An Assessment Order Passed Against a Non-Filer Stands Deemed Withdrawn Upon Filing a Valid Return
Issue
Whether a best-judgment assessment order passed under Section 62(1) against a non-filer of GST returns, along with its recovery and garnishee proceedings, stands automatically withdrawn by virtue of the deeming clause in Section 62(2) if the taxpayer subsequently files a valid return along with the requisite tax, interest, and late fees.
Facts
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The petitioner failed to file their statutory GST return for the tax period of April 2024.
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Due to this non-filing, the Revenue authorities passed a best-judgment assessment order under Section 62 on June 20, 2024, and issued a summary of the demand in Form GST DRC-07 on June 21, 2024.
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On December 2, 2024, the petitioner filed a valid return for the said period, paying all applicable tax, interest, and late fees.
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Despite the return being filed, the Revenue initiated tax recovery actions and garnishee bank attachments based on the initial best-judgment assessment order.
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The petitioner challenged the recovery actions, arguing that the filing of the valid return triggered the statutory deeming clause under Section 62(2), rendering the assessment order automatically withdrawn.
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The Respondent authorities, upon verifying their records, confirmed to the Court that the valid return had been filed and no dues remained pending on account of that return.
Decision
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The High Court allowed the writ petition, ruling entirely in favor of the petitioner.
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The Court held that by virtue of the explicit deeming provision contained in Section 62(2) of the Act, the best-judgment assessment order dated June 20, 2024, and its summary demand dated June 21, 2024, stood automatically “deemed withdrawn” the moment the valid return was filed with tax, interest, and late fees.
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It was ruled that because the underlying assessment order ceased to exist in the eyes of the law, any recovery proceedings founded upon that order could no longer be legally pursued.
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Consequently, the Court set aside and quashed all coercive recovery actions, including the garnishee bank attachments initiated against the petitioner.
Key Takeaways
Automatic Statutory Drop of Best-Judgment Orders: Section 62(2) contains a powerful, self-executing deeming clause. Once a non-filer files a valid return (along with interest and late fees under Sections 47 and 50) within the permissible time frame, the best-judgment order dies a natural legal death without requiring a formal cancellation order from the officer.
Recovery Actions Cannot Survive Deemed Withdrawal: Because the original assessment order stands completely withdrawn, any consequential recovery actions—such as bank attachments or garnishee notices under Section 79—lose their legal foundation and become entirely void.
Compliance Cures Default: The statutory scheme deliberately provides a remedial window to non-filers, prioritizing regular tax compliance and actual revenue collection over the continuation of ad-hoc, estimated best-judgment assessments.