2.13 Circulars and instructions

Para 2.7

NOTICES UNDER SECTIONS 25 & 29

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2018 seems to clarify that bakery will be considered to be akin to a restaurant for purposes of composition of tax, referring to section 10(1)(b). Notice of discrepancies in REG3 may extend to questions about Applicant’s eligibility to composition. Response to notice, even in the context of registration, entails the same level of responsibility and risk of adverse consequences as in the case of notice for demand. Clarity and transparency in response is to be maintained.

2.7 OPTION FOR PROVISIONAL ASSESSMENT

Section 60 permits registered persons to opt for ‘provisional assessment’ in carrying out self-assessment permitted as per section 59, soon after grant of registration or whenever the need for recourse to provisional assessment arises. Rule 98 contains the ‘due process’ in this regard. Registered Person is permitted to apply for ‘provisional assessment’ under section 60 when such person is “unable” to carry out self-assessment. Provisional assessment is not a substitute for Advance Ruling (in Chapter XVII) to redress taxpayers ‘doubts’ about interpretation of this law. Provisional assessment is a supplement to self-assessment where material information having a bearing on the self-assessment is not available, registered persons are allowed this option to seek approval in ASMT1 under rule 98 from Proper Officer to carry out assessment on provisional basis, subject of conditions. Proper Officer’s consideration of this application has limited scope: (a) maintainability of application under section 60; (b) satisfaction of conditions to the grant of approval; and (c) conclusion of provisional assessment. Notice in ASMT2 is prescribed for furnishing additional information. Taxpayer’s response in ASMT3 is to firmly establish that the application is ‘maintainable’ and provisional assessment is not due to any doubts about the interpretation of this law but due to the lack of material information that has a direct bearing on the outcome in self-assessment.

Examples

HSN 2306 states bran (when used as such) is animal feed, but HSN 2306 also states that bran may be put to other uses. Unless bran (residue from oil extraction) is tested in a lab, the identity of resultant product (bran) cannot be reliably known. This would be a fit case of provisional assessment, to determine if it would be exempt or taxable at 5%.

Ready-to-eat savouries sold in a sweet meat shop may be classified as supply of ‘goods’ or ‘services’. HSN code and credit restrictions are different for each. This is not a fit case for provisional assessment as the doubt is about