06 May Understanding Best Judgment Assessment: Section 62 Explained
In the realm of taxation, Section 62 holds significance, especially concerning the assessment of tax liability for registered entities failing to furnish returns as mandated under sections 39 or 45, even after receiving a notice pursuant to section 46.
The Essence of Section 62
What is Section 62?
Section 62 of the tax laws deals with the scenario where registered entities fail to furnish returns within the stipulated timelines, leading to potential tax assessment issues.
- Patna High Court's Perspective: G. Power Solution
Introduction of the Case:
In the matter brought before the court, the plaintiff, an assessee, raised allegations against the Assistant Commissioner regarding the issuance of assessment orders without following due process. Specifically, the plaintiff contended that the orders were passed due to the non-filing of GSTR-3B returns without any prior issuance of a show cause notice or an opportunity for a hearing.
Facts of the Case:
The plaintiff, being subject to tax assessment, failed to file GSTR-3B returns within the prescribed timeframe. Subsequently, assessment orders were issued by the Assistant Commissioner without providing the plaintiff with a fair opportunity to present their case or address any potential discrepancies.
Issue:
The primary contention revolved around the procedural irregularities in the issuance of assessment orders. The core issue at hand was whether the Assistant Commissioner’s actions, devoid of any show cause notice or hearing opportunity, were in compliance with the principles of natural justice.
Held:
Upon review, the court acknowledged the procedural lapses and ruled in favor of the plaintiff. The court held that assessment orders issued in an ex parte manner, without affording the assessee an opportunity to be heard, were untenable. Consequently, the court set aside the ex parte orders for readjudication.
Insights from Madras High Court
- Comfort Shoe Components' Case
Introduction:
The Madras High Court, in the case of Comfort Shoe Components vs. Assistant Commissioner, has delivered a significant ruling regarding the time limit under GST Section 62(2). This case revolves around challenges to orders dated 28.03.2023 and 10.04.2023, where the respondent passed best judgment assessment orders due to the petitioner’s delay in filing returns for December 2022, January 2023, and February 2023.
Facts of the Case:
The petitioner cited financial difficulties for the delay and sought the quashing of assessment orders under Section 62(1) of the GST Act. Section 62(2) allows the withdrawal of assessment orders if valid returns are filed within 30 days of service. The petitioner, filing returns late, urged the court to condone the delay.
Issue:
The critical question emerged: If returns are not filed within 30 days under Section 62(2), does the right to file returns still exist?
Held:
The court reasoned that the 30-day limit seems directory, not mandatory. It observed that the petitioner could file returns by 30.01.2030, considering the five-year assessment window starting from 01.01.2024. Highlighting the directory nature of the time limit, the court asserted that the right to file returns should not be curtailed. It affirmed that the limitation could be condoned for reasons beyond the assessee’s control. The ruling emphasizes that the application for delay condonation must be considered on merits, and the petitioner must provide sufficient reasons.
- Precedents from Rajasthan High Court
Ashok Varandani’s Case
Introduction:
In a recent case before the Rajasthan High Court, Ashok Varandani, the proprietor of M/s Kamaldeep Printers, challenged certain decisions by the Central Board of Indirect Tax and Customs, along with other authorities. The court’s decision sheds light on crucial legal aspects regarding the maintainability of writ petitions in matters related to tax assessments.
Facts of the Case:
Ashok Varandani, representing M/s Kamaldeep Printers, filed a civil writ petition before the Rajasthan High Court. The petitioner’s place of business was situated at S-5, Sardar Patel Marg, C-Scheme, Jaipur, Rajasthan. The petition contested actions taken by various government entities, including the Central Board of Indirect Tax and Customs, the Commissioner of Commercial Taxes, and others. The petitioner’s legal representatives presented arguments before the court, advocating for their client’s position.
Issue:
The primary issue at hand was the maintainability of the writ petition filed by Ashok Varandani. The petitioner sought relief against certain tax assessment orders and decisions made by the relevant tax authorities.
Held:
Upon hearing the arguments presented by both parties, the Rajasthan High Court rendered its decision on 07/03/2024. The court referred to a previous order dated 01.03.2024 in a similar case, where it was held that certain writ petitions challenging tax assessment orders were not maintainable. The court emphasized the importance of adhering to statutory remedies and time limits for filing appeals. It was noted that failure to avail these remedies could render writ petitions non-maintainable. The court dismissed the writ petition filed by Ashok Varandani, citing similar reasons as in the referenced case.
- Insights from Kerala High Court
Joy Mathew’s Resolution
Introduction:
The case of Joy Mathew, the proprietor of Abra Film International, before the Kerala High Court, sheds light on the complexities surrounding GST assessment orders and recovery notices. This article delves into the details of the case and the court’s decision.
Facts of the Case:
Joy Mathew, engaged in the production and distribution of films through Abra Film International, filed a writ petition before the Kerala High Court challenging assessment orders (Exts.P4, P4(a), P4(b), P4(c)) and recovery notices (Exts.P8, P8(b), P8(c)) issued by various tax authorities. The petitioner, registered under the GST Act, faced issues due to discrepancies in filing returns under the new GST regime. Despite regularly filing returns, a shortfall in IGST payment and excess payment towards CGST and SGST led to notices from the State Tax Officer.
Issue:
The primary issue revolved around the validity of the assessment orders and recovery notices issued to Joy Mathew by the tax authorities. The petitioner contended that the notices and orders were in derogation of Section 62(1) of the GST Act and argued for their withdrawal.
Held:
Upon hearing the arguments presented by both parties, the Kerala High Court, presided over by Honourable Mr. Justice Amit Rawal, delivered its judgment on 6th July 2020. The court noted that as per Section 62(2) of the GST Act, if an assessee files returns within 30 days of receiving assessment orders, the orders are automatically recalled. Since Joy Mathew filed returns within the stipulated time, the recovery notices issued by the tax authorities were set aside. The court directed the authorities to re-examine the matter after affording the petitioner an opportunity to be heard.
Conclusion
Section 62 serves as a regulatory mechanism ensuring tax compliance among registered entities. Through judicial interpretations and precedents, its application underscores the balance between procedural adherence and substantive justice.
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