Consequences of non filing to regular return in GST
Who are non fillers for the purpose of section 62 of GST act?
A non-filer is a taxpayer who has not met his tax filing obligation by the due date of the return / statement or approved extended due date.
Non-filers and unregistered non-compliant person are normally misunderstood as one and the same but, these two persons are different. The difference is as under:
- An unregistered non-compliant person under GST is the person liable to apply and obtain registration but failed to do so, i.e., unregistered non – compliant person.
- Non-filer is a person who is already registered and is therefore liable to file the return/ statement but has failed to do so, i.e., registered non – compliant.
Thus, A Non-filer is a Registered Person liable to file the return or statement periodically but one who has failed to do so.
Assessment of non – filers under section 62 of CGST act:
Under Section 62 of the CGST Act, where a registered taxable person fails to furnish the return (non-filer), the proper officer may,
- After allowing a period of 15 days from the date of service of the notice under 46 of the CGST Act 2017,
proceed to assess the tax liability of the person to his best judgment, taking into account all the relevant material which is either available on records or which he has gathered.
Assessment of unregistered non compliant person:
Under Section 63 of the CGST Act, where a taxable person (i.e. a person liable to take registration) fails to obtain registration, the proper officer may:
- Decide to assess the tax liability of the said taxable person to his best judgment for the relevant tax periods, .i.e., 15 days notice period need not to be given in such cases, and
- Issue an assessment order within a period of five years from the due date for filing of the annual return for the year to which the tax not paid relates to.
What material department would consider for making best judgment assessment?
Best Judgment Assessment are made either
- ex-parte or
- by rejecting the accounts or
- plea of the Registered person.
In such cases no records or documents are furnished, or claims are not substantiated. Records and evidence produced before proper officer are rejected, whether wholly or partly, due to unreliability, incorrectness or incompleteness.
In making best judgment assessment the officer does not possess arbitrary powers to assess any figure as he like. Though quasi judicial in nature these assessments are to be based on the principles of justice, equity and good conscience. In common parlance the words ‘best judgment’ carry the connotation that what is being done is in order to make an estimate.
The best judgment is made in a non-arbitrary way and the nexus seems apparent the decision is final and there is no scope for interfering with the best judgment. Thus, in a way there remains no scope for challenging a best judgment assessment. This is because an assessee cannot be allowed to take advantage of his own illegal act.