Section 64 Summary Assessment: New Shortcut Weapon against Bona Fide Recipients

1. emergency provision turned shortcut

Section 64 of the CGST Act was drafted as an emergency provision – “summary assessment in certain special cases” – to protect revenue when waiting for normal adjudication would seriously jeopardise recovery. It was never meant to be a routine assessment section like 73 or 74.

On paper, section 64 is narrow:

• It needs clear evidence of tax liability,
• Previous permission of Additional Commissioner/Joint Commissioner, and
• A genuine belief that any delay will adversely affect the interest of revenue.

In real life, we are now seeing a different story. Summary assessment is being used as a shortcut weapon against bona fide recipients – particularly in ITC disputes linked to supplier default or retrospective cancellation – instead of proceeding properly under sections 73/74 against the defaulting suppliers.

In this article, I focus only on this misuse: how section 64 is being applied to recipients, what the law really says, what the recent jurisprudence on bona fide purchasers implies, and how taxpayers and practitioners should respond.

2. What Section 64 actually says and when it should be used

Section 64(1) allows the proper officer, on any evidence showing a tax liability, with previous permission of AC/JC, to immediately assess the tax liability of a person and issue an order if he has sufficient grounds to believe that any delay may adversely affect the interest of revenue.

Key points in simple language:

• It is a summary and exceptional assessment – meant for special situations.
• The classic examples are: perishable or easily disposable goods; fly‑by‑night operators; unaccounted goods which can quickly vanish.
• It is not meant for normal ITC disputes or interpretational issues where parties are on record and traceable.

Rule 100 requires the order to be in ASMT‑16, and section 64(2) gives an important safeguard – the taxable person can apply in ASMT‑17 within 30 days, and the AC/JC can withdraw the summary order and direct that normal 73/74 procedure be followed.

There is no separate “limitation period” in section 64 itself because the built‑in test is urgency: if there is no immediate adverse effect on revenue, section 64 should not be used at all.

3. How the department is misusing section 64 against recipients

Despite this clear “emergency” design, current practice shows some disturbing trends. I see the following patterns in matters across clients:

1. Using section 64 where the real issue is only ITC on supplier default / mismatch

• • The dispute is usually that the supplier has not paid tax, or his registration is cancelled (often retrospectively), or there is 2A/2B mismatch.
  • Instead of proceeding against the supplier under 73/74, the officer issues a summary assessment under section 64 to the recipient, crystallising full demand and interest, sometimes without even a proper SCN.

2. Treating bona fide recipients as if they are flight‑risk defaulters

• • These recipients are fully registered, filing returns, and available for hearing.
  • There is no genuine risk that waiting for regular 73/74 proceedings will cause revenue loss.
  • Still, section 64 is invoked simply to fast‑track demand and show “action taken” on system dashboards.

3. Skipping or diluting the statutory safeguards

• • Prior written permission of AC/JC is not produced; in some cases, there is only a generic note or post‑facto approval.
  • No reasons are recorded on how delay will adversely affect revenue.
  • The ASMT‑16 order is cryptic, often just copying the system figures and saying tax is payable.

4. Using section 64 to avoid the higher burden of section 74

• • In many of these ITC cases, there is no material of fraud or suppression by the recipient.
  • Under section 74, the officer would have to prove fraud/mens rea and issue a detailed SCN.
  • By using 64, officers try to bypass the stricter requirements of section 74 and jump straight to a demand order.

This is not the legislative scheme. Section 64 is a narrow, protective power for special cases, not an alternative platform for routine ITC recovery from genuine buyers.

4. Judicial trends: protection to bona fide recipients

Even though there are not many reported judgments directly on section 64, the ITC jurisprudence on bona fide purchasers gives very strong support to challenging such misuse.

Recent High Court lines, summarised in 2025–26 commentaries, are very clear:

• Tripura High Court – Malaya Rub‑Tech Industries v. Union of India:

The Court held that ITC cannot be denied to a bona fide purchaser merely because the supplier failed to deposit GST, in the absence of fraud or collusion by the buyer. Section 16(2)(c) must be read down so that honest recipients are not punished and double taxation is avoided.

• • Gauhati High Court – McLeod Russel line (section 16(2) (aa)):

Gauhati HC has read down section 16(2) (aa), holding that ITC cannot be denied solely because the supplier did not upload invoices or there is a portal mismatch, without giving the buyer a fair chance to establish genuineness. Denying ITC in such cases is arbitrary and leads to impermissible double collection.

• Allahabad High Court – Singhal Iron Traders type rulings:

Allahabad HC has held that ITC cannot be denied simply because the supplier’s registration was later cancelled, when at the time of supply the supplier was registered and tax was paid through banking channels. The Court criticised attempts to proceed under section 74 against buyers without any evidence of collusion.

• Multiple HCs – retrospective cancellation not a ground by itself:

Several judgments and case digests show a consistent line: retrospective cancellation of supplier registration cannot, by itself, be the sole ground for denying ITC to a purchaser; authorities must evaluate invoices, e‑way bills, payments, stock records and other evidence.

These principles are directly relevant when section 64 is used against recipients. If ITC cannot be denied to bona fide purchasers under section 73/74 without examining their documents and their bona fides, then using a harsher summary power under section 64 against the same recipients is even more disproportionate and unconstitutional.

5. Legal attack on misuse of section 64 in ITC cases

When a bona fide recipient gets an ASMT‑16 summary assessment based on supplier default, retrospective cancellation or mismatch, there are several strong grounds to challenge it:

1. No “immediate adverse effect on revenue” – wrong trigger

• • Section 64 can be invoked only if delay in assessment will adversely affect revenue.
  • For a registered, traceable recipient with ongoing business, there is no such risk; the department can always issue a normal 73/74 SCN.
  • Use this to argue that the very jurisdictional pre‑condition for section 64 is missing.

2. Mis‑targeting: defaulting suppliers ignored, recipients targeted

• • The main evidence of “tax liability” is that the supplier has not paid, or is cancelled; this shows a liability on the supplier, not on the buyer.
  • By directly assessing the buyer under section 64, officers are trying to shift the burden from the real defaulter to a convenient, compliant party.
  • This contradicts the Tripura and Gauhati HC line that bona fide purchasers cannot be made to suffer for supplier non‑compliance without proof of collusion.

3. Lack of AC/JC permission or mechanical approval

• • Section 64 expressly requires prior written permission of AC/JC.
  • Ask for copy of the approval note. If there is no approval or if it is a rubber‑stamp with no reasoning, the order is liable to be struck for want of jurisdiction.

4. Violation of natural justice and non‑speaking order

• • Even in summary assessment, basic natural justice applies.
  • Many ASMT‑16 orders do not discuss invoices, e‑way bills, payment proofs etc., and merely reproduce system figures.
  • Such non‑speaking orders have consistently been criticised and remanded by High Courts in the ITC context.

5. Section 64(2) safeguard ignored or mechanically rejected

• • If you file ASMT‑17 within 30 days seeking withdrawal, AC/JC is bound to consider whether the order is erroneous and whether 73/74 procedure should be followed.
  • If there is no decision, or a one‑line rejection, it is a strong ground for writ – because the statute itself envisages a serious re‑look before continuing with summary assessment.

6. Practical defence strategy for bona fide recipients

When your client (as recipient) is hit with section 64 in an ITC‑related matter, I would suggest a multi‑layer strategy:

1. Immediate ASMT‑17 application (within 30 days)

• • File a detailed ASMT‑17 before AC/JC seeking withdrawal of the summary assessment.
  • Emphasise:
    • There is no immediate revenue risk – the recipient is traceable and compliant.
    • Dispute is only about ITC linked to supplier default/cancellation, which can be handled under 73/74.
    • The recipient has complied with section 16 and has full documents.

2. Parallel appeal under section 107

• • File appeal against ASMT‑16 within limitation with statutory pre‑deposit.
  • Raise all jurisdictional and factual grounds: wrong use of 64, absence of AC/JC permission (or mechanical approval), no emergency, non‑speaking order, violation of natural justice.

3. Consider writ petition in strong misuse cases

• • Where there is clear absence of permission, no recorded reasons, or blatant targeting of bona fide recipients, writ jurisdiction can be invoked.
  • Use the Tripura, Gauhati, Allahabad and Calcutta lines to argue that using a drastic summary power against bona fide buyers, when law itself protects them, is arbitrary and violative of Articles 14 and 19(1)(g).

4. Document the bona fides thoroughly

• • Along with legal grounds, file a complete evidence set showing the genuineness of purchases (see next section).
  • Courts are more willing to interfere when documentation is clear and organised.

7. Documentation – how genuine taxpayers can protect themselves

In all ITC and section 64‑type disputes, documentation is your best defence. At minimum, bona fide recipients should maintain:

• Proper tax invoices with supplier GSTIN, address, description and tax separately shown.
• E‑way bills / transport documents – LR, GRN, vehicle details, weighbridge slips where relevant.
• Proof of receipt of goods/services – goods receipt notes, stock records, production/consumption records, delivery challans.
• Bank payment proofs – NEFT/RTGS/IMPS/cheque statements showing payment of value plus GST; avoid cash for business‑to‑business supplies.
• Correspondence and contracts – purchase orders, email confirmations, agreements.
• GSTR‑2B/2A and GSTR‑3B reconciliation – show that ITC has been claimed only when it reflects (where applicable) and is backed by actual supply.

This does two things:

• Demonstrates that the recipient is a bona fide purchaser, not part of any racket.
• Makes it easier for courts and appellate authorities to see that section 64 is being misused as a shortcut.

8. How practitioners should advise clients going forward

Practitioners now have to combine technical and risk management advice:

• Due diligence on suppliers
  • Regularly check supplier registration status on GST portal.
  • Avoid obviously risky vendors: unrealistic prices, insistence on cash, non‑existent premises, no track record.
• Contractual clauses and periodic checks
  • Insert clauses requiring suppliers to remain compliant and to share GSTR‑1/3B status where feasible.
  • For large or critical vendors, consider periodic confirmations on tax payment (even if by simple self‑declaration).
• Prompt response to any pre‑intimation or 64‑type action
  • Do not ignore any communication; file detailed replies with documents.
  • Use ASMT‑17 within 30 days in every section 64 case involving bona fide recipients.

Over time, if more taxpayers document their bona fides and more writs challenge misuse, the department will be forced to confine section 64 to truly special cases.

Author’s conclusion – keep section 64 where it belongs

In my view, section 64 belongs only in rare emergency situations: perishable goods, smuggled or unaccounted stock, vanishing dealers and similar cases where waiting for 73/74 will genuinely harm revenue.

Using this harsh summary power against traceable, compliant, bona fide recipients – especially in ITC disputes arising purely from supplier default or retrospective cancellation – is completely against the basic design of GST and the clear directions of recent High Court rulings.

If this misuse continues, taxpayers will again have no option but to approach High Courts to seek protection, and section 64 will join section 74 as another symbol of fear instead of being a limited, sensible tool to protect revenue in exceptional cases. The law is already on the side of genuine purchasers; our job as practitioners is to use that law effectively and consistently until the message percolates down to field‑level adjudication.