1. Why Section 63 matters
Searches such as “Section 63 CGST Act”, “GST assessment of unregistered person”, “best judgment assessment GST”, “ASMT-14”, “ASMT-15”, “GST registration not obtained”, “cancelled GST registration tax liability” and “GST unregistered business assessment” all relate to this provision.
Section 63 is important because GST liability does not disappear merely because a person did not obtain registration.
If a person was legally required to register but did not, the department can still determine the tax liability for the relevant period. The same principle can apply where registration was cancelled under Section 29(2), but the person remained liable to pay tax.
2. Section 63 in very simple language
Suppose a business starts making taxable supplies. Its turnover or nature of activity means registration is compulsory, but the owner never applies for GST registration.
The department later identifies the business and determines that GST should have been paid.
Section 63 allows the proper officer to assess the tax to the best of his judgment for the relevant tax periods, after giving the person an opportunity to be heard.
This is different from Section 62 because Section 62 deals with a registered person who fails to furnish a return, whereas Section 63 deals with a person who was liable to register but did not register, or whose registration was cancelled under Section 29(2) while tax remained payable.
3. What is best-judgment assessment?
Best-judgment assessment means the proper officer determines the tax liability using the relevant information available or gathered when the normal taxpayer-return mechanism is not available.
It does not mean the officer can choose any arbitrary amount.
| Possible evidence | Example |
|---|---|
| Sales invoices | Invoices found during verification or investigation. |
| Banking information | Business receipts, where legally available. |
| E-way bills | Goods movement indicating taxable transactions. |
| Books and records | Ledgers, sales registers, purchase records. |
| Customer/vendor information | Transaction details obtained during proceedings. |
| Business website/agreements | Commercial evidence of supplies where relevant. |
| Historical/industry information | Relevant comparative information where appropriate. |
4. When does Section 63 apply?
There are two principal situations in the current statutory wording:
Situation 1 — Never obtained registration
A taxable person fails to obtain registration even though the law required registration.
Situation 2 — Registration cancelled under Section 29(2)
Registration has been cancelled under Section 29(2), but the person was still liable to pay GST for a relevant period.
The current Section 63 expressly contains both situations and now also cross-references Section 74A in its opening words. citeturn0search3
5. How do we decide whether registration was required?
This is often the most important question before Section 63 can be applied.
The officer must first establish the underlying registration liability by considering the applicable provisions, particularly Sections 22, 23 and 24 and the relevant notifications.
| Question | Why it matters |
|---|---|
| What supplies were made? | Taxable, exempt, non-taxable or zero-rated treatment affects registration analysis. |
| What was the aggregate turnover? | Section 22 thresholds may become relevant. |
| Was compulsory registration triggered? | Section 24 may override the ordinary threshold in specified cases. |
| Was the person exclusively exempt? | Section 23 may remove registration liability in specified situations. |
| Was voluntary registration taken? | Voluntary registration creates separate compliance obligations. |
| Which State/UT rules applied? | Registration and tax jurisdiction must be established correctly. |
6. Cancelled registration cases
Section 63 also covers a person whose registration has been cancelled under Section 29(2) but who was liable to pay tax.
For example, registration may have been cancelled by the proper officer because of specified non-compliance, but investigation later establishes that taxable activity continued during a period for which tax remained payable.
The cancellation itself does not erase earlier tax liabilities.
7. Complete statutory structure
| Part of Section 63 | Easy meaning |
|---|---|
| Main provision | Officer may assess tax to best judgment where a person liable to register did not obtain registration, or a Section 29(2) cancellation person remained liable to tax. |
| Time limit | Assessment order within five years from the date specified under Section 44 for annual return for the financial year to which unpaid tax relates. |
| Hearing safeguard | No Section 63 assessment order can be passed without giving the person an opportunity of being heard. |
The current India Code text confirms the five-year annual-return-linked limitation and the hearing requirement. citeturn0search3turn0search6
8. Opportunity of hearing
This is one of the most important safeguards under Section 63.
The assessment order cannot be passed without giving the person an opportunity of being heard.
In practical terms, the person should use this opportunity to establish:
- whether registration was actually required;
- the correct period of liability;
- the actual taxable turnover;
- applicable exemptions;
- place of supply and tax type;
- eligible deductions/valuation adjustments;
- tax already paid, if any; and
- any other factual or legal issue affecting the assessment.
9. ASMT-14 notice
Rule 100 provides for FORM GST ASMT-14 as the notice for assessment under Section 63.
The notice contains the grounds on which the officer proposes to make a best-judgment assessment. The prescribed form is designed to communicate the basic facts, grounds and proposed assessment issue.
The taxpayer should carefully check whether the notice identifies:
- the period;
- the reason registration was considered mandatory;
- the taxable supplies identified;
- the proposed turnover/tax;
- the legal provisions relied upon; and
- the date and manner of hearing/reply.
Rule 100 provides a 15-day period for furnishing the reply to ASMT-14 before the order is passed. citeturn0search0turn0search4
10. How to reply to ASMT-14
A good response should not simply say “registration was not required”. It should prove the position.
| Issue | Suggested evidence |
|---|---|
| Turnover | Sales register, invoices, books, bank reconciliation. |
| Nature of supply | Contracts, invoices, HSN/SAC and agreements. |
| Exemption | Relevant exemption notification and transaction records. |
| Registration threshold | Aggregate-turnover computation. |
| Compulsory registration | Analysis of Section 24 and applicable notifications. |
| Tax already paid | Challans, returns or other payment evidence. |
11. 15-day response period under Rule 100
Rule 100 states that the proper officer issues ASMT-14 and allows fifteen days to the person to furnish the reply, if any, before passing ASMT-15.
This is different from Section 61 scrutiny, where the current statutory Section 61 framework provides a 30-day period.
12. ASMT-15 assessment order
After considering the reply and hearing, the proper officer may pass the best-judgment assessment order in FORM GST ASMT-15.
The order should determine the tax liability for the relevant periods based on the applicable facts and law.
If the person establishes that registration was not required, or that the proposed taxable turnover/tax is incorrect, the assessment should take those facts into account.
13. DRC-07 demand summary
Rule 100 provides for the electronic summary of an assessment order under the applicable provisions to be uploaded in FORM GST DRC-07.
Accordingly, after receiving ASMT-15, the taxpayer should also check the electronic demand position and reconcile the amount shown in DRC-07 with the detailed assessment order.
The electronic tax liability register records amounts determined by the proper officer under GST proceedings. citeturn0search2
14. Five-year time limit
The current Section 63 provides that the assessment order must be issued within five years from the date specified under Section 44 for furnishing the annual return for the financial year to which the unpaid tax relates.
This is an important change from older GST articles that may describe different limitation wording.
15. Material used for best judgment
Because the person has not followed the normal registration/return mechanism, the department may have to reconstruct the taxable activity from available information.
Where books or accounting records are available.
Sales invoices and other transaction records.
Movement of goods.
Business receipts where lawfully obtained.
Customer/vendor records and other evidence.
Agreements establishing consideration and supply.
The person should therefore maintain complete evidence even if registration was not initially obtained.
16. Tax, interest and penalty
A Section 63 assessment can result in tax liability together with other amounts applicable under the GST law.
| Amount | Possible relevance |
|---|---|
| GST | Tax determined on taxable supplies. |
| Interest | Delayed payment of tax under the applicable Section 50 framework. |
| Penalty | May arise under the applicable penalty provisions depending on the facts. |
| Late fee | Relevant where a return/filling obligation and applicable provision impose it. |
Do not assume that every Section 63 assessment automatically carries the same penalty. Penalty must be linked to the relevant statutory provision and facts.
17. Can the unregistered person claim ITC?
This is a common misconception.
A person cannot simply calculate output tax under Section 63 and then assume that every purchase invoice can be deducted as ITC.
Input tax credit is governed by the separate ITC provisions, including Section 16 and the applicable Rules, and depends on the person's registration/status, documents, conditions and relevant time limits.
18. Section 22 connection
Section 22 is one of the main provisions used to determine whether a person crosses the ordinary registration threshold.
In a Section 63 case, the officer may need to reconstruct aggregate turnover and determine whether the person was required to register under Section 22, subject to Sections 23 and 24 and applicable notifications.
19. Section 24 connection
Section 24 contains specified categories requiring compulsory registration regardless of the normal threshold framework, subject to the applicable law and exemptions.
Therefore, even if turnover appears below the ordinary threshold, a Section 63 analysis may still require examination of Section 24.
20. Section 23 exemptions
Section 23 can exclude specified persons from registration, such as persons exclusively engaged in specified exempt/non-taxable supplies or an agriculturist to the extent covered by the provision.
Therefore, a person receiving a Section 63 notice should not only calculate turnover. It should also examine whether Section 23 or an applicable notification affected registration liability.
21. Section 29 cancellation connection
Section 63 expressly covers a person whose registration has been cancelled under Section 29(2) but who was liable to pay tax.
This is different from saying that every cancelled GSTIN automatically results in Section 63 assessment. The officer must establish the relevant taxable liability.
22. Section 62 vs Section 63
| Point | Section 62 | Section 63 |
|---|---|---|
| Person | Registered person. | Person liable to register but not registered, or specified person whose registration was cancelled under Section 29(2). |
| Problem | Required return not furnished after Section 46 notice. | Registration not obtained despite liability, or cancelled registration person remained liable. |
| Notice | Section 46/GSTR-3A framework. | ASMT-14 under Rule 100. |
| Order | ASMT-13. | ASMT-15. |
| Hearing | Different statutory framework. | Section 63 expressly requires opportunity of hearing. |
23. Section 64 summary assessment
Section 64 is another special assessment provision, but it is different from Section 63.
Section 64 is designed for cases involving evidence showing a tax liability, typically where immediate action is necessary to protect revenue, subject to its statutory conditions.
Section 63, by contrast, is specifically targeted at persons who were liable to register but did not register, and specified cancelled-registration cases.
24. Detailed practical examples
Example 1 — Threshold crossed
A business makes taxable supplies above the applicable registration threshold but does not obtain registration. The department later identifies the business. Section 63 may be used after establishing the registration liability.
Example 2 — Compulsory registration
A person falls within a compulsory-registration category under Section 24. Turnover alone is not the only test. Failure to register can expose the person to Section 63.
Example 3 — Cancelled registration
A registration is cancelled under Section 29(2), but taxable business continues for a period for which tax remains payable. Section 63 may apply to that liability.
Example 4 — Exempt business
A person receives an ASMT-14 notice but can demonstrate that the supplies were exclusively exempt and registration was not required under the applicable law. The response should provide transaction-level evidence.
Example 5 — Mixed taxable and exempt supplies
The person argues that most supplies were exempt. The correct analysis must identify the taxable supplies and aggregate turnover rather than simply looking at the percentage of exempt sales.
Example 6 — E-way bills
The department identifies substantial e-way bills during a period in which no GST registration existed. The person should reconcile each movement with actual taxable, exempt, stock-transfer or other transactions.
Example 7 — Bank receipts
Bank receipts appear higher than reported business turnover. The taxpayer should classify loans, capital introductions, transfers and genuine sales separately and provide evidence.
Example 8 — Service business
A consultant provides taxable services and does not obtain registration despite becoming liable. Contracts, invoices and bank receipts can help establish the actual taxable value.
Example 9 — Construction contractor
A contractor performs works contract services without registration despite registration liability. The officer may reconstruct turnover from RA bills, contracts, payments and project records.
Example 10 — Correcting the record
A taxpayer proves that the department treated an exempt supply as taxable. The ASMT-14 reply should clearly identify the exemption and attach the relevant documents before ASMT-15 is passed.
25. Construction and infrastructure examples
Works contract
A contractor carrying out taxable works contracts must examine the registration threshold and compulsory-registration provisions applicable to its activities. If registration was required but not obtained, Section 63 can become relevant.
RA bills
Project-wise RA bills can be used to reconstruct taxable consideration. The taxpayer should reconcile RA bills with invoices, bank receipts and contract variations.
Mobilisation advances
Advance receipts need separate analysis because GST time-of-supply rules can affect when tax became payable.
Subcontracting
Subcontractor records can help establish the nature and value of the principal contractor's project activity, but each transaction must be analysed separately.
Multiple projects
A contractor should maintain project-wise records because a best-judgment assessment without proper records can create avoidable disputes over turnover and timing.
26. Documents and evidence
- sales invoices and sales register;
- purchase records;
- bank statements and receipt reconciliation;
- contracts and work orders;
- RA bills and measurement records for construction;
- e-way bills;
- customer confirmations where appropriate;
- expense ledgers;
- exemption documentation;
- aggregate-turnover computation;
- Section 22/23/24 registration analysis;
- prior GST registration/cancellation records;
- tax payments already made; and
- ASMT-14/ASMT-15/DRC-07 records.
27. Internal controls
| Control | Purpose |
|---|---|
| Registration-threshold tracker | Identify when registration becomes necessary. |
| Section 24 checklist | Identify compulsory-registration categories. |
| Section 23 review | Confirm exemptions from registration where applicable. |
| Turnover reconciliation | Compare books, invoices and bank receipts. |
| E-way bill reconciliation | Identify unexplained movement of goods. |
| Cancellation review | Check tax liabilities after registration cancellation. |
| Notice tracker | Ensure ASMT-14 response and hearing deadlines are not missed. |
28. Legislative development
| Period | Development |
|---|---|
| 2017 | Section 63 introduced the best-judgment assessment mechanism for specified unregistered persons. |
| 2017 | Rule 100 established ASMT-14 and ASMT-15 for the Section 63 procedure. |
| 2019 | CBIC FAQ material explained the five-year time limit for Section 62/63 assessments. |
| 2023 | Finance Act 2023 aligned the statutory assessment limitation framework with the five-year annual-return-based wording. |
| 2024 | Finance (No. 2) Act 2024 inserted Section 74A into the opening cross-reference of Section 63, effective 1 November 2024. |
| Current | Section 63 remains the best-judgment assessment mechanism for the specified unregistered/cancelled-registration cases. |
29. Common mistakes
- Assuming no GSTIN means no GST liability.
- Calculating registration liability using turnover alone without checking Section 23 and Section 24.
- Ignoring an ASMT-14 notice.
- Giving a verbal explanation without documentary evidence.
- Failing to calculate aggregate turnover correctly.
- Not separating taxable and exempt supplies.
- Ignoring place-of-supply and tax-type issues.
- Assuming all bank receipts are taxable turnover.
- Confusing Section 63 with Section 62.
- Using outdated articles that do not reflect the current five-year limitation framework.
30. Professional workflow
Record service date and hearing/reply date.
Analyse Sections 22, 23, 24 and applicable notifications.
Books, invoices, bank, e-way bills and contracts.
Taxable, exempt, non-taxable and other categories.
Apply correct rate and place-of-supply rules.
Identify any tax already paid.
Point-wise factual and legal explanation.
Present evidence and address officer questions.
Check tax, interest, penalty and reasoning.
Track demand and payment/recovery position.
31. Section 63 GST FAQs
What is Section 63 of the CGST Act?
Section 63 allows the proper officer to assess the tax liability of a person who failed to obtain GST registration despite being liable to do so, or whose registration was cancelled under Section 29(2) while tax remained payable.
What is best judgment assessment under Section 63?
It is an assessment made by the proper officer using relevant information to determine the tax liability for the relevant periods when the normal registered-taxpayer return mechanism is unavailable.
What is ASMT-14?
ASMT-14 is the notice for proposed assessment under Section 63. It explains the grounds for the proposed best-judgment assessment.
What is ASMT-15?
ASMT-15 is the final best-judgment assessment order under Section 63.
How much time is given to reply to ASMT-14?
Rule 100 provides fifteen days for the person to furnish a reply before the assessment order is passed.
Is hearing mandatory under Section 63?
Yes. Section 63 expressly provides that the assessment order cannot be passed without giving the person an opportunity of being heard.
How long does the department have to pass a Section 63 order?
The current Section 63 provides five years from the date specified under Section 44 for furnishing the annual return for the relevant financial year.
Can Section 63 apply after GST registration is cancelled?
Yes, where the registration was cancelled under Section 29(2) but the person was liable to pay tax.
Does Section 63 apply merely because a person has no GST registration?
No. The person must have been liable to obtain registration, or fall within the specified cancelled-registration situation.
Can the officer use e-way bills and other records?
Relevant information available or gathered by the officer can be considered in making the best-judgment assessment.
Can an unregistered person claim ITC against the Section 63 demand?
ITC eligibility is a separate question governed by Sections 16 and 17 and the applicable Rules. It cannot simply be assumed as an offset against the Section 63 tax assessment.
What is the difference between Section 62 and Section 63?
Section 62 deals with a registered person who fails to furnish the required return after Section 46 notice. Section 63 deals with a person liable to register but not registered, or a specified cancelled-registration person who remained liable to tax.
What is the difference between Section 63 and Section 64?
Section 63 is the best-judgment assessment for specified unregistered/cancelled-registration cases. Section 64 is a separate summary-assessment mechanism for specified circumstances.
33. Key takeaways
- Section 63 deals with best-judgment assessment of specified unregistered persons.
- It applies where a person was liable to register but failed to obtain registration.
- It can also apply where registration was cancelled under Section 29(2) but tax remained payable.
- The officer must give an opportunity of being heard before passing the assessment order.
- ASMT-14 is the notice and ASMT-15 is the assessment order.
- Rule 100 provides a 15-day reply period for ASMT-14.
- The current Section 63 assessment time limit is five years linked to the Section 44 annual-return date.
- Registration liability must be analysed using Sections 22, 23, 24 and applicable notifications.
- Output-tax assessment and ITC eligibility are separate legal questions.
- Section 63 should not be confused with Section 62 or Section 64.
Reference policy: This article intentionally does not embed external reference hyperlinks. Legal authorities are identified by Act section, Rule, notification/circular and Government material.
Disclaimer: This guide is written in simple language for practical educational use. Actual Section 63 liability depends on the facts, registration provisions, tax period, applicable notifications, evidence and the assessment order.