CGST Section 62 — Assessment of non-filers of returns

Section 62 of the CGST Act deals with situations where a registered taxpayer fails to file their GST returns. It empowers tax officers to assess the tax liability of such non-filers and issue an assessment order based on their best judgment.

This section primarily applies to registered persons under GST who fail to furnish their returns under Section 39 (regular monthly or quarterly returns) or Section 45 (final return). This applies even after receiving a specific notice from the tax authorities under Section 46 reminding them about the non-filing. Essentially, it's a mechanism to ensure tax compliance and prevent prolonged non-filing of returns.

Here’s a breakdown of the key aspects of Section 62:

• Assessment by the Officer: If a registered person continues to default on filing returns even after being notified, the tax officer can proceed to determine the tax liability to the best of their judgment. This means the officer will estimate the tax owed based on available information, which could include past returns, transaction data, and any other relevant material. The tax officer has to issue an assessment order within five years from the due date for furnishing the annual return for the financial year to which the tax relates to.

• Withdrawal of Assessment Order: The assessment order issued under Section 62(1) can be withdrawn. If the registered person files a valid return within sixty days of receiving the assessment order, the order is considered withdrawn. However, the liability to pay interest on the delayed tax payment (under Section 50) and late fees for delayed filing (under Section 47) remains applicable.

• Extended Period for Filing with Additional Late Fee: A recent amendment provides a further extension. If the taxpayer misses the initial sixty-day window, they can still file the return within an additional sixty days, but they will have to pay an additional late fee of INR 100 for each day of delay beyond the initial sixty days. If they successfully file within this extended period, the assessment order is deemed withdrawn, but interest and late fee liabilities still apply.

Practical Examples:

1. Scenario 1: XYZ Ltd. forgets to file their GSTR-3B for July. The tax officer issues a notice under Section 46. XYZ Ltd. still doesn't file. The officer, using XYZ Ltd.'s past records and sales data, estimates their tax liability to be INR 50,000 and issues an assessment order under Section 62. If XYZ Ltd. files their GSTR-3B within sixty days, the assessment order is withdrawn, but they still need to pay interest on the late payment and late fees for the delayed filing.

2. Scenario 2: ABC Corp. receives an assessment order under Section 62. They miss the initial sixty-day deadline to file their return. They can still file within the next sixty days, but they'll have to pay an additional late fee of INR 100 per day for the delay beyond the first sixty days. If they file within this extended period, the assessment order is withdrawn but interest and late fee liabilities are still applicable.

Important Amendments:

The Finance Act 2023 brought in a significant amendment, substituting "thirty days" with "sixty days," thereby giving taxpayers more time to file their returns after an assessment order has been issued. Further, a proviso was inserted to allow the registered person to furnish a valid return within a further period of sixty days on payment of an additional late fee of one hundred rupees for each day of delay beyond sixty days of the service of the said assessment order. This offers a more lenient approach, providing additional opportunities for compliance. The finance act 2024 also inserted section 74A in sub section (1).

In conclusion, Section 62 is a critical provision in the GST law that ensures compliance from registered persons. While it empowers tax officers to assess and demand tax from non-filers, it also provides opportunities for taxpayers to rectify their non-compliance by filing the overdue returns and paying the applicable interest and late fees. Business owners should ensure timely filing of GST returns to avoid the consequences of assessment under this section. The amendments to this section have provided some relief in the form of extention to file return with additional late fee.