Best judgment’ assessment awaits GST return non-filers

NEW DELHI: Thousands of GST non-filers, or those who did not file returns, have received an auto-generated letter from the authorities, asking them to file their returns or face the prospect of the tax department assessing their liability and asking them to pay. Although the GST law provided for use of “best judgment” assessment, it’s a provision that is only being used now to coax those who have not filed their returns, and paid up GST, to clear dues to the government. Sources said GST authorities have stepped up their drive to maximise collections weeks ahead of close of the financial year. This has been a particularly difficult year for the tax department as lockdown resulted in a massive drop in collections and forced officials to go slow on acting against non-filers and wrong doers. Since October, authorities have swung back into action, launching an offensive against those issuing or dealing in fake invoices and prodding others to file returns, resulting in a record 90 lakh filings in January, when collections also touched an all-time high of nearly Rs 1.2 lakh crore.

A tax consultant with a global firm said that GST Network has developed several tools to enable the tax department to chase those who are non-compliant. “When non-filers do not file GST returns within 15 days of notice for filing returns, the assessing authority on 16th day is empowered under section 62 of CGST Act to pass best judgment assessment order, assessing the tax liability on the basis of available material. This assessment order is deemed withdrawn if tax is paid and a return is filed within 30 days, failing which recovery proceedings can be initiated by authorities unless the order is challenged in appeal after payment of 100% of admitted tax and 10% of the disputed amount, which is the precondition,” tax lawyer R S Sharma explained. Already, tools have been deployed to detect and act against tax filers with a divergence in sales reported in the initial and final returns. Besides, the department has also released the standard operating procedure (SOP) for the immediate suspension of registration of a person, as a measure to safeguard interest of revenue department in case discrepancies or anomalies are observed, indicating a violation of the law and the rules.