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Goods and Service Tax (GST) is structured for efficient tax collection, reduction in corruption, easy inter-state movement of goods and a lot more.

The GST Law provides for self-assessment to facilitate easy compliance and payment of taxes. It also explains the notices, the demand and recovery provisions when the taxes are unpaid, short paid and/or returns are not filed.

Broadly, the GST Procedures can be listed as:

  1. Audits
  2. Assessment
  3. Demand and Recovery
  4. Advance Ruling

GST Procedure

1. Audits

Audit under GST is the examination of records maintained by a registered dealer. The aim is to verify the correctness of information declared, taxes paid and to assess the compliance with GST.

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1. A. Audit by Registered Dealer

Every registered dealer whose turnover during a financial year exceeds the Rs 1 crore has to get his accounts audited by a CA or a CMA.

1. B. Audit by GST Tax Authorities

General Audit: The commissioner or on his orders an officer may conduct any audit of any registered dealer.

Special Audit: The department may conduct a special audit due to the complexity of case and considering interest of revenue. The CA or a CMA will be appointed to conduct the audit.

2. Assessment

Assessment under GST means determination of tax liability under GST. Assessment under GST has been divided into 5 types:

2.A. Self Assessment

Under GST, every registered taxable person shall assess the taxes payable by them on their own, and furnish a return for each tax period. This is called self-assessment.

2.B. Provisional Assessment

A registered dealer can request the officer for provisional assessment if he is unable to determine value of goods or rate of tax. The proper officer can allow the assessee to pay tax on a provisional basis at a rate or a value specified by him.

2.C. Scrutiny Assessment

A GST officer can scrutinize the return to verify its correctness. The officer will ask for explanations on any discrepancies noticed in the returns.

2.D. Summary Assessment

Summary Assessment is done when the assessing officer comes across sufficient grounds to believe any delay in showing a tax liability can harm the interest of the revenue. To protect the interest of the revenue, he can pass the summary assessment with the prior permission of the additional/joint commissioner.

2.E. Best Judgement Assessment

E.1. Assessment of non-filers of returns

If a registered taxable person does not file his return even after getting a notice, the proper officer will assess the tax liability to the best of his judgement using the available relevant material.

E.2. Assessment of unregistered persons

This assessment is done when a taxable person fails to obtain registration even though he is liable to do so.

The officer will assess the tax liability of such persons to the best of his judgement. The taxable person will receive a show cause notice and an opportunity of being heard.

3. Demand and Recovery

Demand and recovery provisions are applicable when a registered dealer has paid tax incorrectly or not paid tax at all. It is also applicable when incorrect refund or ITC is claimed by the dealer.

The proper officer will issue a show cause notice along with a demand for payment of tax and penalty in case of fraud.

Demands can arise in the following cases:

1. Unpaid or short paid tax or wrong refund

2. Tax collected but not deposited with the Central or a State Government

3. CGST/SGST paid when IGST was payable and vice versa.

If demand is not paid, the IT department starts recovery proceedings 

4. Advance Ruling

Advance Ruling under GST means seeking clarifications from GST authority on certain tax matters before starting the proposed activity. This helps to reduce costly litigation.

A advance ruling is a written decision given by the tax authority to an applicant on queries related to the supply of goods/services.

 

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  6. What happens if you collect IGST instead of CGST & SGST? Click here to find out about the penalty in cases where the wrong type of GST is mistakenly paid.
  7. The demand under GST and recovery provisions will be initiated if there is a failure to pay the tax, in a manner similar to the provisions of current tax.
  8. Updated:11.4.2017 Like current indirect tax regime, provisions of Best Judgement Assessment under GST are also to keep a check on assesses. Click here to find out more.
  9. Updated: 11.4.2017-Assessment means determination of GST tax liability. Apart from self assessment all other assessments are by tax authorities. Click here.
  10. If the applicant aggrieved by the advance ruling he can appeal to the Appellate Authority for Advance Ruling under GST. This is new in GST.
  11. Being new, GST will require many clarifications. So advance ruling under GST becomes vital to reduce tax disputes and costly legal battles.
  12. The purpose of audit under GST is to assess compliance with GST. Read more to find out when you can be liable for audit by tax officers.