Section 59 of GST – Self assessment with introduction and Analysis

Section 59 of GST – Self assessment as per GST Act. Check Details for GST Section 59 In terms of Section 2(11) of the Act, “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgement assessment

Must Read – List of all sections of GST

Section 59 of GST – Self assessment as per GST Act

Every registered taxable person shall self assess the taxes payable under this Act and furnish a return for each tax period as specified under Section 39.

Related provisions of the Statute

Section or RuleDescription
Section 2(94)Definition of Registered Person
Section 2(97)Definition of Return
Section 39Furnishing of returns
Chapter VIII of the CGST Rules, 2017Returns

Analysis and Updates

Introduction

In terms of Section 2(11) of the Act, “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgement assessment. It is important to note that there is no provision permitting a Proper Officer to re-assess the tax liability of taxable person. The provisions of the law permit a registered person to rectify any incorrect particulars furnished in the returns.

In terms of Section 39(9), if a registered person discovers any omission or incorrect particulars furnished in a return, he is required to rectify such omission or incorrect particulars in the return to be furnished for the tax period during which such omission or incorrect particulars as are noticed (on payment of due interest), unless the same is as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, or such rectification is time barred

(i.e., after the due date for furnishing of return for the month of September or second quarter following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier). As such, reference to such re-assessment in the definition may have to be suitably read down.

It is normally understood that an Assessment is conducted by a proper officer. In terms of Section 2(91) of the CGST Act, 2017 a “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board;

The CGST Act contemplates the following types of Assessments:

  • Self-assessment (Section 59)
  • Provisional Assessment (Section 60)
  • Scrutiny of returns filed by registered taxable persons (Section 61 )
  • Assessment of non-filers of returns (Section 62)
  • Assessment of unregistered persons (Section 63)
  • Summary Assessment in certain special cases (Section 64)
  • (i) Self-assessment in terms of Section 59 refers to the assessment made by registered person himself / itself while all other assessments are undertaken by tax authorities.
  • (ii) Provisional Assessment under Section 60 is an assessment undertaken at the instance of the registered person. Provisional Assessment is followed by a final Assessment.
  • (iii) Scrutiny Assessment under section 61 is a form of re-assessment (since the self-assessment is made by the registered person himself / itself. A scrutiny of returns conducted by the proper officer who checks for the correctness of the returns filed and intimates the registered person of any discrepancies noticed.
  • (iv) Assessment of non-filers u/s 62 and Assessment of un-registered person u/s 63 are in the nature of best judgement assessments.
  • (v) Summary Assessment under Section 64 is a form of protective assessment based on information gathered from the tax authorities in a particular case.

Analysis

Self-assessment means an assessment by the registered person himself and not an assessment conducted or carried out by the Proper Officer. The GST regime continues to promote the scheme of self-assessment. Hence, every registered person would be required to assess his tax dues in accordance with the provisions of GST Act and report the basis of calculation of tax dues to the tax administrators, by filing periodic tax returns.

The provisions of the law permit a registered person to rectify any incorrect particulars furnished in the returns. In terms of Section 39(9), if a registered person discovers any omission or incorrect particulars furnished in a return, he is required to rectify such omission or incorrect particulars in the return to be furnished for the tax period during which such omission or incorrect particulars are noticed (on payment of due interest), unless the same is as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities,

or such rectification is time barred(i.e., after the due date for furnishing of return for the month of September or second quarter following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier).

Further, Para 4 of Circular 26/2017 dated 29.12.17, clarifies that in case of summary returns like GSTR-3B, where there are no separate tables for reflecting tax effects of amendments for past periods are available, the figures pertaining to the current month can be adjusted for past month amendments, so long as the amount is not negative. These provisions exhort the concept of self-assessment.

It is important to note that ‘self-assessment’ does not confer authority of an assessing officer (called Proper Officer) on the taxpayer. Taxpayer must exercise this liberty to assess tax liability voluntarily with the perils of interest and penalty for any miscalculations or misinterpretations without usurping the role of Proper Officer.

For eg. If tax is charged in excess to a customer and the same has been reported in GSTR 1 and paid in GSTR 3B, whether taxpayer on realizing the error, is required to file a refund claim under section 54 or free to adjust the excess with any other dues. And if the tax is correctly charged to customer but error is in GSTR 1 and GSTR 3B, whether taxpayer is still liable to file refund under section 54 or does section 59 permit taxpayer to suo moto adjust the excess by reducing any other tax payable.

Experts are of the view that taxpayer must submit to the jurisdiction of Proper Officer to examine and sanction refund in case the tax charged to customer is in excess by filing a refund application and not merely when the errors is in reporting in GSTR 1 and 3B and not in tax invoice issued to customer. It is on this premise that experts opine that ANX-1 containing instructions that ‘tax dues admitted in ANX-1 will be liability under the Act’ may not be entirely in accordance with law.

The point therefore is about the ‘limits’ to this liberty of self-assessment cannot be lost sight of while complying with GST. Self-assessment does not mean ‘unsupervised self-administration’.

Comparative Review

The principles of self-assessment were contained in Central Excise Law, Service Tax Law as well as VAT Laws.

Rule 6 of Central Excise Rules, provides that the assessee shall himself assess the duty payable on excisable goods (except in the case of cigarettes). As regards service tax, the concept of self-assessment is envisaged in Section 70 of the Act which provides that every person liable to pay service tax shall himself assess the tax due on services provided by him. State VAT laws also provide for filing of returns and payment of VAT on self-assessment basis [For instance, Section 20 of MVAT Act, 2002 or Section 38 of the Karnataka VAT Act, 2003]

Issues and Concerns

In respect of discharge of any additional tax liability that may arise on account of any reworking or re-computation etc., (for example – Reversal of input tax credit on account of obtaining completion certificate required under any law for the time being in force by a builder in the construction sector), the proportionate input tax credit ought to be reversed (in this example, in case of unsold flats).

The quantum of reversal of taxes relating to the pre-GST regime cannot be reflected in the GST returns, since the credits have been availed under the erstwhile laws (which may or may not have been carried forward as transitional credit). In so far as GST returns are concerned (presently GSTR-3B), the return does not permit / allow a registered person to enter the proportionate reversal of Credit. Reference may be had to section 75(12) where ‘undisputed arrears’ permits recovery action by tax authorities without affording an opportunity to be heard.

Frequently Asked Questions

Who is the person responsible to make self-assessment of taxes payable under the Act?

Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under Section 39.

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