2019 (9) TMI 1245 - HC - GST

GST Act: Upholding Best Judgment Assessments, Emphasizing Timely Filing & Payment

The Court upheld the validity of best judgment assessment orders under the GST Act, emphasizing strict adherence to the 30-day period for filing returns ... Best judgment assessment - Withdrawal of best judgment assessment on filing of return within 30 days under Section 62(2) - Strict construction of statutory time-limit in a taxing statute - Continuance of liability to pay interest for late paymentBest judgment assessment - Withdrawal of best judgment assessment on filing of return within 30 days under Section 62(2) - Continuance of liability to pay interest for late payment - Effect of Section 62 where assessee failed to file returns and the consequence of filing a valid return within 30 days of service of a best judgment assessment order. - HELD THAT: - The Court held that where an assessee refuses or fails to furnish the particulars required for assessment by not filing a return within time, the proper officer is entitled to finalise assessment on best judgment basis. Sub section (2) of Section 62 provides that if, after service of such a best judgment assessment order, the assessee furnishes a valid return within 30 days, the assessment order shall be deemed to have been withdrawn, subject to the continuance of liability to pay interest for late payment. The statutory scheme therefore affords the assessee a specific remedial mechanism - filing a return within the 30 day period and paying tax on the basis of that return - which operates to automatically set aside the best judgment assessment except for interest liability.The statutory provision permitting withdrawal of a best judgment assessment upon filing a valid return within 30 days is operative and available to the assessee; the assessment was occasioned by the assessee's failure to file returns and may be set aside only in the manner prescribed, with interest liability remaining.Strict construction of statutory time-limit in a taxing statute - Best judgment assessment - Whether the Court can grant an extension of the 30 day period under Section 62(2) to enable an assessee who cannot pay the admitted tax liability to file returns and thereby have a best judgment assessment withdrawn. - HELD THAT: - The Court observed that the 30 day period in sub section (2) of Section 62 is a statutory prescription in a taxing enactment and must be construed strictly in favour of the revenue. The provision is akin to an exemption in a tax statute that enables an assessee to obtain the benefit of withdrawal of a best judgment assessment; it cannot be extended by the Court to accommodate the assessee's financial inability to pay the admitted tax liability. Consequently, the Court declined to enlarge the statutory period for filing returns beyond 30 days to cure a best judgment assessment.The Court will not extend the 30 day statutory period under Section 62(2) for the purpose of withdrawing a best judgment assessment, even where the assessee contends inability to pay the tax within that period.Final Conclusion: The writ petition seeking quashing of the best judgment assessment was dismissed; the statutory remedy of filing a valid return within 30 days (subject to interest) is the exclusive means to have such an assessment withdrawn and the Court will not extend that period on grounds of inability to pay. Issues:1. Validity of best judgment assessment orders under the GST Act.2. Interpretation of Section 62 regarding the filing of returns and payment of tax.3. Consideration of time frame for withdrawal of best judgment assessment orders.4. Assessment on best judgment basis in taxing statutes.Analysis:The petitioner, an assessee under the GST Act, defaulted on filing returns from May 2018 onwards, leading to best judgment assessment orders by the 1st respondent. The petitioner challenges these orders, citing the provision for setting aside best judgment assessments if valid returns are filed within 30 days. However, the petitioner argues that even if returns are filed within the extended time, they cannot pay the tax liability, seeking to quash the assessment orders for non-adherence to Section 62 guidelines.Upon review, the Court notes that Section 62 allows best judgment assessments when an assessee fails to furnish required particulars through timely return filing. The provision also permits withdrawal of such orders if valid returns are filed within 30 days, with the liability for interest remaining. Despite the petitioner's claim of arbitrary assessment, the statutory framework provides a remedy through timely return submission and tax payment based on the returns.The Court emphasizes strict adherence to the 30-day period from the assessment order for filing returns and paying taxes, favoring revenue interests in interpreting taxing statutes. It rejects the petitioner's argument of financial constraints preventing tax payment within the specified timeframe. The Court views the 30-day deadline as crucial for assessee relief, akin to an exemption provision, and declines to extend this period for filing returns beyond what is statutorily prescribed.Ultimately, the Court dismisses the writ petition, finding no grounds to grant the requested relief, as the statutory provisions under Section 62 of the GST Act clearly outline the procedure for withdrawal of best judgment assessment orders based on timely return filing and tax payment within the specified timeframe.