Facts of the Case

The petitioner, Hercules Automobiles International (P) Ltd., represented by its Managing Director, had multiple best-judgment assessment orders passed against it under Section 62 of the CGST/SGST Act, 2017 for non-filing of monthly returns (GSTR-1 and GSTR-3B) for tax periods spanning March 2019 to December 2020. Consequent to these assessment orders (Ext.P2 series), the jurisdictional officers also issued a series of demand notices in Form GST DRC-07 (Ext.P3 series). The petitioner approached the High Court of Kerala challenging both the validity of Section 62's thirty-day time limit for filing returns to have a best-judgment assessment deemed withdrawn, and the individual assessment orders and DRC-07 notices, while also seeking to restrain coercive recovery of the assessed tax and interest.

Issues Involved

  1. Whether the thirty-day period prescribed under Section 62 of the CGST/SGST Act for the assessee to file returns and have a best-judgment assessment deemed withdrawn is arbitrary and ultra vires.
  2. Whether Section 62 ought to be read down to require an opportunity of personal hearing before a best-judgment assessment order is passed.
  3. Whether the assessment orders (Ext.P2 series) and consequential DRC-07 demand notices (Ext.P3 series) were liable to be quashed.
  4. Whether coercive recovery of the assessed tax and interest should be restrained pending adjudication.

Petitioner's Arguments

  • The petitioner argued that the thirty-day period under Section 62 for filing returns to secure automatic withdrawal of a best-judgment assessment is arbitrary and violates the basic scheme of the GST Acts.
  • It was contended that Section 62 should be read down, in line with the opportunity of personal hearing envisaged under Section 72 of the Finance Act, 1994, so that an assessee is heard before a best-judgment assessment order is passed.
  • The petitioner sought quashing of the entire series of monthly assessment orders and DRC-07 notices issued against it for the period March 2019 to December 2020.
  • The petitioner also sought a mandamus restraining the respondents from taking coercive steps to recover the tax and interest assessed under the impugned orders.

Respondent's Arguments

  • The learned Government Pleader submitted that the writ petition had become infructuous since the entire tax liability arising from the impugned Ext.P2 series assessment orders had already been settled by the petitioner.
  • It was submitted that nothing further remained to be recovered from the petitioner in respect of those assessment orders.

Court Order/Findings

  • Accepting the respondents' submission that the entire tax liability had been settled, the Court found that no live controversy survived for adjudication on the impugned assessment orders.
  • The Court closed the writ petition as infructuous, extending to the petitioner the benefit of Notification No. 6/2023-Central Tax dated 31.03.2023, without examining the constitutional challenge to Section 62 on merits.
  • The order records that it was passed after considering the respondents' stand that the entire tax liability pursuant to the Ext.P2 series of assessment orders had been settled by the petitioner.

Important Clarification

  • Where an amnesty-type notification (here, Notification No. 6/2023-Central Tax) enables settlement of tax liability arising from best-judgment assessments under Section 62, courts will treat a pending challenge to the underlying assessment orders as infructuous once the liability is discharged, rather than deciding the constitutional question.
  • The constitutional validity of the thirty-day time limit under Section 62 for deemed withdrawal of a best-judgment assessment remains open and was not decided in this case — assessees seeking to raise that challenge must do so in a matter where the assessment has not been settled.
  • Taxpayers facing Section 62 best-judgment assessments for extended non-filing should be aware that settlement under an amnesty notification effectively forecloses further challenge to the assessment on jurisdictional or procedural grounds.

Sections Involved

  • Section 62, CGST/SGST Act, 2017 — provides for best-judgment assessment where a registered person fails to file returns, subject to withdrawal if a valid return is filed within a prescribed period.
  • Section 72, Finance Act, 1994 — cited by analogy for the requirement of an opportunity of personal hearing before a best-judgment-type assessment.
  • Notification No. 6/2023-Central Tax dated 31.03.2023 — an amnesty measure enabling settlement/withdrawal of liability arising from Section 62 assessment orders on compliance with prescribed conditions.

Decision – In Favour of

The matter was closed as infructuous rather than decided on merits. This is properly recorded as disposed of with directions extending the benefit of the amnesty notification to the petitioner — a practical, though not formally adjudicated, outcome in favour of the Assessee, since no further recovery survives and the constitutional challenge was left open.

Related Case Laws

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

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) No. 36195 of 2022
  • CNR: Not available on record
  • Coram: Hon'ble Mr. Justice Dinesh Kumar Singh
  • Decision Date: 29 November 2023
  • Disposal Nature: Closed as infructuous — tax liability settled under Notification No.6/2023-Central Tax

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