In the Goods and Services Tax (GST) framework, registration is a fundamental requirement for any person whose turnover crosses the prescribed threshold or who is otherwise liable under the law. However, there are instances where a person:

1. Fails to obtain GST registration despite being liable, or
2. Gets their GST registration cancelled under Section 29(2) but still continues to have tax liability.

To address such cases, Section 63 of the CGST Act, 2017 provides the legal authority for the tax department to determine and recover the tax payable from such persons through a Best Judgment Assessment.

This section ensures that tax liabilities are not lost merely because a person is outside the registration net. It overrides certain procedural provisions like Section 73 (non-fraud tax shortfall) and Section 74 (fraud/wilful misstatement), and—after the Finance Act (No. 2), 2024—also overrides Section 74A (fraudulent availment of ITC without invoice).

Who Can Be Assessed Under This Section?

• Unregistered taxable persons who are liable to register under Section 22 (threshold-based) or Section 24 (compulsory registration) but did not obtain GST registration.
• Persons whose GST registration was cancelled under Section 29(2) (e.g., due to non-filing of returns, contravention of law) but who continue to have taxable activities.

Authority to Act – “Proper Officer”

The term “Proper Officer” under GST is defined in Section 2(91) and notified by the CBIC and State GST authorities. Generally:

• Central GST: Superintendent, Assistant Commissioner, or Deputy Commissioner of Central Tax.
• State GST: Officers as notified by State Governments.

These officers are empowered to initiate assessment proceedings under Section 63.

When Can It Be Invoked?

Section 63 is applicable in two specific situations:

1. Failure to Obtain Registration – The person is liable under GST law but has not applied for registration.
2. Post-Cancellation Liability – Registration is cancelled under Section 29(2) but taxable supplies continue, or tax remains unpaid for the earlier period.

Time Limit for Passing Order

The assessment order must be passed within 5 years from the due date for filing the annual return under Section 44 for the relevant financial year.
Example:

• FY 2023–24 → Annual return due date = 31 December 2024 → Order can be passed up to 31 December 2029.

Forms Prescribed Under Rule 100 of CGST Rules

The procedure for Section 63 assessments is laid down in Rule 100 of the CGST Rules:

• Form GST ASMT-14 – Notice issued to the person, containing grounds for assessment and proposed tax liability.
• Form GST ASMT-15 – Final assessment order, issued after considering the reply and hearing.

Procedure for Assessment Under Section 63

Step 1 – Detection

The officer identifies an unregistered person or a person with cancelled registration who has taxable transactions. This can arise from:

• GST intelligence reports
• E-way bill data
• TDS/TCS data
• Departmental surveys/inspections

Step 2 – Issue of Notice (ASMT-14)

• A Show Cause Notice is issued in Form ASMT-14.
• It specifies:
  • Facts of the case
  • Legal provisions violated
  • Proposed tax, interest, and penalty
• The notice gives the person 15 days to reply.

Step 3 – Opportunity of Being Heard

• The taxpayer can:
  • File a written reply
  • Seek a personal hearing
• The officer may grant up to three adjournments (as per Section 75(5)).

Step 4 – Best Judgment Assessment

If the person fails to reply or the explanation is unsatisfactory, the officer determines liability based on:

• Available records (sales data, third-party information, bank statements, etc.)
• Comparable cases
• Past patterns of trade

Step 5 – Final Order (ASMT-15)

• Passed after considering submissions.
• Contains details of:
  • Tax payable
  • Interest under Section 50
  • Penalty under Section 122 or 125
• The order is served electronically.

Step 6 – Recovery

If the tax remains unpaid after the order, recovery proceedings under Section 78–79 can be initiated.