Section 64 of GST – Summary assessment in certain special cases
(1) The proper officer may, on any evidence showing a tax liability of a person coming to his notice, with the previous permission of Additional/Joint Commissioner, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue: Provided that where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be assessed and liable to pay tax and any other amount due under this section. (2) On any application made by the taxable person within thirty days from the date of receipt of order passed under sub-Section (1) or on his own motion, if the Additional or Joint Commissioner considers that such order is erroneous, he may withdraw such order and follow the procedure laid down in Section 73 or section 74. Related provisions of the Statute
Analysis of this section
Introduction
The word “summary assessment” is generally used in a tax legislation to denote ‘fast track assessment’ based on return filed by the assessee. It allows the Tax Officer to make prima facie adjustments based on errors or factors based on the available information without an occasion for calling for further information from an assessee or inspecting his records. In the GST Act, it is used to denote those assessments which are completed ex-parte and on priority basis when there is reason to believe that there will be loss of tax revenue, if such assessment is delayed. This provision is only the first step in invoking the machinery provided to enforce recovery of dues from potential defaulters, and this requires an assessment of the tax liability. Such amounts are commonly known as protective assessments which in a sense protects Government revenue. This section pre-supposes the fact that the proper officer must be in possession of sufficient grounds to believe that any delay will adversely affect revenue.
Analysis
The summary assessment can be undertaken in case the following conditions are satisfied:
The Proper Officer must have evidence that there may be a tax liability. It is this ingredient that furnishes jurisdiction for the Proper Officer to invoke section 64. Experts hold the view that the ‘evidence’ is not merely ‘reason to believe’ but something more. And if it were merely reason to believe, then that would not have been open for examination in further proceedings. Since it refers to something more by the words ‘evidence’ that supports Proper Officer’s expectation of plausible tax liability, then such evidentiary material can be called in for examination in further proceedings. Proper Officer’s apprehension that there may be tax payable is not sufficient to vest with necessary jurisdiction; andThe Proper Officer has obtained prior permission of Additional / Joint Commissioner to assess the tax liability summarily. The proper officer must have sufficient ground to believe that any delay in passing assessment order would result in loss of revenue. Now, steps proposed by the Proper Officer requires be fettered with some checks. Checks on the exercise of this authority are ensured by permission from ADC/JC who would appreciate the quality of such evidence and then grant permission. Once ADC/JC has granted permission, Proper Officer may proceed to pass the assessment order. Examination of the evidence after summary assessment order has been passed would only help in establishing impropriety of the entire proceedings in judicial review.
Summary assessment under this Section of the CGST Act can therefore be construed in some sense as a ‘protective assessment’ carried out in special circumstances, where there are sufficient grounds to believe that taxable person will fail to make payment of any tax, penalty or interest, if the assessment is not completed immediately. Such failure to pay tax, interest or penalty must be due to reasons attributable to the tax payer (ex: insolvency, instances of defaulting, absconding etc). Hence, summary assessment under this Section is not a substitute for assessment that are nearing the time limitation prescribed for issue of SCN. Further, mere possibility of non-payment cannot be a grounds for resorting to summary assessment, unless there are factors indicating that such non-payment pertains to admitted or undisputed tax liability. As per the provision of Rule 100(3) the summary assessment order should be in FORM GST ASMT-16 + DRC 7. This section appears to overlap with section 62 and 63 but please note:
Persons who have obtained registration but have failed to file returns will come within the operation of section 62; andPersons who are liable to obtain registration but have failed to seek registration or whose registration has been cancelled under section 29(2) will attract section 63.
Section 64, however, requires the ingredients discussed earlier to exist in order for summary assessment to be undertaken. Please note that along with summary assessment order, a demand order in DRC7 is also to be passed for proceedings with recovery unless further appeal is filed under section 107 to stay the demand. The section allows the person who is assessed and is served with the order so passed, to come forward and make an application in accordance with Rule 100(4) in FORM GST ASMT– 17 to the Additional / Joint Commissioner, who will examine the same and if the Additional/ Joint Commissioner is satisfied, the summary assessment order may be withdrawn. As regards the contents of this application, it may be understood that the applicant may attempt to challenge the facts or reasons for the belief about risk of revenue loss and further accept to be available to respond, if proceedings under Section 73/74 were to be undertaken. Besides, the Additional / Joint Commissioner may, on his own motion, withdraw such order and follow the procedure laid down in Section 73 or as the case may be Section 74 for determination of taxes not paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised if he considers that such order is erroneous. From the above, it appears that every summary assessment order so withdrawn under subSection (2), may be followed by a notice under Section 73 or as the case may be section 74 of the Act. On receipt of application the proper officer has to pass the order of withdrawal or, rejection of the application in accordance with Rule 100(5) in FORM GST ASMT-18. Many times, summary assessments are undertaken in circumstances, when a taxable person to whom liability pertains is not ascertainable. In such cases, the law provides that, if the liability pertains to supply of goods, then person in charge of such goods shall be deemed to be the taxable person liable to be assessed and pay tax and amount due on completion of summary assessment. There is no deeming provision when unpaid tax liability relates to supply of services. Within 30 days from passing of such summary assessment order, based on application to ADC/JC by taxable person, such order may be withdrawn. Please note that this provision in section 64(2), the main aspect is the ‘time limit’ of 30 days provided to make this application. An order passed under 64(2) is an appealable order to be carried before First Appellate Authority under section 107. Summary assessment is NOT the same as best judgement assessment. Summary assessment must be based on qualitative data and records far superior that in the case of bestjudgement assessment. Experts opine that determination of tax liability in this case would not be able to allow credits as Proper Officer may not be in a position to ensure conditions of section 16(2) are satisfied. However, while arriving at tax liability, credit availed cannot be glossed over and must be adjusted to arrive at final net tax liability. Experts hold the view that the meaning of the expression ‘tax liability’ all sister provisions from 61 to 64 will be highly debated in courts in the days to come. 64.3 Issues and Concerns The law provides for treating the person in charge of goods as the “taxable person” in cases where the person liable to pay tax cannot be ascertained. This provision will require the transporter to take due care to ensure that his position in terms of compliance with the law will not be compromised, while several transporters may themselves be unaware of the provisions of the law. Recommended Articles –
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