Self Assessment of Tax under GST u/s 59

Every registered person shall self assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.

 Order of Discharge of Self Assessment Tax:

As per section 49(8), every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the following order, namely:—

(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the demand determined under section 73 or section 74;

Whether unregistered person can opt for Self assessment

In service tax, it was not registered person but person liable to pay tax who could opt for self assessment. However under GST only registered person can opt for self assessment. If unregistered person was liable to get registered or his registration has been cancelled, he may approach the proper and then proper officer can only frame best judgment assessment for the relevant period u/s 63.

There may be cases where unregistered period is subject to liability without being registered person because he is director of company or partner of firm from whom dues can not be recovered due to operation of section 89 or 90 and such like other provisions of Chapter XVI of Central GST Act. In such circumstances, unregistered person shall obtain temporary number and discharge his tax liability. But the discharge of liability is not end of the matter for unregistered person and may not enjoy the benefit of self assessment u/s 59, without being proceeded u/s 73/74.

However irrespective of person being registered or unregistered person but liable to be registered, the order of discharge of self assessed tax shall be in ascending order i.e. the earlier liabilities shall be met in precedence to subsequent liabilities.

Whether right to be self assessed is lost after filing of return u/s 39

Section 59 though requires to furnish return u/s 39 but does not place a bar on being self assessed after filing of return in GSTR-3B for a relevant period. At the time of filing of return u/s 44 i.e. annual return also, a registered person can self assess himself. Para (e ) of Press Release dated 4-06-2019 provided for payment of additional outward liability at the time of filing annual return. Section 73(5) and Section 74(5) also permits voluntary payment of tax on the basis of own ascertainment. Hence self assessment is not limited by the mere filing of return u/s 39 and is also not mandate of section 59. Mere requisition to self assess the tax and file return u/s 39 should not treated as expression of self assessment only through return u/s 39.

Whether section 59 is complete code for self assessment

Though section 59 requires self assessment of tax payable but section 59 in itself is not complete code for self assessment. Like self assessment of output tax is dealt in section 41(2), while self assessment of input tax credit is dealt in section 49(2) read with section 41(1). Hence self assessment of output tax, self assessment of output tax and self assessment of input tax are seperately dealt in the gst law.

Section 49(2): Self Assessed ITC

The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with 16 section 41 or section 43A, to be maintained in such manner as may be prescribed

Section 41

41(1) Every registered person shall, subject to such conditions and restric- tions as may be prescribed, be entitled to take the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited on a provisional basis to his electronic credit ledger.

Self Assessed Output tax: Section 41(2)

(2) The credit referred to in sub-section (1) shall be utilised only for payment of self-assessed output tax as per the return referred to in the said sub-section.

 Manner of Payment of output tax not declared in return

 As per section 41(2) self assessed ITC can only be utilized for the payment of self assessed output tax in the return u/s 41(1). Section 41(1) talks about “return” and does not say whether it is monthly return u/s 39 or annual return u/s 44. However self assessed ITC u/s 41(1) travels to electronic credit ledger only through return u/s 39 and hence return referred in section 41(1) is the return u/s 39 and not any any other return and hence tax self assessed in annual return or self assessed at any other point of time and sought to be discharged should be met through cash ledger only. Hence the instruction in GSTR 9/9C requiring payment of additional tax only through  cash ledger very much appear to be in connosance with the scheme of the law

Interest for non payment of self assessed tax [S.50]

Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent, as may be notified by the Government on the recommendations of the Council:

Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger

Hence as per proviso to section 50 made effective from 01-09-2020 by NN 63/2020-Central tax dated 25-08-2020 postulates that benefit of interest on net tax liability in belated return met through cash ledger only can be availled only of following conditions are satisfied:

Tax is payable in respect of supplies made during a tax period

AND

Supplies are declared in the return for the “said” period.

Hence this benefit shall be foregone if,

Proceedings u/s 73, 74 in respect of impugned period of return have already commenced before filing of return for that period      OR

Supplies made in a tax period were not declared in the same period but are carried forward from earlier period.

However the benefit of proviso shall not be foregone in respect of tax liabilities not arising from supplies made during earlier period e.g. reversal of ITC or excess ITC claimed.

Recovery of Self Assessed Tax and Interest [S. 75(12)]

Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.