Best Judgment Assessment Orders Stand Deemed Withdrawn Upon Subsequent Filing of GSTR-3B with Late Fees

Best Judgment Assessment Orders Stand Deemed Withdrawn Upon Subsequent Filing of GSTR-3B with Late Fees

Issue

Whether assessment orders passed under Section 62 for non-filing of returns are deemed withdrawn when the assessee subsequently files the pending GSTR-3B returns along with the applicable late fees.

Facts

• Default: The petitioner, a registered GST taxpayer, failed to file GSTR-3B returns for the period of November 2022, December 2022, and January 2023.

• Revenue Action: Due to the non-filing, the Proper Officer passed best judgment assessment orders under Section 62 and initiated recovery proceedings, including bank account attachments.

• Compliance: Subsequent to the assessment orders, the petitioner filed the GSTR-3B returns for all three months and paid the requisite late fees.

• Legal Question: The petitioner sought a declaration that the filing of returns effectively nullified the best judgment orders and the consequential recovery actions.

Decision

• Statutory Withdrawal: The court held that under the GST statutory scheme, best judgment orders for non-filers are deemed withdrawn once the taxpayer furnishes the valid returns within the prescribed timeframe (or extended timeframe upon payment of late fees).

• Validation of Filing: Since the petitioner successfully paid the late fees and furnished the returns for the disputed months, the conditions for deemed withdrawal were met.

• Quashing of Recovery: Consequently, the best judgment assessment orders were declared withdrawn, and the writ petitions were allowed.

• Release of Assets: The court ordered that any bank attachments or recovery actions initiated under the now-withdrawn orders be set aside.

• Result: The decision was rendered in favor of the assessee.

Key Takeaways

• Self-Correction Mechanism: Section 62 provides a “deemed withdrawal” mechanism that rewards subsequent compliance, even if the returns are filed after a best judgment order has been passed.

• Late Fees as Enablers: The payment of late fees is the essential procedural requirement that allows a non-filer to resolve their status and trigger the withdrawal of ex-parte assessment orders.

• Recovery Cessation: Once a return is filed and the assessment is deemed withdrawn, the Revenue loses the legal basis to maintain bank attachments or other recovery measures related to that specific assessment.