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CA Final · Indirect Tax Laws · Assessment and Audit

Orion Components Ltd applied for provisional assessment for a product whose value is disputed. The proper officer's order in FORM GST ASMT-04 requires a bond covering Rs 40,00,000 of tax. The applicant has executed the bond in FORM GST ASMT-05. What is the maximum security by way of bank guarantee the officer can require, and what is the next step after the final assessment order in ASMT-07 and the applicant paying the amount specified?

Security cannot exceed twenty-five per cent of the bond amount, so the maximum is Rs 10,00,000. After the final order in ASMT-07, the applicant files ASMT-08 for release, and the officer, once payment is ensured, releases it in ASMT-09 within seven working days of receipt.

  1. ARs 10,00,000; the applicant files FORM GST ASMT-08 for release, and the officer releases the security within seven working days of receipt via FORM GST ASMT-09Correct
  2. BRs 4,00,000; the applicant files FORM GST ASMT-08, and the security is released within fifteen days
  3. CRs 10,00,000; the security is released automatically through FORM GST ASMT-09 without any application
  4. DRs 20,00,000; the applicant files FORM GST ASMT-08 and release is within seven working days

Explanation

Rule 98(3) caps security at 25% of the bond amount: 25% of Rs 40,00,000 = Rs 10,00,000. After the ASMT-07 order, the applicant applies in ASMT-08 (rule 98(6)), and the officer releases the security in ASMT-09 within seven working days of receipt after ensuring payment (rule 98(7)). Rs 4,00,000 wrongly uses 10%, and automatic release ignores the application.

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