SECTION 44-ASSESSMENT

GST Update 01.09.2016

GST DAILY DOSE OF UPDATION:-

SECTION 44-ASSESSMENT:- The Model GST Law has specified two types of assessment, one being self assessment and the other being provisional assessment.

Every registered taxable person will assess the taxes payable under this Act and furnish the prescribed returns. It is also specified that on returning the goods to the supplier within a period of 6 months from the date of invoice, the tax payable on such supply will be the amount of input tax credit availed on such supply.

Provisional assessment comes into picture when the taxable person is unable to determine the value of goods/services or rate of tax applicable thereon. In such a case, assessee is allowed to pay tax on provisional basis with such surety/security as may be prescribed by officer. Thereafter, officer shall pass final assessment order within a period of six months from the date of order allowing assessee to pay tax on provisional basis. The period for passing final assessment order may be extended by the Joint/Additional Commissioner for further period not exceeding six months for sufficient reasons. The taxable person shall be liable to pay interest if any amount is payable to the government consequent to final assessment order from the first date after due date till the date of actual payment of differential tax, irrespective of the fact that the differential amount is paid before or after issue of order of final assessment. Similarly, if tax provisionally paid is more than the actual tax liability, assessee will be entitled to refund subject to unjust enrichment clause along with interest under section 39.

If the provision regarding interest on differential amount of tax payable is pursued, it is found that the provision has been made in consonance with the recent amendment made in Rule 7(4) of the Cenvat Credit Rules, 2004 vide Budget, 2016-17 wherein it was clarified that interest is payable irrespective of the fact that the differential tax amount is paid before or after passing of final assessment order. Earlier there was lacunae in the language of Rule 7 of CCR, 2004 wherein Bombay High Court in the case of CEAT LLIMITED took an interpretation that interest is payable only if differential tax is paid by assessee after passing of final assessment order and if the assessee pays differential tax before final assessment order, no interest is payable. However, on realizing the drafting lacunae, the law was recently amended. The amended provision is imported into the Model GST law also. Furthermore, the government has being partial in grant of interest since inception and this policy will be continued in the GST regime also. Although, the rates of interest have not been specified in the Model GST Law but there are lower rates for grant of interest while higher rates for collection of interest by assessees. It is provided that assessee will be also entitled for interest under section 39 subject to unjust enrichment clause which is extremely difficult to bypass. Moreover, whether interest will be granted from the due date as provided in case of levy of interest on differential tax is also uncertain.

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GST Update 01.09.2016

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