PROVISIONAL ASSESSMENT
Section 32, Return scrutiny and provisional assessment.
32.(1); Returns or revised returns furnished by the dealer in accordance with section 29
shall be subject to scrutiny by the Commissioner.
(2) (a) if any dealer has furnished return or revised return according to which;(i) net amount of tax payable, in accordance with section 13 is nil.
(ii) the amount of tax credit is carried forward for subsequent return or
(iii) the amount of refund is claimed therein or
(iv) the dealer has claimed in the return or the revised return higher amount of tax credit
than the admissible amount of tax credit.
then, the Commissioner may, as soon as possible, provisionally assess such dealer for the
period of such return or as the case may be, revised return. For the purpose of aforesaid
provisional assessment, the Commissioner shall serve on such dealer in the prescribed manner
a notice requiring him to explain in writing, on or before the date specified in the aforesaid
notice, the basis on which the dealer has furnished such returns or the revised returns. The
Commissioner may, after considering such explanation provisionally assess the amount of tax
due from such dealer and issue an order in the prescribed form.
(b) If the dealer who has been served the notice under clause (a) fails to comply with
requirement of clause (a) the Commissioner shall determine the amount of tax payable in the
manner as may be prescribed and serve on such dealer an order of the provisional assessment.
(3) Where a registered dealer has not furnished the return in respect of any tax period
within the prescribed time, the Commissioner shall, notwithstanding anything contained in
section 34, proceed to assess the dealer provisionally for the period for such default., proceed
to assess the dealer provisionally for the period for such default.
(4) Where the Commissioner has reason to believe that the dealer has evaded the tax or
has claimed more amount of tax credit than the admissible amount of tax credit, he may after
taking into account all relevant materials gathered by him and after giving the dealer a notice in
the prescribed form, provisionally assess to the best of his judgment the amount of tax payable
by the dealer.
(5) The provisions of this Act shall mutatis mutandis apply to the provisional assessment as
if provisional assessment were an audit assessment made under this Act.
(6) Nothing contained in this section shall prevent the Commissioner from making
assessment under section 33 and 34.
[Provisions of Provisional Assessment under the repealed G.S.T Act, 1969. where under
Section 41 B, they were as under:
41B Provisional Assessment:
(1). Where the Commissioner has reason to believe that the dealer has evaded the tax. He
may, after taking into account all relevant materials gathered by him and after giving the dealer
a reasonable opportunity of being heard, provisionally assess the amount of tax payable by the
dealer.
(2).The provisions of this Act shall mutatis mutandis apply to the provisional assessment
made under this Act.
These provisions were interpreted and analyed by the Honourable Gujarat High Court in
the case of Batliboi & Co. Ltd. Vs. Sales Tax Officer ( Guj ), 119 S.T.C.583. in following words;
“the provisional assessment can be made by the Commissioner or his delegate as
assessing authority only if he “has reasons to believe that a dealer has evaded the
tax”.....................................
On the facts and legal position disclosed by the dealer, there did not exist any grounds and
circumstances for the assessing officer to reasonably form an opinion that the dealer had
evaded the tax.”
In the case of Asian Paints India Ltd. V. D.C. S.T. (Guj ).148 STC 532.( Guj ); The Gujarat
High Court has held that; the provisional assessment order passed under section 41B of the
State Act has got to be taken into account while passing regular order under section 41(3) of the
Act and it can either be upheld or set aside or modified but cannot be ignored or suppressed.]
Observations made by the Honourable Gujarat High Court are applicable to the provisional
assessments made under Section 32 of the Gujarat Value Added Tax Act 2003.
Provisional Assessment Requires;
1. A Notice in prescribed form, ( Notice in form 301), (Rule 29)
2.Service of notice in form 301.
Date fixed for compliance with the notice shall not be earlier than fifteen days from the
date of service of notice. Provided date earlier than the date may be fixed if the dealer or his
agent agrees thereto in writing. Sub-Sections (2) and (4);
3. Explanation of the dealer in writing.
4. Assessment order in Form 304. ( Rule 29 (2 ).
Accounts to be audited in certain cases.
Section 63: (1) If in respect of any particular year, total turnover of a dealer exceeds such
amount, not being less than one crore as may be prescribed then such dealer shall get his
accounts verified and audited by a
authority within nine months from the end of that year and
obtain within that period a report of such audit in the prescribed form duly signed and verified
by such prescribed authority along such particulars as may be prescribed. A true copy of such
report shall be furnished by such dealer to the Commissioner within such period as may be
prescribed.
Explanation : For the purpose of this section , “specified authority “ means.(i). a Chartered Accountant within the meaning of the Chartered Accounts Act, 1949 and
includes persons who by virtue of the provisions of section (2) of section 226 of the Companies
Act, 1956, is entitled to be appointed to act as an auditor of Companies.
(ii). a cost Accountant within the meaning of the Cost and Works Accountants Act, 1959.
(iii). a legal practitioner or Sales Tax Practitioner whose name is entered in the list
maintained by the Commissioner in accordance with the provisions of Section 81.
(2) If any dealer liable to get his accounts audited under sub-section (1) fails to furnish a
true copy of such report within the prescribed time, the Commissioner shall, after giving the
dealer a reasonable opportunity of being heard, impose on him, in addition to any tax payable, a
sum by way of penalty not exceeding rupees ten thousand, as he may determine.
Section 64: Preservation of Records.
64. The dealer shall preserve his books of accounts and the records relevant for the
purpose of this Act till the period of six years from the end of the accounting year to which the
books of account and the record relate:
[Provided that where the dealer is a party to an appeal or revision under this Act, he shall
preserve the books of account and the records pertaining to the subject matter of such appeal
or revision until the appeal or revision is finally disposed of.]