Five types of GST assessment: self-assessment, provisional, scrutiny, best judgment, and summary. When disputes arise, formal adjudication follows quasi-judicial principles with hearing, evidence, and speaking orders. This guide covers the complete assessment and adjudication lifecycle.
Every registered person self-assesses tax liability in returns (GSTR-3B). Tax is computed by the taxpayer based on outward supplies, ITC, and exemptions. This is the default and most common form — over 99% of GST compliance is self-assessed.
Trigger: Every return filingWhen taxpayer is unable to determine value or rate of tax, they can request provisional assessment. Officer allows payment on provisional basis. Final assessment done within 6 months (extendable). Difference is refunded or recovered with interest.
Trigger: Valuation uncertainty, rate classification disputeOfficer examines returns and notices discrepancies. Issues notice to taxpayer to explain. If explanation is unsatisfactory, proceeds to Section 73/74 demand. Most scrutiny is automated through data analytics on the GST portal.
Trigger: Return discrepancies, data mismatchIf taxpayer fails to file returns despite notice, officer assesses tax liability to the best of his judgment. Taxpayer can get this set aside by filing all pending returns within 60 days of the assessment order (extended to 60 days).
Trigger: Non-filing of returnsIn extraordinary circumstances (protection of revenue interest), officer can make summary assessment of tax liability with prior permission of Additional/Joint Commissioner. Very rare — used in urgent cases to prevent revenue loss.
Trigger: Revenue at risk, urgent casesProper officer issues SCN (DRC-01) under Section 73 (no fraud, 3 years) or Section 74 (fraud, 5 years). Notice specifies: tax not paid/short-paid, ITC wrongly claimed, erroneous refund. DIN is mandatory on the notice.
Taxpayer files reply (DRC-06) within 30 days. Can admit (pay via DRC-03) or contest with detailed legal/factual arguments. Adjournments can be requested but should be used judiciously.
Adjudicating authority grants personal hearing. Taxpayer or authorized representative (CA, Advocate, CMA) presents arguments. Additional documents and written submissions can be filed. Audio/video hearing also permitted (post-COVID norms).
Authority issues speaking order (DRC-07) with detailed findings and reasons. Order must be issued within the prescribed time limit. If order confirms demand: specifies tax, interest, and penalty payable. If drops demand: no further action.
If taxpayer doesn't pay within 3 months of order: recovery proceedings under Section 79. Methods: deduction from bank account, attachment of movable/immovable property, detention/seizure, recovery from third parties owing money to taxpayer.
Taxpayer can appeal to Commissioner (Appeals) within 3 months under Section 107. Pre-deposit: full admitted tax + 10% of disputed tax. Further appeals to GSTAT → High Court → Supreme Court.
Self-assessment (Section 59) means every registered person calculates their own tax liability in each return. You compute: output tax on supplies, deduct eligible ITC, apply RCM liability, and pay the net tax. The GST portal does not compute tax for you — you declare it in GSTR-3B. Over 99% of GST compliance works on self-assessment. The department intervenes only when discrepancies are detected.
Under Section 62, if a taxpayer fails to file returns even after receiving a notice under Section 46, the officer can assess the tax liability based on available information (best judgment). The taxpayer can get this assessment nullified by filing ALL pending returns within 60 days of the best judgment order. If returns are filed within this window, the best judgment order is automatically deemed withdrawn.
Under Section 61: (1) Officer examines return and identifies discrepancies, (2) Issues notice to taxpayer with specific discrepancies, (3) Taxpayer must respond within 30 days with explanation, (4) If explanation accepted — matter closed, (5) If not accepted — officer initiates demand proceedings under Section 73 or 74. Scrutiny is increasingly automated — the GST system flags mismatches between GSTR-1, GSTR-3B, and GSTR-2B.
Assessment determines the tax liability (how much tax is owed). Adjudication is the quasi-judicial process of deciding a dispute — when the department issues a demand notice and the taxpayer contests it, the adjudicating authority hears both sides and passes a speaking order. Assessment is routine (self-assessment); adjudication involves a formal hearing process with principles of natural justice.
A speaking order is an adjudication order that contains detailed reasons and findings for the decision. It must address: each ground raised by the taxpayer in the reply, evidence/documents considered, legal provisions applied, and the basis for confirming or dropping the demand. A non-speaking order (without reasons) can be challenged in appeal on the ground of violation of natural justice.
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