ASMT-02 Notice

Extract of Section 60 of the CGST Act, 2017

Section 60 of the Central Goods and Services Tax (CGST) Act, 2017 is a cornerstone of the provisions for provisional assessment under GST. It empowers taxpayers to seek a provisional evaluation when they are unable to ascertain the value of goods or services or the applicable tax rate.

Section 60: Provisional Assessment

(1) In instances where a taxable person is unable to determine the value of goods or services or both, or the applicable tax rate, they may formally request the ‘proper officer’ to allow them to pay tax on a provisional basis. This request should be accompanied by a clear and detailed explanation of the reasons. The ‘proper officer’ will then review the request and may allow tax payment on a provisional basis at a rate or value they specify.

(2) The proper officer shall pass an order, within a period not later than ninety days from the date of receipt of such request, allowing payment of tax on a provisional basis indicating the value or rate, or both, based on which the assessment is to be allowed on a provisional basis and specifying therein the amount for which the bond is to be executed. The amount of security to be furnished as surety for the payment of the differential tax.

(3) The taxable person shall execute a bond in such form as may be prescribed and with such surety or security as the proper officer may deem fit, binding the taxable person for payment of the ‘differential tax’ (the difference between the tax paid on a provisional basis and the final assessed tax amount).

(4) The proper officer shall, within a period not exceeding six months from the date of the communication of the order issued under sub-section (2), pass the ‘final assessment order’ (the official decision on the tax liability based on the information provided during the provisional assessment period) after taking into account such information as may be required for finalising the assessment: Provided that the period specified in this sub-section may, on sufficient cause being shown and for reasons to be recorded in writing, be extended by the Joint Commissioner or Additional Commissioner for a further period not exceeding six months and by the Commissioner for such further period not exceeding four years.

(5) The taxable person shall be liable to pay ‘interest on any tax payable’ (the additional amount of tax that was not paid on the due date specified under sub-section (7) of section 39 or the rules made thereunder) on the supply of goods or services or both under provisional assessment but not paid on the due date specified under sub-section (7) of section 39 or the rules made thereunder, at the rate determined under sub-section (1) of section 50 or to be paid on such tax from the first day after the due date of payment of tax in respect of the said supply of goods or services or both till the date of actual payment, whether such amount is paid before or after the issuance of order for final assessment.

(6) Where the taxable person is entitled to a refund consequent to the order of final assessment under sub-section (3), subject to the provisions of sub-section (8) of section 54, interest shall be paid on such refund as provided in section 56.

ASMT-02 Notice

GST ASMT-02 is a notice issued by the GST authorities in response to a taxpayer’s request for provisional assessment (GST ASMT-01). This notice, of utmost importance for your understanding, serves as a communication from the tax authorities requesting additional information or clarification regarding the provisional assessment application. It is crucial that you understand the content and implications of this notice to ensure a smooth and successful provisional assessment process.

Example Scenario

For instance, if a business, XYZ Pvt Ltd, is uncertain about the applicable tax rate for a new product it plans to launch, it may apply for provisional assessment. In this case, XYZ Pvt Ltd would submit GST ASMT-01. Upon reviewing the application, the GST officer may require additional information to process the request and issue an ASMT-02 notice to XYZ Pvt Ltd, asking for further details and documentation.

Legal Recourse and Proceedings

Legal Recourse

When a taxpayer receives an ASMT-02 notice, they should:

1. Review the Notice: Carefully read the notice to understand the required information or documents.
2. Prepare a Response: Gather the requested information and prepare a detailed response to address the issues raised in the notice.
3. Submit the Response: File the response within the specified time frame, typically 15 days from receipt of the notice.

Legal Proceedings

If the taxpayer fails to respond adequately or if the response is not satisfactory, the GST authorities may proceed with the following:

• Rejection of Provisional Assessment Request: The request for provisional assessment may be rejected, and the taxpayer must independently determine the tax liability.
• Demand Notice: If a tax liability arises due to incorrect self-assessment, the authorities may issue a demand notice to recover the tax, interest, and penalties.

Penalties and Prosecution

Penalties for non-compliance with an ASMT-02 notice can include:

• Monetary Penalty: Penalties for failure to comply with GST provisions specified under Section 122 of the CGST Act.
• Interest: Interest on any unpaid tax amount per Section 50 of the CGST Act.
• Prosecution: In cases of willful misstatement or fraud, prosecution under GST laws may be initiated, leading to severe penalties and imprisonment.

Do’s and Don’ts on Receiving an ASMT-02 Notice

Do’s

1. Read Carefully: Understand the specific reasons for the additional information request and the details required.
2. Gather Evidence: Collect all necessary documents and information to support your provisional assessment application.
3. Consult a Professional: Seek advice from a GST practitioner or tax consultant to formulate a strong response.
4. Respond Promptly: Submit your response within the stipulated deadline to avoid rejecting the provisional assessment request.
5. Maintain Records: Keep copies of the notice and your response for future reference.

Don’ts

1. Understand the Consequences: It is of utmost importance to understand that ignoring the notice will result in the rejection of your provisional assessment request. This could lead to additional tax liabilities and penalties. Responding promptly and accurately to the ASMT-02 notice is crucial to avoid these potential consequences.
2. Delay Response: Delaying your response can cause unnecessary complications and result in the rejection of your request.
3. Provide Incorrect Information: Ensure the information is accurate and complete to avoid further queries or issues.
4. Disregard Professional Advice: Always consult a professional if unsure about the notice’s content or implications.

Legal Remedy

If a taxpayer believes that the notice is unjust or if the provisional assessment request is rejected despite providing the necessary information, the following remedies are available:

1. Exercise Your Right to Appeal: If you believe that your provisional assessment request has been unjustly rejected, you have the right to file an appeal. This can be done under Section 107 of the CGST Act within three months from the date of the rejection order.
2. Review by Higher Authorities: Request a review of the decision by higher authorities if there is a valid ground to believe that the rejection was not justified.
3. Reapply for Provisional Assessment: If the request is rejected, the taxpayer can rectify the issues highlighted and reapply for provisional assessment.

Conclusion

Section 60 of the CGST Act 2017 provides the framework for provisional assessment under GST. The GST ASMT-02 notice is an integral part of this process, allowing tax authorities to request additional information or clarification from taxpayers. Understanding how to respond to such notices, the potential penalties, and the available legal remedies can help businesses navigate the provisional assessment process smoothly and avoid possible legal issues. Proper preparation and professional guidance are essential to handling provisional assessment requests effectively and ensuring compliance with GST regulations.