Best Judgment Order Deemed Withdrawn Upon Filing of Returns Within 30 Days

Issue

The central issue is: What is the legal status of a best judgment assessment order issued under Section 62 of the CGST Act when the taxpayer subsequently files all pending valid returns, along with the due tax and late fees, within the 30-day statutory period?

Brief Facts

The GST department passed a best judgment assessment order against the assessee for failure to file returns. Based on this order, the department raised a demand and proceeded with recovery by adjusting a certain amount against the Input Tax Credit (ITC) available to the assessee.

The assessee challenged this, pointing out that within 30 days of being served the assessment order, they had filed all the pending returns and paid the necessary tax and late fees. They argued that this action, as per the GST law, automatically nullifies the best judgment order.

Decision

The court ruled decisively in favor of the assessee.

It held that the assessee had fully complied with the conditions laid out in Section 62(2) of the CGST Act. This provision clearly states that if a taxpayer, against whom a best judgment order has been passed, furnishes a valid return within 30 days of the service of the said order, the assessment order shall be “deemed to have been withdrawn.”

Since the assessee fulfilled this condition, the best judgment order ceased to have any legal effect. Consequently, any recovery action based on this withdrawn order was invalid. The court, therefore, set aside the assessment order and directed the department to return the ITC that had been adjusted.

Key Takeaways

A Second Chance for Taxpayers: Section 62(2) provides a crucial and straightforward remedy for taxpayers who have been assessed on a best judgment basis for non-filing of returns.
Withdrawal is Automatic: The withdrawal of the assessment order is not at the discretion of the tax officer. It is a legal consequence that happens automatically (“deemed to be withdrawn”) the moment the taxpayer complies with the 30-day requirement.
Invalidity of Recovery Actions: Once a best judgment order is deemed withdrawn, all consequential actions based on it, such as demand notices or adjustment of ITC, become null and void. Any amount recovered must be refunded or restored to the taxpayer.

HIGH COURT OF ANDHRA PRADESH

JPR Projects

State of Andhra Pradesh

R. Raghunandan Rao and T.C.D. Sekhar, JJ.

W.P. No.18990 of 2025

AUGUST 20, 2025

Jyothi Ratna Anumolu for the Petitioner.

ORDER

R. Raghunandan Rao J. – The petitioner is a registered person under the GST Regime. The 2^nd respondent-Assistant Commissioner passed a best judgment assessment order, dated 07.02.2024, under Section 62 of the GST Act. This order is said to have been passed on the ground that the petitioner had not filed its returns for the relevant period and a best judgment assessment order was being carried out.

2. The petitioner has now approached this Court, by way of the present Writ Petition, contending that the 2^nd respondent is seeking to recover the taxes, demanded under the assessment order, dated 07.02.2024, though the petitioner had filed returns for the relevant period and had paid the tax and late payment fee, as required under Section 62 of GST Act. The petitioner contends that upon filing of returns and payment of tax and late fee, the best judgment assessment order, is deemed, under Section 62(2) of the GST Act, to have been withdrawn.

3. Ms. Jyothi Ratna Anumolu, learned counsel appearing for the petitioner would contend that the petitioner, having complied with the requirements of Section 62(2) cannot be called upon to pay any tax, interest or penalty arising out of the assessment order, dated 07.02.2024, as the said order stands withdrawn, by virtue of operation of law, as set out under Section 62(2) of the GST Act.

4. The learned Government Pleader has placed written instructions issued by the 2^nd respondent-Assistant Commissioner. In the written instructions it is not disputed that the petitioner had filed the necessary returns and paid the tax and late fee payable under the returns. However, the 2^nd respondent-Assistant Commissioner took the view that the filing of the returns and payment of tax and late fee had not been intimated to the 2^nd respondentAssistant Commissioner and consequently the tax demand raised under the order, dated 07.02.2024, would remain.

5. Section 62 of the GST Act, reads as follows:

Section 62. Assessment of non-filers of returns.-

(1) Notwithstanding anything to the contrary contained in section 73 or section 74 [or section 74A], where a registered person fails to furnish the return under section 39 or section 45, even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his judgment taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.

(2) Where the registered person furnishes a valid return within [sixty days] of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.

²[P rovided that where the registered person fails to furnish a valid return within sixty days of the service of the assessment order under subsection (1), he may furnish the same within a further period of sixty days on payment of an additional late fee of one hundred rupees for each day of delay beyond sixty days of the service of the said assessment order and in case he furnishes valid return within such extended period, the said assessment order shall be deemed to have been withdrawn, but the liability to pay interest under sub-section (1) of section 50 or to pay late fee under section 47 shall continue.]

6. A perusal of Section 62(2) of the GST Act would show that any order passed under Section 62(1), would be deemed to have been withdrawn upon the registered person furnishing the valid returns within 30 days of the service of assessment order and payment of tax and late fee.

7. In the present case, these conditions having been complied with the order, dated 07.02.2024 is deemed to have been withdrawn and consequently no tax can be collected on the basis of such an order. There is no stipulation that the deeming clause would come into effect only after intimation to the proper officer.

8. It is submitted by the learned counsel for the petitioner that an amount of Rs.12,92,346/- has been adjusted against the input tax credit available to the petitioner towards recovery of the tax raised under the order, dated 07.02.2024. In view of this order, the said tax credit would have to be returned to the petitioner by reversing the debit entry made against the petitioner for the aforesaid sum. The said exercise shall be completed within a period of four weeks from the date of receipt of this order.

9. Accordingly, the Writ Petition is disposed of setting aside the order of assessment dated 07.02.2024 and leaving it open to the 2^nd respondent to take up steps for assessment, if the 2^nd respondent is of the opinion that there is any such requirement. There shall be no order as to costs.

As a sequel, miscellaneous petitions pending, if any, shall stand closed.