typically invoked in the following scenarios:

1. Failure to Furnish Returns (Section 39 or Section 45): If a registered person fails to furnish their mandatory returns, such as monthly, quarterly, or annual returns (under Section 39), or the final return upon cancellation of registration (under Section 45), within the prescribed time limits.

2. Non-Compliance with Notice to File Returns (Section 46): Even after the proper officer has issued a notice under Section 46 requiring the registered person to furnish the return, if the person still fails to do so.

The process for conducting Best Judgement Assessment generally involves the following steps:

1. Issuance of Notice (Section 46): The proper officer will typically issue a notice under Section 46 to the registered person who has failed to furnish their return, providing an opportunity to file the overdue return within a specified timeframe.

2. Consideration of Available Information: If the taxpayer fails to file the return even after the notice under Section 46, the proper officer will proceed to assess the tax liability to the best of their judgment.

   This means the officer will consider all the relevant material available or gathered.

   This information may include:

   • Transaction details available on the GST portal (e-way bills, invoices uploaded by suppliers, etc.).

   • Information gathered from inspections or investigations.

   • Past tax payment history of the taxpayer.

   • Industry trends and averages for similar businesses.

3. Assessment Order: After considering all the relevant material, the proper officer will issue an assessment order determining the tax liability, along with any applicable interest and penalties.

   This order will be served to the taxpayer. The assessment order must be issued within a period of five years from the date specified under Section 44 for furnishing the annual return for the financial year to which the tax not paid relates.

Section 62 of the GST Act explicitly deals with Best Judgement Assessment for non-filers of returns.

It states:

“If 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 the annual return for the financial year to which the tax not paid relates.”

This section clearly outlines the conditions for invoking Best Judgement Assessment and the statutory time limit for issuing the order.

While the proper officer makes the assessment based on their best judgment, taxpayers still have certain rights and responsibilities:

Rights:

• Right to Receive Notice: Taxpayers have the right to receive a proper notice (under Section 46) before the Best Judgement Assessment is initiated, giving them an opportunity to comply.

• Right to be Heard: Although not explicitly mandated in Section 62 before the order, principles of natural justice generally imply that taxpayers should have an opportunity to present their case or explain the reasons for non-compliance before the final assessment order is passed.

• Right to Appeal: Taxpayers have the right to appeal against the Best Judgement Assessment order if they believe it is incorrect or unfair.

Responsibilities:

• File Returns Promptly: The primary responsibility is to file all GST returns within the stipulated timeframes to avoid triggering a Best Judgement Assessment.

• Respond to Notices: If a notice is received under Section 46, it is crucial to respond promptly and either file the return or provide a valid explanation for the non-filing.

• Maintain Proper Records: Keeping accurate and complete records of all business transactions is essential, as these records can be crucial if a Best Judgement Assessment is initiated or when filing an appeal.

If you receive a Best Judgement Assessment order, here are some steps you should take:

1. Review the Order Carefully: Understand the basis on which the tax liability has been assessed by the proper officer.

2. Identify the Reason for Assessment: Determine why the Best Judgement Assessment was initiated (e.g., failure to file specific returns).

3. Comply Immediately (If Possible): If the assessment was due to non-filing of returns, file the overdue returns as soon as possible.

4. Gather Supporting Documents: Collect all relevant documents and records that can help you demonstrate your actual tax liability.

5. File an Appeal: If you disagree with the assessment order, you have the right to file an appeal with the appropriate appellate authority within the prescribed time limit.

   You will need to present your case with supporting evidence.

6. Seek Professional Help: It is advisable to consult with a tax professional or DisyTax to understand the implications of the assessment and to get assistance with filing an appeal or representing your case.

As per Section 62 of the GST Act, if the registered person furnishes a valid return within thirty days of the service of the assessment order, the assessment order shall be deemed to have been withdrawn.

This provides a significant relief to taxpayers who may have genuinely missed filing their returns.

If a taxpayer believes that the Best Judgement Assessment order is incorrect or unfair, they can file an appeal with the First Appellate Authority.

The process for filing an appeal is outlined under Section 107 of the GST Act.

It is important to file the appeal within the specified time limit and with the required documents and fees.

DisyTax can provide valuable assistance to businesses facing Best Judgement Assessment under GST:

• Understanding Notices and Orders: We can help you interpret the notices and assessment orders received from the proper officer.

• Preparing Responses and Submissions: Our team can assist you in preparing a comprehensive response to the proper officer, along with relevant supporting documents.

• Filing Appeals: We can guide you through the process of filing an appeal against the Best Judgement Assessment order.

• Representation Services: Our experts can represent you before the tax authorities during the assessment or appeal proceedings.

• Ensuring Compliance: We can help you get back on track with your GST filings and ensure future compliance to avoid such assessments.

Best Judgement Assessment under GST is a measure taken by tax authorities when taxpayers fail to meet their basic compliance obligations.

While the law provides avenues for recourse, the best approach is to ensure timely filing of returns and cooperation with the tax authorities.

If you find yourself facing a Best Judgement Assessment, understanding the process and your rights is crucial.

DisyTax is here to provide the expert guidance and support you need to navigate such situations effectively.

For the most accurate and up-to-date information, always refer to the official GST portal: https://www.gst.gov.in/.