ADJUDICATION AND ASSESSMENT IN GST

[Dr. Sanjiv Agarwal]

Meaning of Adjudication and Adjudicating Authority

As per section 2(4) of the CGST Act, 2017, ‘adjudicating authority’ means any authority, appointed or authorized to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the National Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (22) of section 71.

It may be noted that ‘Adjudication’ is the process of deciding an issue relating to tax matters through departmental authorities empowered to determine issues relating to classification, valuation, refund claim, tax or duty payable etc. The department raises demands by way of Show Cause Notices (SCNs) to the assessees when irregularities are observed or suspected.

Adjudication pre-supposes issuance of a show cause notice (SCN) - an intimation to show cause, explain or defend the proposed action as mentioned in the SCN. Infact, SCN is the first limb of principle of natural justice i.e., no one should be condemned unheard. SCN should be clear, precise and unambiguous.

Adjudication has not been defined in the GST laws but according to www. wikipedia. org, “Adjudication is the legal process by which an arbiter or judge reviews evidence and argumentation including legal reasoning set forth by opposing parties or litigants to come to a decision which determines rights and obligation between the parties involved. Three types of dispute are resolved through adjudication:

• Disputes between private parties, such as individuals or corporations.
• Disputes between private parties and public officials.
• Disputes between public officials or public bodies.”

To adjudicate means to decide, determine or to settle. Literally, it means the act of adjudicating, the process of trying and determining a case judicially. The application of the law to the facts and an authoritative declaration of the result.

‘An adjudication in favour of natural rights’. A solemn or deliberate determination by the judicial power: the act of giving judgment.

Black’s Law Dictionary defines the term ‘adjudicate’ so as to mean ‘to settle in the exercise of judicial authority; to determine finally’.

In GST, generally it is the ‘proper officer’ who is adjudicating authority but delegation of powers for the purpose of adjudication can be notified in terms of section 167 of CGST Act, 2017. Accordingly, the Commissioner may delegate any power exercisable by any authority or officer which may be exercisable by another authority or officer subject to conditions as per notifications. There may be different adjudicating authorities based upon jurisdiction as also the monetary limits.

Adjudication proceedings in any assessment or penal proceedings is a very important aspect of tax administration. It provides an opportunity to the assessee to be heard and show cause before any action is taken in proceedings relating to him. Issue of show cause notice is a pre-condition to a proper adjudication which is an intimation to assessee of the proposed action by the department. The adjudicating officer adjudicates the show cause notice by considering the reply to show cause notice and other available or produced evidences by the Noticee. A SCN should follow certain principles to be legally sustainable.

Meaning of Assessment

As per section 2(11) of the CGST Act, 2017 ‘assessment’ means determination of tax liability under GST law and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.

Thus, the definition of ‘assessment’ in CGST Act, besides providing the meaning of the term assessment as determination of tax liability under the CGST Act, also provides various ways of assessment by which tax liability can be determined.

According to GST Law, assessments are covered under Chapter XII of the Act which provides for –

●     Self-assessment (Section 59)

●     Provisional assessment (Section 60)

●     Summary assessment (Section 64)

●     Best judgment assessment (Section 63)

●     Re-assessment (Section 61)

Such assessments are subject to adjudication procedure which involves observance of principles of natural justice. The person who is assessed is called assessee (i.e. taxable person) and the person who assesses is called adjudicating authority.

Assessment is the official determination of liability of a person to pay a particular tax. FIRM L. HAZARI MAL KUTHIALA VERSUS INCOME-TAX OFFICER - 1956 (9) TMI 63 - PUNJAB & HARYANA HIGH COURT [Income-tax Act  (11 of 1922), S. 23]

The word assessment is used in a comprehensive sense and includes all proceedings, starting with the filing of the return or issue of notice and ending with the determination of the tax payable by assessee. S SANKAPPA AND OTHERS VERSUS INCOME-TAX OFFICER, CENTRAL CIRCLE II, BANGALORE - 1967 (12) TMI 2 - SUPREME COURT  [Income-tax Act (11 of 1922), S. 35(1) & (5)].

The term 'assessment' not only includes assessment but also includes determination, levy and also recovery of tax so far as the assessee is concerned. [MRS. PADMA KHASTGIR, J.] MAINA DEBI GOENKA VERSUS UNION OF INDIA AND OTHERS (AND OTHER WRIT PETITIONS) - 1978 (2) TMI 70 - CALCUTTA HIGH COURT [Indian Income-tax Act (II of 1922), S. 67].

The word 'assessment' can comprehend the whole procedure for ascertaining and imposing liability upon the tax-payer. KALAWATI DEVI HARLALKA VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL AND OTHERS - 1967 (5) TMI 2 - SUPREME COURT. [Income-tax Act (43 of 1961), S. 297 (2)(a)].

The expression 'assessment' is used as meaning sometimes, the computation of income, sometimes 'the determination of the amount of tax payable' and sometimes, the whole procedure laid down in the Act for imposing liability upon the taxpayer. The intimation under Section 143(1)(a) cannot be treated to be an order of 'assessment'. [ASSISTANT COMMISSIONER OF INCOME-TAX VERSUS RAJESH JHAVERI STOCK BROKERS P. LIMITED - 2007 (5) TMI 197 - SUPREME COURT] [Income-tax Act (43 of 1961), S. 143(1)].

Various types of Assessments at a glance

Section	Type of assessment	Assessment by	Conditions precedent to assessment
59	Self-assessment	Taxable person	Where registered taxable person assesses his tax liability himself.
60	Provisional assessment	Proper Officer	Where registered taxable person is unable to determine following: •     Value of supply, and/or •     Rate of applicable tax on supply
61	Scrutiny assessment (Refer Chapter 4 of Book)	Proper Officer	Verifying the correctness of the return by scrutinizing the return and particulars furnished by taxable person.
62	Assessment of non-filers of return(Best judgment assessment)	Proper Officer	Where the registered taxable person fails to furnish return under section 39 or section 45 even after service of notice under section 46.
63	Assessment of unregistered persons(Best judgment assessment)	Proper Officer	Where a taxable person fails to obtain registration, even though liable to do so.
64	Summary assessment	Proper Officer	To protect the interest of revenue with previous permission of Additional/Joint commissioner.

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