Best Judgment Assessment for GST Non-Filers: Key Provisions of Section 62 CGST Act, 2017

Section 62 of the CGST Act, 2017 empowers the proper officer to conduct a best judgment assessment for registered persons who fail to furnish GST returns even after notice, enabling authorities to assess tax liability based on available material and issue an order (FORM GST ASMT-13) within five years from the due date of the annual return.

If the taxpayer furnishes a valid return within 60 days of the assessment order, the order is deemed withdrawn; this window can be further extended by another 60 days with additional late fees.

However, liability for interest and late fees remains. The section is supported by procedural rules (Rules 100, 142) and specific forms, and the Finance Act 2023 amendments have strengthened compliance provisions by offering more opportunities for regularization while maintaining consequences for delays. Section 62 thus serves as a critical tool to ensure non-filers are brought into compliance under the GST regime.

Assessment of Non-Filers: Understanding Section 62 of the CGST Act, 2017

Section 62 of the Central Goods and Services Tax (CGST) Act, 2017, effective from July 1, 2017, through Notification No. 9/2017-Central Tax, dated June 28, 2017, empowers the proper officer to assess the tax liability of registered persons who fail to furnish their GST returns. This provision plays a crucial role in ensuring tax compliance and revenue collection, even in cases where taxpayers are delinquent in their filing obligations.

Section 62(1): Best Judgement Assessment for Non-Filers

Section 62(1) outlines the procedure for the “best judgement assessment” of non-filers. This subsection states that, notwithstanding anything contained in Section 73 (determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for reasons other than fraud or willful misstatement or suppression of facts) or Section 74 (determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or willful misstatement or suppression of facts), or Section 74A (which was inserted with effect from November 1, 2024, by the Finance (No. 2) Act, 2024, vide Notification No. 17/2024-Central Tax, dated September 27, 2024), if a registered person fails to furnish the required returns under Section 39 (furnishing of returns) or Section 45 (final return), even after receiving a notice under Section 46 (notice to return defaulters), the proper officer is authorized to proceed with the assessment.

In such scenarios, the proper officer will assess the tax liability to the best of their judgment. This “best judgment” must be based on all relevant material that is already available or that has been gathered by the officer. An assessment order, specifically FORM GST ASMT-13, must then be issued within a period of five years from the due date for furnishing the annual return (under Section 44) for the financial year to which the unpaid tax relates. This five-year period provides a significant window for the authorities to act against non-compliant taxpayers.

Section 62(2): Opportunity for Compliance and Withdrawal of Order

Section 62(2) provides a critical window of opportunity for the registered person to rectify their non-compliance. As per the amendment made by the Finance Act 2023, effective from October 1, 2023, vide Notification No. 28/2023-Central Tax, dated July 31, 2023, if the registered person furnishes a valid return within sixty days of the service of the assessment order issued under sub-section (1), the said assessment order shall be deemed to have been withdrawn.

However, it is crucial to note that while the assessment order is withdrawn, the liability for certain payments continues. Specifically, the registered person will still be liable for the payment of interest under sub-section (1) of Section 50 (interest on delayed payment of tax) and for the payment of late fee under Section 47 (late fee).

A significant proviso was newly inserted into Section 62(2) by the Finance Act 2023, also effective from October 1, 2023, via the same Notification No. 28/2023-Central Tax. This proviso grants an additional opportunity for compliance. If the registered person fails to furnish a valid return within the initial sixty days of the service of the assessment order, they may furnish the same within a further period of sixty days.

This extension, however, comes with an additional late fee of one hundred rupees ($100) for each day of delay beyond the initial sixty days. If the valid return is furnished within this extended period, the assessment order will still be deemed to have been withdrawn, but the liability to pay interest under Section 50(1) and late fee under Section 47 will persist.

Relevant Rules and Forms for Section 62

The implementation and operational aspects of Section 62 are further elaborated by various rules and forms under the CGST Act:

• Rule 100: Assessment in certain cases: This rule provides the procedural framework for assessments in specific scenarios, including those under Section 62.
• FORM GST ASMT-13: Assessment order under Section 62: This is the specific form used by the proper officer to issue the best judgement assessment order to non-filers.
• FORM GST ASMT-14: Show Cause Notice for assessment under section 63: While not directly for Section 62, this form relates to assessment for unregistered persons, highlighting the broader framework of assessment under GST.
• FORM GST ASMT-15: Assessment order under section 63: This is the assessment order for unregistered persons.
• FORM GST ASMT-16: Assessment order under section 64: This form pertains to summary assessment in certain special cases.
• FORM GST ASMT-17: Application for withdrawal of assessment order issued under section 64(2): This form is for withdrawal of orders under summary assessment, not directly for Section 62.
• FORM GST ASMT-18: Acceptance or Rejection of application filed under section 64(2): This relates to acceptance or rejection of withdrawal applications for summary assessment.
• Rule 142: Notice and order for demand of amounts payable under the Act: This rule outlines the procedures for issuing notices and orders for the demand of various amounts payable under the Act, including those arising from assessments under Section 62.

In essence, Section 62 serves as a crucial enforcement mechanism within the GST framework, ensuring that even non-compliant taxpayers are brought within the tax net. While it grants significant power to the proper officer for best judgment assessment, it also provides a clear pathway for taxpayers to rectify their defaults and mitigate the consequences, albeit with applicable interest and late fees. The amendments introduced by the Finance Act 2023 further refine this process, offering an extended window for compliance while emphasizing the importance of timely return filing.

FAQs on Section 62 of CGST Act 2017

What is Section 62 of the CGST Act, 2017?
Section 62 empowers GST officers to conduct a best judgment assessment for registered persons who fail to file GST returns despite receiving a notice.

When does Section 62 apply?
It applies when a registered taxpayer fails to file returns under Section 39 or 45 even after being served a notice under Section 46.

What is a best judgment assessment?
It is an assessment conducted by the proper officer based on available records and information to estimate tax liability when the taxpayer has failed to file returns.

Which form is used to issue an assessment order under Section 62?
FORM GST ASMT-13 is used to issue the best judgment assessment order.

What is the time limit for issuing an order under Section 62?
The assessment order must be issued within five years from the due date of furnishing the annual return for the relevant financial year.

What happens if the taxpayer files the pending return after receiving the assessment order?
If the taxpayer files a valid return within 60 days of the service of the assessment order, the order is deemed to have been withdrawn.

Is there any extension available beyond the initial 60 days?
Yes, an additional 60 days is allowed with an extra late fee of ₹100 per day for delays beyond the initial 60 days.

What happens to interest and late fees if the assessment order is withdrawn?
Even if the assessment order is withdrawn, the taxpayer remains liable to pay interest under Section 50 and late fees under Section 47.

What are the consequences of not filing returns within the extended period?
If returns are not filed within the extended period, the assessment order remains valid, and recovery proceedings may follow.

What are the relevant rules supporting Section 62?
Rule 100 (Assessment procedures) and Rule 142 (Demand notices and orders) support the implementation of Section 62.

What other forms are related to assessment under GST?
Related forms include ASMT-14 (show cause notice for unregistered persons), ASMT-15 (order for unregistered persons), ASMT-16 (summary assessment), ASMT-17, and ASMT-18.

What is the significance of the Finance Act 2023 for Section 62?
The Finance Act 2023 introduced an extended compliance window with an additional late fee for delayed filing beyond the initial 60 days.

Does Section 62 apply to unregistered persons?
No, Section 62 applies only to registered persons. Assessment of unregistered persons is covered under Section 63.

Can a taxpayer challenge an assessment order under Section 62?
Yes, the taxpayer can challenge the assessment order through the appellate mechanism provided under the GST Act.

What is the purpose of Section 62 in GST compliance?
The primary purpose is to ensure tax compliance and revenue collection from non-filers by empowering officers to finalize tax liabilities in their absence.

Does filing a return automatically cancel the assessment order?
Yes, if filed within the permitted time, the assessment order is deemed withdrawn, but interest and late fees still apply.

Are penalties under Section 122 applicable for non-filers under Section 62?
Section 62 focuses on assessment; however, separate penalty provisions under Section 122 may apply based on facts.

What materials can the officer use for best judgment assessment?
The officer may use available records, data from previous filings, third-party information, and any other relevant material.

What is the role of Rule 142 in Section 62 assessments?
Rule 142 outlines the procedures for issuing notices and orders for tax demands, including those under Section 62.

Can the assessment order under Section 62 be rectified for mistakes?
Yes, rectification can be done if there are apparent errors on the face of the record, as per the general provisions of the CGST Act.