GST Notice ASMT-02: What It Means, How to Reply via ASMT-03, and Navigating Provisional Assessment

Classification disputes over GST rates, valuation disagreements on related-party transactions, and ambiguity over the nature of composite supplies affect businesses across sectors, from pharmaceuticals disputing whether a product is a medicine (5%) or a cosmetic (18%), to software firms uncertain whether a service is “development” or “cloud subscription.” When a registered taxpayer cannot determine the applicable tax rate or the value of supply, Section 60 of the CGST Act 2017 allows them to apply for a provisional assessment by filing Form GST ASMT-01, asking the Proper Officer to fix a provisional rate or value so they can continue filing returns without the risk of a demand for the wrong amount. After examining the ASMT-01 application, the Proper Officer may require additional information before passing the provisional assessment order and issues Form GST ASMT-02, a notice seeking that information. Your reply in Form ASMT-03 must address every specific information request completely. The officer then passes the provisional order in Form ASMT-04 within 90 days of your original ASMT-01 application. This guide explains what triggers ASMT-02, what information officers typically seek, how to structure your ASMT-03 reply, the security bond requirement, the finalization process, and the critical 18% interest exposure if the final assessment exceeds the provisional.

What Is Form GST ASMT-02 and Why Did You Receive It?

Form GST ASMT-02 is a notice issued by the Proper Officer under Rule 98(2) of the CGST Rules 2017 (rules and forms available on the CBIC website), seeking additional information, documents, or clarification from a taxpayer who has applied for provisional assessment under Section 60 of the CGST Act. It is not a demand notice, a scrutiny notice, or a show cause notice: it is an administrative information request in the context of a procedure that you initiated by filing ASMT-01. Receiving ASMT-02 means the officer is actively processing your provisional assessment application and needs more data before deciding it.

The provisional assessment framework under Section 60 exists precisely because GST is a self-assessment system under Section 59: you are expected to determine your own tax liability, compute it correctly, and pay it with every return. Where you genuinely cannot do so, because the applicable rate or the correct value is uncertain, Section 60 gives you a mechanism to operate under an officer-determined provisional rate while the underlying question is resolved. ASMT-01 initiates this request; ASMT-02 is the officer’s follow-up for more information; and ASMT-04 is the provisional order that lets you resume operations with certainty about the rate or value to apply.

The complete provisional assessment form flow is as follows.

ASMT-02 is accessible on the GST portal under Services > User Services > View Notices and Orders, linked to your ASMT-01 application reference. The notice specifies exactly what additional information is required and the period within which ASMT-03 must be filed.

When Should a Business File ASMT-01 for Provisional Assessment?

Section 60(1) of the CGST Act restricts provisional assessment to two precise grounds: the taxpayer is unable to determine (a) the value of supply, or (b) the applicable rate of tax. Both grounds arise from genuine uncertainty, not convenience or strategic preference. A business that knows its classification and value but prefers not to pay cannot use ASMT-01 as a deferral tool: the officer will reject the application on ASMT-04 for failure to meet the threshold conditions.

Ground 1: Inability to Determine the Value of Supply

Valuation uncertainty most commonly arises in these scenarios:

• Related-party transactions: Where the buyer and seller are related (as defined under Rule 2(c) of the CGST Rules), the transaction value may not be accepted by the officer, and the correct valuation methodology (cost plus, comparable uncontrolled price, resale price) is unclear. Rule 28 of the CGST Rules provides the valuation framework but applying it requires information the taxpayer may not have at the time of supply.
• Post-supply price revisions: Long-term contracts where the final price is determined after delivery (such as construction contracts tied to index prices, or commodity contracts with retrospective price adjustments) create uncertainty about the value at the time of invoice.
• Subsidized supplies to employees: Where goods or services are supplied to employees at a subsidized price, Rule 28 requires the open market value or cost plus markup. If neither is readily determinable, provisional assessment provides a pathway.
• Complex bundled supplies: Where a composite or mixed supply involves components with different rates, the relative value of each component determines the overall tax rate. If the value allocation is genuinely contested, ASMT-01 is appropriate.

Ground 2: Inability to Determine the Applicable Rate of Tax

Rate uncertainty arises most commonly in classification disputes:

• Pharmaceutical and healthcare products: Whether a product is a medicine (5% GST under Chapter 30), a food supplement (18%), or a cosmetic (18%) depends on the primary composition, intended use, regulatory classification (CDSCO vs. FSSAI), and labeling. Many products genuinely straddle categories.
• Software and IT services: Whether a particular delivery model constitutes a “development service” (18%), “information technology software” (18%), or a “cloud computing service” (18%) may seem uniform but the distinction matters for state-level SGST allocation and place of supply determinations.
• Construction and real estate: Whether a supply is a “work contract service” (12% or 18% depending on the type of work) or a “composite supply” involving materials is a recurring dispute in the construction sector.
• Agricultural and food products: Classification between branded and unbranded food products, or between “processed” and “unprocessed” food, can make the difference between 0% and 5% GST.
• New products without established classification: Where a taxpayer has developed a genuinely novel product with no prior GST classification precedent, provisional assessment protects against retrospective demands while a formal classification determination is sought.

What Information Does an ASMT-02 Notice Typically Seek?

The Proper Officer tailors ASMT-02 to the specific dispute raised in ASMT-01. There is no standard checklist: every ASMT-02 is specific to the product, service, or transaction in question. However, based on the two grounds for provisional assessment, the information requests fall into predictable categories. Understanding these in advance allows you to prepare the ASMT-03 reply proactively, often with documents already organized before the ASMT-02 arrives.

For Classification Disputes (Unable to Determine Rate)

For Valuation Disputes (Unable to Determine Value)

For Nature of Supply or Place of Supply Disputes

Where ASMT-01 is filed because the taxpayer cannot determine whether a supply is goods or services, or whether it is a composite or mixed supply attracting a single rate or multiple rates, ASMT-02 typically requests: the complete description of all elements of the supply; the pricing structure (is a single amount charged or are components priced separately?); the contract terms specifying what is promised; the physical and documentary evidence of performance; and any court or tribunal ruling on the characterization of similar supplies.

How Do You Reply to ASMT-02 Using Form GST ASMT-03?

Form GST ASMT-03 is the statutory reply to ASMT-02 under Rule 98(3) of the CGST Rules. Unlike the reply forms for demand notices (REG-18, REG-24, RFD-09), ASMT-03 is not a defence against an adverse allegation: it is a structured provision of information to assist the officer in making the provisional assessment determination. The quality and completeness of the ASMT-03 response directly determines the rate or value the officer fixes in ASMT-04, which in turn determines your provisional tax obligation and your 18% interest exposure at finalization.

1. Read ASMT-02 and extract every specific information request. Create a numbered list of each item requested in ASMT-02. Confirm that you understand precisely what each request means: if a request is ambiguous (for example, “provide technical data” without specifying what data is needed), call or write to the officer’s office to clarify before the reply deadline expires. Do not guess at what was meant: a reply that provides the wrong data wastes both your time and the officer’s.
2. Assemble the core technical or commercial documentation first. For classification disputes: obtain the current product test certificate from an NABL-accredited laboratory, the current manufacturing licence, and any AAR ruling on the same or similar product. For valuation disputes: compile the inter-company agreement, the transfer pricing study (if prepared under the Income Tax Act), and comparable uncontrolled price data. These documents are the foundation of the reply; the narrative explanation in ASMT-03 is built around them.
3. State your proposed provisional rate or value clearly in ASMT-03. ASMT-03 is not just a document submission: it should also state, explicitly, what provisional rate or value you are requesting the officer to fix in ASMT-04, and why that rate or value is supportable on the information provided. An officer who sees a clearly articulated proposed rate with supporting evidence is in a better position to pass ASMT-04 quickly and at the rate closest to what you have requested.
4. Reference all relevant legal positions. Cite any CBIC circular, GST Council recommendation, AAR ruling, AAAR ruling, or court judgment that supports your proposed classification or valuation. Do not expect the officer to independently research the legal landscape: present it to them. Officers dealing with ASMT-02 responses benefit from having the legal framework pre-organized in the reply.
5. Address the interest exposure proactively. If there is a realistic possibility that the final assessment rate will be higher than the provisional rate you are requesting, acknowledge this in ASMT-03 and propose the security bond amount under ASMT-05 that reflects the estimated differential. An officer who sees a taxpayer engaging transparently with the interest and security implications of provisional assessment is more likely to pass a balanced ASMT-04 rather than defaulting to the higher rate as a conservative measure.
6. File ASMT-03 through the portal and save the acknowledgement. Access the ASMT-02 notice under Services > User Services > View Notices and Orders and use the “Reply” function linked to the specific ASMT-02 reference number. Upload all documents as PDF exhibits with exhibit numbers corresponding to the ASMT-03 text. Submit before the deadline specified in ASMT-02 and retain the acknowledgement number and timestamp.

What Happens After Your ASMT-03 Reply: The ASMT-04 Provisional Order?

After you file ASMT-03, the Proper Officer reviews your reply and passes the provisional assessment order in Form ASMT-04 within 90 days of the original ASMT-01 application date under Rule 98(4). The 90-day period is measured from ASMT-01, not from ASMT-02 or ASMT-03. If the officer takes a long time issuing ASMT-02 and you need time to respond via ASMT-03, the 90-day clock continues to run. Monitor the timeline: if 90 days from your ASMT-01 have elapsed without an ASMT-04, write to the jurisdictional Commissioner citing the Rule 98(4) obligation and requesting that the provisional order be passed without further delay.

What ASMT-04 Contains

The ASMT-04 provisional assessment order specifies: (a) the provisional rate of tax or the provisional value of supply, as the case may be; (b) the period for which the provisional rate or value applies; (c) the amount of security required (if any) under ASMT-05; and (d) the expected date by which finalization is anticipated. Once ASMT-04 is passed, you file your returns using the provisional rate or value specified in the order, rather than the rate or value you would have self-assessed.

Security Bond Under ASMT-05

Rule 98(4) allows the Proper Officer to require a bond with or without a surety, along with other security, to ensure payment of the differential tax if the final assessment results in a higher liability. This security is formalized in Form ASMT-05. The security amount is typically the officer’s estimate of the differential between the provisional rate and the likely final rate, applied to the estimated turnover for the provisional period. For example, if provisional assessment is at 5% and the officer estimates the final rate may be 12%, the security on Rs. 1 crore of turnover during the provisional period would be Rs. 7 lakh (the 7% differential).

Security instruments accepted typically include: a cash deposit into the electronic cash ledger; a bank guarantee from a scheduled commercial bank; or a surety bond from a government-approved surety. The choice of instrument is negotiated with the officer and confirmed in the ASMT-04 or ASMT-05 order. Releasing the security after final assessment requires filing Form ASMT-08, which the officer processes as ASMT-09 (release or retention of security).

Filing Returns During the Provisional Assessment Period

During the period covered by the provisional assessment, you file GSTR-1, GSTR-3B, and other applicable returns using the provisional rate or value fixed in ASMT-04. Returns for supply periods within the provisional assessment period should reference the ASMT-04 order number. Any return non-filing notices (GSTR-3A) received during the provisional period must be addressed promptly: non-filing during provisional assessment suspends the officer’s ability to finalize the assessment and may be cited as a reason for delay in ASMT-07.

How Is the Provisional Assessment Finalized via ASMT-07?

Provisional assessment does not continue indefinitely. Section 60(4) of the CGST Act requires the Proper Officer to pass a final assessment order in Form ASMT-07 within six months of the date of the provisional assessment order, extendable by a further six months on application to the Joint or Additional Commissioner, and further by the Commissioner, on sufficient cause. In practice, finalization is often triggered by the resolution of the underlying uncertainty: a court judgment on classification, an Authority for Advance Rulings decision, a CBIC circular clarifying the rate, or the parties reaching a commercial agreement on valuation.

ASMT-06: Notice Before Finalization

Before passing ASMT-07, the officer may issue Form ASMT-06, requesting any additional records or information needed to complete the final assessment. Unlike ASMT-02 (which is issued before the provisional order), ASMT-06 is issued during the finalization process. A prompt and complete reply to ASMT-06 accelerates finalization and gives you the opportunity to shape the officer’s final determination with the most current and complete supporting documentation.

Interest Implications of ASMT-07

The ASMT-07 final order determines the tax liability for the entire provisional assessment period at the finally determined rate or value. The comparison between what you paid provisionally and what is finally determined creates one of three outcomes.

Worked Example: 18% Interest Calculation

A pharmaceutical company filed ASMT-01 in April 2024, claiming that its product should be assessed provisionally at 5% GST (as a medicine) while the classification at 18% (as a health supplement) was disputed. The ASMT-04 order set a provisional rate of 5%. In the 18 months of provisional assessment (April 2024 to October 2025), the company supplied Rs. 10 crore worth of the product per month, paying 5% IGST (Rs. 50 lakh per month = Rs. 9 crore provisional tax paid). The ASMT-07 final order in October 2025 determined the correct rate was 12% (not 18% and not 5%). The differential is 7%: Rs. 7 lakh per month. Total differential tax = Rs. 7 lakh x 18 months = Rs. 1.26 crore. Interest at 18% per annum on Rs. 1.26 crore from the dates of provisional payments to October 2025 (averaging approximately 9 months at the midpoint) = approximately Rs. 17 lakh. Total exposure from provisional assessment: Rs. 1.43 crore, in addition to the provisional tax already paid of Rs. 9 crore. This example illustrates why minimizing the provisional period (by actively pursuing finalization) and maximizing the accuracy of the ASMT-03 reply (to obtain the most defensible provisional rate) are critical.

Where a GST refund arises from an ASMT-07 determination that the final rate is lower than the provisional rate paid, the GST refund notice guide (RFD-08) explains how to handle any refund rejection notices that may arise during the refund processing.

Is Provisional Assessment the Right Strategy for Your Business?

Provisional assessment under Section 60 is a specific tool for a specific situation. Used correctly, it protects a business from retrospective demand exposure while the underlying uncertainty is resolved. Used incorrectly, it creates administrative complexity, security bond obligations, and significant interest liability. The following framework helps businesses and their advisers decide whether ASMT-01 is the right move.

When Provisional Assessment Makes Strong Sense

• The classification or valuation question is genuinely contested with reasonable arguments on both sides, and the stakes are high enough that the 18% interest risk from paying at the wrong rate without provisional assessment would be material.
• The business has significant ongoing transactions in the disputed category and cannot wait 3-6 months for an Advance Ruling before continuing to supply.
• The dispute is likely to be resolved within a reasonable period (a court judgment is expected, a CBIC circular is anticipated, or a transfer pricing study is being finalized), meaning the provisional assessment period will be short and interest exposure manageable.
• The business has the financial capacity to provide the required security bond (ASMT-05) without straining working capital.

When Advance Ruling Is Preferable

• The transaction is of a type where the classification question has not previously been ruled upon, and the business needs a legally binding, prospective answer before it can confidently price its supply.
• The dispute relates to a single large future transaction (for example, a major infrastructure project) where getting the rate right from the outset is more important than speed.
• The business can afford to wait: Advance Rulings typically take 90 to 180 days from application to ruling under Section 98, and the ruling is binding on both the applicant and the officer for prospective transactions.
• The business operates in a state with an AAR that has a strong track record on the specific industry or product category in dispute.

When Self-Assessment at Higher Rate and Refund Claim Is Preferable

• The disputed differential is small in absolute terms, and the administrative cost of provisional assessment (officer engagement, security bond, finalization process) exceeds the potential savings.
• The supply is primarily to B2B customers who claim ITC, meaning the tax paid is effectively neutral for the supply chain (buyers can claim the higher rate as ITC). Paying at the higher rate and claiming a refund later (via RFD-01) avoids the provisional assessment complexity entirely.
• The higher rate provides certainty and avoids any risk of the officer fixing a provisional rate lower than the final rate, which would trigger the 18% interest exposure.

For businesses evaluating whether their corporate structure optimally manages the tax risks arising from classification disputes and provisional assessment obligations, our Pvt Ltd company registration guide covers the compliance considerations that affect entity-level GST positioning. For businesses with international operations where related-party valuation disputes arise alongside domestic GST valuation questions, our FAST-DS 2026 foreign assets disclosure guide is relevant for the broader compliance picture.

Frequently Asked Questions on GST ASMT-02 Notice