ASSESSMENT OF UNREGISTERED PERSONS

[Dr. Sanjiv Agarwal]

Statutory Provisions (Section 63)

63. Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable person fails to obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2) of section 29 but who was liable to pay tax, the proper officer may proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates:

Provided that no such assessment order shall be passed without giving the person an opportunity of being heard.

Assessment of Unregistered Persons

Section 63 of CGST Act, 2017 deals with assessment of unregistered persons or persons whose registration had been cancelled but they were liable to pay GST. This section is one of the triggers for making assessment as best judgment assessment.

According to section 63 of CGST Act, 2017, proper officer may proceed to assess the tax liability of a taxable person who did not seek the registration under GST Act even when he was liable for the same.

This section overrides the provisions of section 73 and 74 of the CGST Act, 2017.

It may be noted that a person whose registration has been cancelled by the proper officer under section 29(2) of the CGST Act, 2017, but such person was liable to pay tax and the registration was cancelled due to various reasons as provided in section 29(2). Such person would also be considered as unregistered person for the purpose of applicability of section 63.

The Proper Officer shall issue a notice to a taxable person in FORM GST ASMT-14 containing the grounds on which the assessment is proposed to be made on best judgment basis. In Re: Narayan Builders and Developers (2021) 47 GSTL 88 (Commissioner Appeals, Rajasthan), where show cause notice was not issued for issuing order under section 62 of CGST Act, 2017 and registration of appellant was cancelled, it was held that provisions of section 63 of CGST Act, 2017 shall be applicable as the best judgment assessment has been passed by the adjudicating authority. It was directed that notice be issued under section 63 of CGST Act, 2017 in FORM GST ASMT-14 as per rule 100(2) of CGST Rules, 2017.

The Proper Officer, in relation to assessment of taxes on the unregistered taxable person, shall issue the assessment order in FORM GST ASMT-15 within a period of 5 years from the date specified under Section 44 for furnishing of the annual return for the financial year to which the tax unpaid relates.

According to proviso to section 63 of CGST Act, 2017, no such assessment order shall be passed without giving a notice to show cause and without giving the person a reasonable opportunity of being heard. Thus, order can be passed only after observing the principles of natural justice.

Time limit for Order

A time limit of five years from the due date of filing of the annual return of the year to which the tax not paid relates shall be reckoned for making an order of assessment.

Example: The assessment under section 63 of CGST Act, 2017 for the year 2018-19 can be made upto 31^st December, 2024 as last date of filing of annual return of 2018-19 is 31^st December, 2019.

Applicable Rules and Forms

According to Rule 100 of CGST Rules, 2017, the sub-rule (2) provides as follows:

(2) The proper officer shall issue a notice to a taxable person in accordance with the provisions of section 63 in FORM GST ASMT-14 containing the grounds on which the assessment is proposed to be made on best judgment basis and shall also serve a summary thereof electronically in FORM GST DRC-01, and after allowing a time of fifteen days to such person to furnish his reply, if any, pass an order in FORM GST ASMT-15 and summary thereof shall be uploaded electronically in FORM GST DRC-07.

Accordingly, following forms are required to be used for various purposes and are to be filed online:

S.No.	Form No.	Purpose
1.	GST ASMT – 14	Notice to taxable person
2.	GST DRC – 01	Summary of notice to be uploaded electronically
3.	GST ASMT – 15	Assessment order
4.	GST DRC-07	Summary of order to be uploaded electronically

Flow of events for Order under section 63 of CGST Act, 2017

Sequence	Event	Time
(A)	Proper officer to issue notice to taxable person	On noticing the default
(B)	Intimation of grounds on which best judgment assessment is proposed	On noticing the default
(C)	Summary of notice electronically uploaded	After issuance of notice
(D)	Reply by taxable person / opportunity of being heard	Within 15 days of notice
(E)	Assessment order	Within 5 years from the date of relevant annual return
(F)	Summary of order electronically uploaded	After issuance of order