Section 60 of CGST Act, 2017 : Section 60: Provisional Assessment

Explanation using Example

Imagine a scenario where a company, XYZ Pvt. Ltd., is importing a new type of biodegradable plastic material to manufacture eco-friendly packaging. The tax rate and valuation of this new material are uncertain due to its innovative nature and lack of precedent in the market.

XYZ Pvt. Ltd. requests the proper officer to pay Goods and Services Tax (GST) on a provisional basis. They submit a written application explaining their inability to determine the exact tax rate and valuation of the material. The proper officer reviews the request and allows XYZ Pvt. Ltd. to pay tax provisionally at an estimated rate and value, with the condition that XYZ Pvt. Ltd. executes a bond with security for any potential difference in tax after final assessment.

Within six months, the proper officer collects additional information needed to finalize the assessment of the biodegradable plastic material. The officer concludes the final tax rate and valuation, issuing a final assessment order. If the final tax is higher than the provisional tax paid, XYZ Pvt. Ltd. must pay the difference with interest. Conversely, if the final tax is lower, XYZ Pvt. Ltd. would be entitled to a refund, along with interest on that refund.