Assessment, Provisional Assessment &

Audit

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Presentation Plan
• Self assessment
• Provisional assessment
• Scrutiny of Returns
• Assessment of Non Filers of Return
• Assessment of un- registered persons
• Summery assessment
• Audit by Department
• Special Audit

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 Self Assessment
• Taxes due during any tax period to be assessed
by concerned registered taxable person.
• Every registered person is required to file a
return, within stipulated period.
• Authorised person certifies that the assessment
of tax made by him and payment of tax by
utilising ITC or Cash is true and correct by
signing the declaration (self assessment)

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 Provisional Assessment
• Taxable person has to request in writing if unable to determine—
– The value of goods and/or services or
– The applicable rate of tax

• Upon furnishing of bond with security/surety, the proper officer

then will permit payment of tax provisionally at rate or value
specified in order passed by officer

• Final order to be passed within six months

– Extendable by Additional/Joint Commissioner by 6 months and by
Commissioner for further period but not exceeding fours)
– Thus, a provisional assessment can remain provisional for a maximum of
five years.
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 Scrutiny of Returns
•If amount paid provisionally is less than the amount
determined finally, interest to be paid
as per Section 50

•If amount paid provisionally is more than the amount

determined finally, excess to be refunded if –
•It relates to exports/inputs for exports, except in case of
goods subject to export duty
•It has accumulated as ITC on account of inverted duty
structure

•Interest on delayed refund to be paid on such refund (section

56)
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 Scrutiny of Returns
• Return to be scrutinized
– in accordance with pre-defined parameters
– To verify correctness thereof [Section 61(1)]

• Discrepancies
– to be communicated in manner prescribed
– if explained satisfactorily, to be informed and no further action
to be taken [Section 61(2) & (3)]

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 Scrutiny of Returns
• If no satisfactory explanation furnished within 30
days or tax not paid after accepting discrepancy then
proper officer may initiate-
– Tax audit,
– Special audit,
– Inspection, search and seizure, or
– Adjudication for recovery

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 Assessment
• Non-filer
• If a registered taxable person does not furnish the
monthly/quarterly or final return
– within 15 days of service of notice then
– proper officer may pass a best judgment assessment order
within 5 years of due date of annual return, in case there is
evidence of any fraud

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 Assessment
• If valid return furnished within 30 days of
service of such order then the order deemed
to have been withdrawn
• Interest or late fee, as applicable, to be paid.

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 Assessment

• Un-registered Person
• 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
• Proper officer may pass a best judgment assessment
order within 5 years of due date of annual return
• Such order to be passed only after granting reasonable
opportunity of being heard to said person

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 Summary Assessment

• If proper officer has

– evidence of any tax liability of a person and
– reason to believe that delay in assessment will adversely affect interest of
revenue

• Such officer, to protect interest of revenue, may pass an

assessment order
• The order to be passed only with prior sanction of
Additional/Joint Commissioner
[Section 64]

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 Summary Assessment
• If, in case of goods, person chargeable with tax is not
ascertainable then the person in charge of goods
shall be deemed to be such person

• If upon application within 30 days of receipt of order,

or suo moto order considered erroneous by
Additional/Joint Commissioner then such order may
be withdrawn and Section 73 or 74 to apply

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 Departmental Audit
• Audit is detailed examination of records, returns and
other documents to
– verify correctness of the contents relating to
– turnover, claims, taxes
– assess level of compliance
• Commissioner/Authorized Officer, by general/specific
order
– direct audit of taxable person
– for prescribed period and frequency

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 Departmental Audit
• Tax payers to be selected for audit on the basis of risk
analysis
• Risk scores and risk profiling to be done
• Some selection criteria:
– Total tax/tax throughput
– Refund claim
– Export/zero rating
– History of delinquency
– Unusual deviations from “norms”/”standards”

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 Departmental Audit
• Auditee to be informed by notice at-least 15 days in
advance
• Audit to be preceded by compilation and collation of
– Records/documents relating to auditee
– Records/documents relating to ‘industry norms/standards’
– Questionnaire
– Checklist

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 Departmental Audit
• Desk/Field audit to be conducted
– in transparent manner in accordance with manual/SOP
– within 3 months of commencement, extendable by
Commissioner by maximum 6 months
– “commencement” is the earlier of the date
• on which is records are furnished, or
• institution of audit at place of business

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 Departmental Audit
• Auditee to provide facility to verify records and furnish
information required by audit authority
• Audit authority to
– verify and examine records and responses
– carry out cross verification from external sources
– assess evidence
• Upon conclusion, proper officer to communicate to auditee
– findings of audit and reasons thereof
– rights and obligations of auditee
• Proceedings u/s 73/74 to be initiated if audit reveals
– detection of tax not paid/short paid or
– ITC erroneously availed or
– tax erroneously refunded
[Section 65(6) &17(7)]
 Special Audit
• Special audit is an audit of records on specific issues and originates from
Section 233A of Companies Act, 1956
• If any officer not below rank of Assistant Commissioner during any
– scrutiny
– enquiry
– investigation or
– any other proceeding
• is of the view that
– value has been incorrectly declared or
– credit availed is not within “normal limits”
• then he may, by written notice, direct audit/examination of accounts and
record by such Chartered or Cost Accountant nominated by
Commissioner
• Such audit can be directed only with prior approval of Commissioner
[Section 66(1)] 18
 Special Audit

• The auditor to furnish audit report within 90 days to officers

ordering such audit
• The 90 days period may be extended, by a further 90 days, by
the proper officer
– on application made by
• the auditee or
• the auditor or
– for any material and sufficient result
• Special audit, if ordered, to be in addition to any other
statutory audit
• Expenses of such audit to be determined and borne by
Commissioner
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 Special Audit
• Proceedings u/s 73/74 to be initiated if audit reveals
– detection of tax not paid/short paid or
– ITC erroneously availed or
– tax erroneously refunded
• Auditee to be afforded opportunity of hearing if findings
of special audit are to be used in any proceeding against
him
[Section 66(6)]

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THANK YOU

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