The absence of a GSTIN does not end the assessment enquiry
A person who was legally required to register cannot defeat a GST tax assessment merely by remaining unregistered. Section 63 of the CGST Act permits the proper officer to determine liability to the best of judgment for relevant tax periods. It also covers a person whose registration was cancelled under section 29(2) but who remained liable to pay tax. The officer must provide an opportunity of hearing and issue the order within the provision’s five-year limit.
The first response to FORM GST ASMT-14 should address whether the person was liable to register, from what date, and on which transactions tax is actually payable. A bank-credit total or third-party turnover estimate is a starting point for investigation, not a substitute for transaction analysis. This guide addresses the Central framework checked on 25 October 2026; verify the corresponding State or Union territory provisions and the authority issuing the notice. See current section 63 and rule 100(2) in ICAI’s statutory compilation.
Scope: identify the statutory gateway before reconstructing turnover
Prepare a dated registration analysis using the actual supply profile, territorial facts, applicable registration thresholds, compulsory-registration provisions and exclusions. This article does not assume that every unregistered business is in default or that one turnover threshold applies to every supplier. If liability to register is disputed, support the position with the applicable notification and underlying records rather than merely stating that no GSTIN existed.
For a cancelled registration, obtain the actual section 29(2) order and effective date. Separate supplies before and after that date, the person who made them, and tax already discharged. A cancelled status on a portal does not establish that every later receipt is taxable. Equally, cancellation does not itself extinguish a tax liability that otherwise exists.
ASMT-14, the reply and the hearing
Rule 100(2) requires ASMT-14 to state the grounds for the proposed best-judgment assessment, with an electronic summary in DRC-01. It allows fifteen days for a reply, followed by an ASMT-15 order and an electronic DRC-07 summary. Read the substantive notice and annexures alongside the summary; the summary cannot explain an omitted turnover computation. The CBIC rules compilation contains the rule 100 procedure. The current compilation linked above also reflects section 63’s reference to section 74A, effective from 1 November 2024; older Act compilations may omit that reference.
Preserve service evidence and the actual date stated for response. File a reasoned reply within time, retain the acknowledgement and request an opportunity to be heard on disputed facts and law. Rule 142(4) refers to DRC-06 for the stated representations and replies where the notice summary is uploaded under rule 142(1). Section 63 is separately addressed by rule 100(2); a DRC-01 summary under that rule alone should not be treated as proof that DRC-06 is invariably the required or available reply route. Check the actual notice and applicable portal procedure, and retain the issuing officer’s confirmed submission channel. Where an unregistered person encounters a filing-access problem, promptly document it and seek the issuing officer’s designated submission route; a technical difficulty should not become an unexplained non-response.
Build an evidence-led taxable-supply bridge
Start with source records and reconcile sales, receipts, credit notes, advances, loans, capital introductions, transfers between bank accounts and tax already paid. Classify each exclusion with evidence. Then determine taxable value, the relevant rate, place of supply and tax head. Do not use an assumed 18% rate simply because it is common: the examples below use 18% as a stipulated model input, not as a rate decision for an identified product.
Where the officer extrapolates from a sample, explain why a period, branch, supply mix or season makes the extrapolation inappropriate and provide a better-supported reconstruction. A reply is stronger when it offers a reproducible alternative computation, document references and period totals. Keep objections to registration liability separate from objections to the quantum; pleading an alternative calculation need not silently concede the gateway issue.
Five years runs from the annual-return anchor
Section 63 measures the order limit from the date specified under section 44 for the annual return of the financial year to which the unpaid tax relates. It does not simply grant five years from discovery, cancellation, notice or bank statement receipt. Prepare a financial-year schedule, identify the legally applicable annual-return due date including a valid extension where relevant, and assess any other applicable statutory exclusion or extension. The example uses an expressly assumed anchor and does not declare an actual filing deadline for a particular taxpayer.
Avoid importing other assessment remedies
Section 62’s deemed withdrawal when a registered non-filer supplies a valid return is a different mechanism. Section 64’s summary-assessment withdrawal application is also distinct. Do not promise that filing a return after an ASMT-15 order automatically withdraws a section 63 assessment. Read the order, service record and applicable appeal or rectification framework separately. Interest, penalty, input tax credit and amounts already paid require independent legal and factual checks; section 63 is not a blanket permission to add every receipt and deny every adjustment.
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Tax-exclusive reconstruction
Assume registration liability for the full model period is established, taxable value is ₹10,00,000 and the correctly determined combined GST rate is 18%. Tax is ₹1,80,000. If all supplies are stipulated intra-State at 9% plus 9%, the components are ₹90,000 CGST and ₹90,000 SGST.
Illustrative example 2: Tax-inclusive evidence
Assume evidence establishes that ₹1,18,000 is a tax-inclusive price and 18% is the applicable combined rate. Value = ₹1,18,000 ÷ 1.18 = ₹1,00,000; tax = ₹18,000. Treating ₹1,18,000 as tax-exclusive would compute ₹21,240, an overstatement of ₹3,240 for these facts.
Illustrative example 3: Remove substantiated non-supply credits
A bank-credit reconstruction begins at ₹14,00,000. Evidence establishes a ₹2,00,000 loan receipt and ₹1,00,000 transfer between the person’s own accounts, leaving ₹11,00,000. Assuming that entire remainder is tax-exclusive taxable value at a verified 18%, tax is ₹1,98,000. Unsupported exclusions cannot simply be asserted.
Illustrative example 4: Deduplicate the same invoice
A ₹5,00,000 tax-exclusive invoice is recorded in sales and its ₹5,00,000 receipt is also included separately in the officer’s working. The duplicate base of ₹10,00,000 implies ₹1,80,000 at an assumed 18%; the single supply implies ₹90,000. Invoice-to-bank matching removes the ₹90,000 overstatement.
Illustrative example 5: Conditional limitation calendar
Assume the legally applicable section 44 annual-return date for a model financial year is 31 December 2024 and no other extension or exclusion applies. Five calendar years gives 31 December 2029 as the section 63 order-limit anchor. A notice dated 1 July 2029 does not create a fresh five-year clock.
Illustrative example 6: Reconcile a verified tax payment
The assessed model tax is ₹2,70,000 and a ₹90,000 payment is verified as applicable to the same period and liability. The unreconciled tax balance is ₹1,80,000. This arithmetic does not settle separate interest or penalty, and the payment must not be used against an unrelated demand.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Authenticate the proceeding | Officer, jurisdiction, ASMT-14, service date and complete annexures. |
| 2 | Test registration liability | Supply profile, dates, thresholds, compulsory-registration rules and exclusions. |
| 3 | Read any cancellation order | Section 29(2) order, effective date and affected periods. |
| 4 | Secure the response route | DRC-01 reference, actual notice/portal reply route and evidence of any technical issue. |
| 5 | Obtain the proposed working | Turnover sources, extrapolations, rates and period allocation. |
| 6 | Reconcile receipts and supplies | Invoice-level bridge, loans, own transfers and supported exclusions. |
| 7 | Compute the correct tax | Value, rate, place of supply, tax head and rounding working. |
| 8 | Check the order limitation | Financial-year section 44 anchor and applicable extensions or exclusions. |
| 9 | Submit and attend hearing | Reasoned reply, indexed documents, acknowledgement and hearing record. |
| 10 | Reconcile the outcome | ASMT-15, DRC-07, payments and separately diarised challenge options. |
Sixteen practitioner FAQs
1. Does every unregistered supplier fall under section 63?
No. The person must have failed to register despite liability, or fall within the specified cancelled-registration limb.
2. Can registration liability itself be contested?
Yes. Supply type, territorial facts, exclusions and the operative registration rules should be addressed with evidence.
3. Does cancellation erase unpaid GST?
No. The section expressly covers the specified cancelled person who remained liable to pay tax.
4. Which notice is expected?
ASMT-14 containing the grounds, accompanied by an electronic DRC-01 summary under rule 100(2).
5. How much reply time does the rule allow?
Fifteen days. Preserve service evidence and work to the actual notice timetable, raising any defect promptly.
6. Where does DRC-06 fit?
Rule 142(4) links DRC-06 to the stated cases and summaries under rule 142(1). Rule 100(2) separately governs section 63. Verify the actual notice/portal route instead of inferring mandatory DRC-06 merely from DRC-01; document access difficulties and the officer-confirmed submission channel.
7. Is a hearing optional for the officer?
Section 63 prohibits an assessment order without an opportunity of hearing.
8. Is every bank credit taxable turnover?
No. Its character must be established; loans and own-account transfers require proof and reconciliation.
9. Can a cash-business estimate be challenged?
Yes. Explain the factual defect and provide a better-supported period and supply reconstruction.
10. Must an 18% rate always be used?
No. The rate must be established for the actual supply. It is only an assumption in the worked models here.
11. Is a gross receipt automatically tax-inclusive?
No. The contract, invoice and evidence must support that treatment before using a tax-inclusive calculation.
12. When does the five-year period start?
From the section 44 annual-return date for the relevant financial year, subject to applicable legal modifications.
13. Does an ASMT-14 notice restart limitation?
No. The section specifies the annual-return anchor for issuance of the assessment order.
14. Does a later return automatically cancel ASMT-15?
Section 63 does not contain the section 62 deemed-withdrawal mechanism. Review the available remedy for the actual order.
15. Does this procedure automatically decide input credit?
No. Eligibility, registration-linked conditions, evidence and timing require their own analysis.
16. What should be checked on receiving the order?
Compare ASMT-15 and DRC-07 with the reply, hearing record, periods, tax heads and verified payments, and promptly diarise the applicable challenge route.
Conclusion
Section 63 permits best-judgment assessment of persons liable to register who did not, and certain cancelled registrants still liable to tax. Reconcile the registration trigger, tax periods and evidence, use the ASMT-14 response opportunity, and check the five-year order limit.