Facts of the Case

The petitioner, M/s. Radox Engineering Private Limited, Jaipur, challenged before the Rajasthan High Court (Jaipur Bench) an order dated 13.06.2023 by which it was assessed under Section 62 of the CGST Act, 2017 (best judgment assessment for non-filers of returns). For March 2023, the petitioner had filed GSTR-1 within time, declaring outward supplies of Rs.2,16,01,166 and an IGST liability of Rs.35,17,065, but failed to file GSTR-3B by the due date of 20.04.2023 citing financial crisis and non-availability of funds. A notice under Section 46 of the Act was issued on 27.04.2023 requiring the return within 15 days; the petitioner neither responded nor filed the return. Consequently, the respondents passed a best judgment assessment under Section 62 along with attachment, creating a liability of Rs.51,98,302. The petitioner challenged this assessment directly before the High Court under Article 226, alleging lack of hearing under Section 75(4) and relying on the Telangana High Court's decision in Golden Mesh Industries. The matter was heard by a Division Bench and decided on 21.12.2023.

Issues Involved

  1. Whether the best judgment assessment passed under Section 62 of the CGST Act, 2017 for non-filing of GSTR-3B, despite prior GSTR-1 filing, was legally sustainable.
  2. Whether the petitioner was denied the opportunity of hearing mandated under Section 75(4) of the CGST Act.
  3. Whether the petitioner should be relegated to the statutory appellate remedy under Section 107 instead of invoking writ jurisdiction.

Petitioner's Arguments

  • The impugned best judgment assessment was wholly unjustified as the petitioner was not afforded any opportunity of hearing as contemplated under Section 75(4) of the Act.
  • The demand raised was frivolous and hyped, and was created without following the guidelines prescribed by the Department.
  • Reliance was placed on Golden Mesh Industries v. Assistant Commissioner of State Tax (Telangana High Court, decided 31.03.2021) in support of setting aside the assessment.

Respondent's Arguments

  • The order impugned was appealable under Section 107 of the CGST Act, and no case was made out for bypassing the alternative statutory remedy.
  • The procedure prescribed under Section 62 for assessment of non-filers had been meticulously followed: a notice under Section 46 was duly issued, and only upon continued non-compliance was the best judgment assessment passed.
  • Reliance was placed on Kachwala Gems v. Joint Commissioner of Income Tax (AIR 2007 SC 487) in support of a best judgment approach.

Court Order/Findings

  • The procedure under Section 62 had been meticulously followed — notice under Section 46 was issued and the petitioner chose neither to respond nor file the return — and therefore no violation of Section 75(4) could be countenanced.
  • The petitioner's own GSTR-1 disclosed an IGST liability of Rs.35,17,065, far higher than its average monthly tax for the corresponding period of the previous year, and the assessment being higher than the petitioner considered fair was, by itself, no ground for interference.
  • The writ petition was dismissed, with the Court finding no case for interference in extraordinary jurisdiction.
  • Liberty was expressly reserved: if the petitioner files a statutory appeal, none of the observations made in the order would come in the way of such appeal.

Important Clarification

Where the procedure prescribed under Section 62 of the CGST Act for best judgment assessment of a return non-filer — including prior notice under Section 46 — has been duly followed, a writ court will not interfere merely because the assessed liability appears high to the assessee; the assessee must pursue the statutory appellate remedy under Section 107, and dismissal of the writ petition does not preclude such an appeal.

Sections Involved

  • Section 62 of the Central Goods and Services Tax Act, 2017 — best judgment assessment of non-filers.
  • Section 46 of the CGST Act, 2017 — notice to return defaulters.
  • Section 75(4) of the CGST Act, 2017 — opportunity of hearing.
  • Section 107 of the CGST Act, 2017 — appeal to Appellate Authority.
  • Article 226 of the Constitution of India, 1950 — writ jurisdiction invoked.

Decision – In Favour of

Department. The writ petition was dismissed and the best judgment assessment upheld, though the petitioner retains the right to pursue a statutory appeal under Section 107.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature for Rajasthan, Bench at Jaipur
  • Case No.: D.B. Civil Writ Petition No. 20483/2023
  • CNR: Not available
  • Coram: Hon'ble Mr. Justice Arun Bhansali and Hon'ble Mr. Justice Narendra Singh Dhaddha
  • Decision Date: 21.12.2023
  • Disposal Nature: Dismissed

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