Kerala HC Quashes Section 62 Best Judgment Assessments for Non-Service of Notice

Mundeth Ply Boards Vs State Tax Officer (Kerala High Court)

Summary: The petitioner was a registered taxable person under the CGST/KSGST Act, 2017, having migrated from the KVAT regime upon implementation of GST from 01.07.2017. The petitioner stopped business in September 2017 and stated that it could not cancel its registration at that time because of the prohibition contained in the proviso to Rule 20 of the CGST Rules, as it then existed.

In November 2017, the petitioner leased the premises to another person. That person subsequently obtained GST registration at the same premises and was regularly filing returns and paying tax. The petitioner challenged a series of best judgment assessment orders passed under Section 62 of the CGST Act for the period from February 2018 to February 2019.

The petitioner contended that the statutory notices required before making an assessment under Section 62 had not been served. It relied upon a screenshot of its GST dashboard, which did not show issuance of the notices and contained only details of the summary orders. The petitioner argued that, without service of the statutory notices, it was deprived of the opportunity contemplated under the provision to furnish the required returns.

The Revenue opposed the petition, submitting that although cancellation of registration had been prohibited for the relevant period, the petitioner was required to file returns. It was also pointed out that the assessments related to a period after expiry of one year from registration and that the petitioner’s registration had subsequently been cancelled suo motu for non-filing of returns.

The Kerala High Court noted that the assessment orders themselves referred to notices, but the petitioner’s GST dashboard did not indicate issuance of those notices. The respondents also failed to produce documents establishing that the notices had actually been served before the Section 62 assessments were made.

The Court held that assessment orders under Section 62 passed without issuance of the requisite notice could only be treated as null and void. Mere reference to notices in the assessment orders was not sufficient to establish service. The Court further held that the statutory requirement had to be fulfilled through the modes contemplated under Section 169 of the CGST Act, 2017.

The Court therefore quashed the assessment orders for February 2018 to February 2019 and directed the competent Assessing Officer to reconsider the matter after issuing a fresh statutory notice under Section 62, if warranted. Since the petitioner’s registration had already been cancelled and portal access was unavailable, the petitioner was directed to appear before the Assessing Officer on 18.06.2026 for further processing.

Background of the Dispute

The petitioner was originally registered under the KVAT Act and migrated to the CGST/KSGST regime from 01.07.2017.

The petitioner stopped its business during September 2017. According to the petitioner, it intended to cancel its GST registration following cessation of business but was unable to do so because of the prohibition under the proviso to Rule 20 of the CGST Rules as it then existed.

During November 2017, the petitioner leased the premises to another person. The subsequent occupant obtained GST registration in respect of the same premises and regularly furnished returns and paid tax for the business carried on there.

Challenge to Section 62 Assessments

The petitioner challenged the series of assessment orders passed under Section 62 of the CGST Act covering February 2018 to February 2019.

The assessments were made on a best judgment basis on the ground that the petitioner had failed to furnish returns despite issuance of notices. The principal challenge before the High Court was that the statutory notices contemplated under Section 62 had not actually been issued or served upon the petitioner.

The petitioner relied upon Ext.P4, a screenshot of the GST Department dashboard. According to the petitioner, the screenshot contained no reference to issuance of the statutory notices and reflected only the details of the summary assessment orders.

Petitioner’s Submissions

The learned counsel for the petitioner submitted that no notice contemplated under Section 62 had been issued before the impugned assessment orders were passed.

It was contended that the petitioner had produced evidence including the GST dashboard screenshot demonstrating the absence of any indication regarding issuance of the notices. The petitioner therefore submitted that it had been deprived of the opportunity to furnish the returns within the prescribed period after receipt of the statutory notice.

The petitioner sought interference with the assessment orders on the ground that the mandatory statutory procedure had not been followed.

Revenue’s Submissions

The respondents opposed the relief sought by the petitioner.

It was submitted that, notwithstanding the prohibition on cancellation of registration at the relevant time, the petitioner was required to file returns. The Revenue further contended that the prohibition on cancellation existed only for a period of one year and that, after expiry of that period, the petitioner ought either to have taken steps to cancel the registration or continued filing returns.

The respondents pointed out that the impugned assessments related to February 2018 to February 2019, which was after expiry of one year from the date of registration. It was also submitted that the petitioner’s registration had already been cancelled suo motu for non-filing of returns.

Kerala High Court’s Findings

The High Court considered the rival submissions and the material placed on record.

The Court noted that the assessment orders contained references to notices having been issued. However, it also accepted the petitioner’s submission that the GST dashboard screenshot did not indicate issuance of those notices.

More importantly, the Court observed that the first respondent had not produced any documents along with the counter affidavit to substantiate that the notices had actually been issued and served upon the petitioner before the Section 62 assessment orders were passed.

Notice Under Section 62 is Mandatory

The Court held that assessment orders under Section 62 without issuing the requisite notice could only be treated as null and void.

It rejected the proposition that a mere reference to notices in the assessment orders could establish that the notices had actually been issued and served. The statutory requirement was that the notices had to be served upon the petitioner through one of the modes contemplated under Section 169 of the CGST Act, 2017.

In the absence of evidence demonstrating such service, the Court concluded that the mandatory requirements preceding the assessments had not been fulfilled.

TaxGuru has previously published material concerning assessment of non-filers of returns under Section 62, including the statutory procedure applicable to best judgment assessment.

Effect of Absence of Statutory Notice

The Court found that the absence of evidence establishing service of the statutory notices was sufficient to invalidate the impugned assessment orders.

The Court specifically held that the mere reference to notices in the assessment orders could not substitute proof of their issuance and service. Since the respondents failed to produce evidence of service, the assessment orders could not be treated as valid.

The Court’s conclusion was therefore based on non-compliance with the mandatory statutory requirement preceding the Section 62 assessments.

Reconsideration After Fresh Notice

Having found that interference was required, the High Court quashed the series of assessment orders pertaining to the period from February 2018 to February 2019.

The competent Assessing Officer was directed to reconsider the matter after issuing a fresh statutory notice contemplated under Section 62, if warranted.

The Court also took note of the fact that another entity had already obtained registration in respect of the same premises and was regularly submitting returns for the relevant period.

Direction to Appear Before Assessing Officer

The Court noted that the petitioner’s registration had already been cancelled since 2019 and that the petitioner no longer had access to the GST portal.

In these circumstances, the petitioner was directed to appear before the concerned Assessing Officer on 18.06.2026 for further processing of the matter.

Final Decision

The Kerala High Court quashed the assessment orders under Section 62 pertaining to the period from February 2018 to February 2019.

The Court directed the competent Assessing Officer to reconsider the matter after issuing a fresh statutory notice under Section 62, if warranted. The direction to the petitioner to appear before the Assessing Officer on 18.06.2026 was also issued in view of the cancellation of registration and absence of portal access.

The writ petition was accordingly disposed of.

Full Text of the Judgment/Order of Kerala High Court

The petitioner was a registered taxable person under the provisions of the CGST/KSGST Act, 2017. The petitioner was was originally registered under the provisions of the KVAT Act and migrated to the CGST/KSGST Act, upon its implementation since 01.07.2017.

2. During the month of September, 2017 the petitioner stopped the business. According to the petitioner, even though the petitioner wanted to cancel the registration on such stoppage, he could not do so, in view of the fact that, as per the proviso to Rule 20 of the CGST Rules, as it then existed, there was a prohibition on cancelling the registration, for a period of one year from the date of obtaining the registration.

3. During the month of November, 2017 the petitioner leased out the said premises to another person as evidenced by Ext.P5. The said person have taken registration under the provisions of the CGST Act in the same premises and was being regularly furnishing the returns and paying the tax for the business that is carried out in the said building. The grievances of the petitioner in this writ petition is against Ext.P2 series of orders of assessment under Section 62 of the CGST Act, where, the petitioner was subjected to best judge assessment, as the petitioner failed to submit the returns despite of issuance of notices. The challenge against Ext.P2 series is on the ground that the statutory notice as contemplated under Section 62 was not issued to the petitioner, thereby, the petitioner was deprived of the opportunity to furnish the returns within 15 days from the receipt of such notice.

4. To substantiate the contention that the petitioner was not served with the statutory notices before issuance of Ext.P2 series of assessment orders, the petitioner is relying on Ext.P4 screen shot of the dash board of the petitioner maintained by the Department of GST. According to the petitioner, in Ext.P4, there is no reference of any notice and it contains only the details of the summary order issued. It is therefore, contended that, an interference is required in Ext.P2 series orders of assessment.

5. A counter affidavit has been submitted on behalf of the respondents opposing the averments of the petitioners and also opposing the reliefs sought by the petitioner. It was contended that, even though there was a prohibition for cancelling the registration at the relevant time, the petitioner ought to have filed the returns. It was further contended that the prohibition was only for a period of one year and, therefore, after the expiry of the said period, the petitioner ought to have taken steps either to cancel the registration or to file the returns. It was pointed out that, in this case, Ext.P2 series orders of assessments were passed pertaining to the months of February, 2018 to February 2019, which were after the expiry of the one year period from the date of registration. It is also pointed out that the petitioner’s registration is already cancelled suo motu for non-filing of the return as well.

6. I have heard Sri.Hrithwik D.Namboothiri, the learned counsel appearing for the petitioner and Sri.Arun Ajay Shankar, the learned Government Pleader for the respondents.

7. The specific contention raised by the learned counsel for the petitioner are that, no notice as contemplated under Section 62 of the Act, 2017 was issued, before passing Ext.P2 series assessment orders under Section 62. Of course, it is true that in the respective orders of assessment, there are reference of the notices issued. However, as rightly pointed out by the learned counsel for the petitioner, in Ext.P4, the screenshot of the dashboard of the petitioner, there is no indication as to the issuance of the said notices to the petitioner. While filing the counter affidavit by the 1st respondent also, no documents are produced to substantiate that the notices were indeed issued to the petitioner before passing the assessment orders under Section 62 as evidenced by Ext.P2 series. There cannot be any dispute that, the assessment orders under Section 62 without issuing a notice can only be treated as null and void. In this case, as there is nothing to show that notices were served upon the petitioner, I am of the view that Ext.P2 series orders cannot be treated as valid. The mere reference of notices in the assessment orders by itself cannot be reason to assume that notices were issued to the petitioner. The requirement is to serve such notices upon the petitioner through any of the modes contemplated under Section 169 of the CGST Act, 2017 and in the absence of any such evidence before this Court, the only conclusion possible is that, the impugned orders were passed without fulfilling the aforesaid mandatory requirements.

8. In such circumstances, I am of the view that an interference is required. While taking this view, this Court also considered the fact that, another entity has already secured a registration in respect of the very same premises and returns are being submitted regularly for the period including the period covered by Ext.P6 orders of assessment as well.

In such circumstances, this writ petition is disposed of quashing Ext.P2 series orders of assessment pertaining to the period from February, 2018 to February, 2019, with a direction to the competent Assessing Officer to reconsider the matter, after issuing a fresh statutory notice as contemplated under Section 62, if warranted. Since it is pointed out that the registration of the petitioner has already been cancelled since 2019 as evidenced by Ext.P1 and that no access is available to the petitioner to the portal, the petitioner shall appear before the Assessing Officer concerned, on 18.06.2026, for further processing of the matter.