Section 63 of GST – Assessment of unregistered persons. Check Details for GST Section 63 In this section you may find all details for “Assessment of unregistered persons” as per GST Act 2017. Detailed Analysis of GST Section 63 of GST Act 2017.
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Section 63 of GST – Assessment of unregistered persons
Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable person fails to obtain registration even though liable to do so, or whose registration has been cancelled under sub section (2) of section 29 but who was liable to pay tax, the proper officer may proceed to assess the tax liability of such taxable person to the best of his judgement for the relevant tax periods and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.
Provided that no such assessment order shall be passed without giving the person an opportunity of being heard.
Analysis of this section
This section commences with a non obstante clause, meaning whenever the provisions of section 73 or 74 applies, the provisions of section 63 of the Act cannot be invoked. This Section is applicable to unregistered persons i.e., persons who are liable to obtain registration under Section 22 and have failed to obtain registration, will come within scope of operation of this Section. This provision also covers cases where registration was cancelled under section 29(2). Section 29(2) of the Act covers 5 instances where registration may be cancelled by proper officer:
- (a) A person who contravenes the provisions of this Act or Rules made thereunder; or
- (b) A composition person who fails to furnish returns for 3 consecutive tax periods; or
- (c) A person other than composition person who fails to furnish returns for 6 consecutive months or
- (d) A person who has sought voluntary registration but has failed to commence business within 6 months; or
- (e) Where registration has been obtained by way of fraud, willful misstatement or suppression of facts.
This Section is applicable to unregistered taxable persons. In such cases, proper officer is required to provide a reasonable opportunity of being heard to such person before proceeding to assess such person. This section begins with the phrase “Notwithstanding anything to the contrary contained in section 73 or section 74”. It therefore appears that, assessment under section 63 can be completed independent of section 73 and Section 74, however, procedures contained in section 73 or 74 to the extent they are not inconsistent with section 63 need to be followed, while completing the assessment on principles governing best judgment assessment. Even though no return would have actually been filed in such cases, the authority to pass such assessment order is extinguished on the expiry of 5 years from due date applicable for filing annual return for the financial year to which tax not paid relates.
For assessment under this section, notice has to be issued as per Rule 100(2) in FORM GST ASMT-14 by the proper officer. The notice would contain the reasons / grounds on which the assessment is proposed to be made on best judgment basis. The registered person is allowed a time period of 15 days to furnish his reply, if any. After considering the said explanation, the order has to be passed in FORM GST ASMT- 15.
Comparison with equivalent provisions in other laws:
Section 23(4) of the MVAT Act contains similar provision as that in Section 63 of the GST Act.
Issues and Concerns
The application of the aforesaid section is a discretionary power vested in the officer when it comes to his notice that a person although liable to registered has not obtained registration. The powers vested in the section 63 can be invoked only when the proper officer is in possession of information that is material for initiating the proceedings.
An unregistered person does not qualify as a registered person under section 2(94) of the CGST Act, 2017, hence annual return and audit is not applicable for him.
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