Section 64 of the CGST Act empowers the proper officer to undertake summary assessment in special cases where any delay is likely to adversely affect revenue. This provision is intended only for urgent situations — for example, unaccounted goods in transit, perishable goods, or fly‑by‑night dealers where immediate crystallisation of liability is essential.
It is an exception to the regular assessment procedure under Sections 73/74, not a substitute for convenience. Judicial approval and recording of reasons are mandatory safeguards before invoking such power.
1. Emerging misuse against genuine recipients
In practice, officers in certain States have begun to invoke Section 64 not against defaulting suppliers, but against purchasers who have already discharged GST to registered suppliers. Typical grounds include supplier’s return default, cancellation of registration, or tax not deposited into the Government account.
Such use treats a genuine recipient as though he were a wilful participant in evasion, even where he holds valid invoices, has received goods, and made payment with GST through banking channels.
This short‑circuiting of due process effectively bypasses Section 73/74, converts an ITC verification into a “special case,” and exposes the recipient to double taxation on the same supply.
2. Judicial protection to bona fide buyers
High Courts have repeatedly intervened to protect bona fide purchasers. A leading ruling is M/s. McLeod Russel India Ltd v. Union of India (Gauhati High Court), where Section 16(2) (aa) was read down. The Court held that ITC cannot be denied to a bona fide purchaser merely because the supplier failed to file returns or upload invoices. What matters is whether the buyer possesses valid tax invoices, has received the goods, and paid consideration including GST through banking channels.
Similarly, in a later “landmark ruling” (as reported on Faceless Compliance, 2025), the High Court observed that requiring a buyer to ensure the supplier’s tax remittance would be “to do the impossible,” and directed that ITC must be allowed where genuineness of purchase is established.
These principles are squarely applicable to Section 64 misuse — if ITC itself cannot be denied in such cases, a drastic summary assessment on the same facts is a fortiori unjustified.
3. Core legal grounds to challenge Section 64 invocation
When a recipient faces Section 64 action for supplier‑side default, the following defences are well‑founded:
Absence of pre‑condition: No contemporaneous “adverse effect on revenue” exists; hence the jurisdictional basis fails.
Mechanical approval: Prior permission of AC/JC is often granted without recorded reasons, rendering the proceedings void.
Violation of bona fide purchaser protection: Courts have affirmed that genuine buyers cannot be penalised for supplier lapses.
Arbitrariness under Articles 14 & 19(1)(g): Imposing tax twice on one supply defeats the destination‑based design of GST.
Availability of alternate remedies: The department already possesses tools under Sections 73/74, registration suspension, and recovery provisions to proceed against the actual defaulter.
4. Practical defence strategy
On receipt of a summary assessment order (Form ASMT‑16), the recipient should:
File an application for withdrawal under Rule 100(3) / Form ASMT‑17 within 30 days, showing that no “special case” exists.
Demonstrate compliance with Section 16 — valid invoices, E‑way bills, payment proof, GRN, and stock records.
Cite McLeod Russel (Gauhati HC) and similar rulings to establish bona fides.
Seek conversion of the proceeding into the regular Section 73 route, ensuring full hearing and adjudication.
Conclusion:
Section 64 is designed for emergency protection of revenue — not for convenience recovery from traceable taxpayers. Its mechanical use against compliant recipients’ damages trust, violates due process, and upsets the neutrality of GST credit flow. Officers must confine Section 64 strictly to genuinely “special cases,” while bona fide purchasers should actively challenge such misuse through timely representation, Writ Petition, or appeal.
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