Facts of the Case

The petitioner company failed to file its GSTR-3B return by the due date of 24.09.2024. The Commercial Tax Officer issued a notice under Section 46 of the KGST Act calling for the return within 15 days, and on the petitioner's continued default, passed a best-judgment assessment order dated 14.10.2024 under Section 62 of the KGST Act. Pursuant to this, a Form GST DRC-13 notice was issued to the petitioner's banker, freezing Rs.12,56,062/- in the petitioner's account. The petitioner approached the Karnataka High Court seeking to quash the assessment order and release of the frozen funds.

Issues Involved

  1. Whether the benefit of the amended Section 62(2) of the KGST/CGST Act, 2017 (introduced by the Finance Act, 2023, effective 01.10.2023) — extending the period for filing valid returns to nullify a best-judgment assessment — can be extended to defaults and assessment orders that predate 01.10.2023.
  2. Whether the bank attachment consequent to the best-judgment assessment ought to be lifted if the belated return is accepted.

Petitioner's Arguments

  • Relying on a coordinate Bench decision applying Helmet House v. Deputy State Tax Officer-1, Madurai (Madras High Court), it was submitted that the amendment to Section 62, being beneficial, should extend the time available to file valid returns to 120 days (an initial 60 days, plus a further 60 days on payment of Rs.100/- per day of delay) even for pre-amendment tax periods.
  • The petitioner was suffering financial stringency and had filed returns belatedly, but nevertheless within the extended 120-day window, and was willing to pay the outstanding late fee.

Respondent's Arguments

  • The learned AGA submitted that the amendment to Section 62, effective 01.10.2023, is prospective in nature and cannot apply to defaults for tax periods before that date, and that the applicable pre-amendment regime allowed only 30 days for filing valid returns.

Court Order / Findings

  • Following the reasoning of a coordinate Bench (relying on Helmet House), the Court held that the amendment being beneficial, its advantage should be extended to the assessee, treating the 120-day window (60 days without late fee, and a further 60 days on payment of Rs.100/- per day) as available even here.
  • Since the petitioner's belated returns for the relevant months fell within the 120-day period from the respective best-judgment assessment orders, the writ petition was allowed.
  • The respondents were directed to accept the returns filed, and to proceed to assess only the applicable late fee.
  • The provisional bank attachment order was deemed withdrawn and the respondents directed to refund the amount to the petitioner in accordance with law.

Important Clarification

  • The extended 120-day window under the amended Section 62(2) of the CGST/KGST Act, 2017 — which nullifies a best-judgment assessment once valid returns are filed within that period, subject to payment of an additional late fee for the second 60-day tranche — is treated as a beneficial, curative provision and has been applied even to assessment orders and defaults that arose before the 01.10.2023 amendment came into force.
  • Once returns are accepted under this extended window, the best-judgment assessment order stands withdrawn and consequential bank attachments must be released.

Sections Involved

  • Section 62, CGST/KGST Act, 2017 — best-judgment assessment of non-filers, and its amended sub-section (2) providing the extended window for deemed withdrawal.
  • Section 46, CGST Act, 2017 — notice to registered persons who fail to furnish returns.
  • Finance Act, 2023 — amended Section 62(2) with effect from 01.10.2023.

Decision – In Favour of

In favour of the Assessee. The best-judgment assessment orders were treated as withdrawn upon acceptance of belated returns, and the bank attachment was set aside.

Case Details

High Court of Karnataka at Bengaluru; WP No.34974 of 2025 (T-RES); Neutral Citation: 2025:KHC:51900; Coram: Hon'ble Mr. Justice S.R. Krishna Kumar; Date of Order: 09.12.2025.

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.