Section 63 of CGST Act: GST Assessment for Unregistered Persons Explained [2025 Guide]

Section 63 of the CGST Act, 2017 empowers GST authorities to assess and recover tax dues from individuals or entities who are liable to pay tax but remain unregistered or whose registrations have been cancelled while still conducting taxable activities.

Applicable since July 1, 2017, it enables a best judgment assessment based on available data, with a mandatory opportunity of being heard. A key amendment effective November 1, 2024, expands its scope to include cases under Section 74A, strengthening enforcement against tax evasion where records are missing. Section 63 plays a critical role in ensuring compliance and protecting government revenue.

Section 63: Assessment of Unregistered Persons Under GST

Understanding the Legal Backbone of GST Enforcement with AUBSP

India’s Goods and Services Tax (GST) regime relies heavily on self-compliance. However, to prevent revenue leakage, Section 63 of the CGST Act, 2017 plays a pivotal role.

This provision empowers tax authorities to assess individuals or entities who are liable to pay tax but either failed to register or continued operations even after cancellation of their GST registration. At AUBSP, we break it down for you—clearly, concisely, and compliantly.

What Is Section 63 of the CGST Act, 2017?

Section 63 allows tax authorities to assess the tax liability of individuals who are unregistered or whose registration has been cancelled, yet are liable to pay GST. It enables a best judgment assessment, meaning the tax officer uses available information and reasonable estimates to determine dues.

This provision is crucial in deterring businesses from evading tax through non-registration or irregular cancellation and acts as a safety net to preserve government revenue.

AUBSP Insight: Whether you’re running a small online store or offering services across states, registration under GST is not optional if you meet the criteria. Don’t risk a best judgment assessment—stay registered and compliant!

Date of Applicability

Section 63 came into effect on July 1, 2017, aligning with the implementation of GST in India. This was notified through Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated June 28, 2017.

This means any non-compliance from the very inception of GST can be evaluated under this section, and authorities have the legal backing to initiate assessment proceedings against unregistered defaulters.

Pro Tip by AUBSP: Even historical lapses post-GST rollout can come under scrutiny. Regularly audit your compliance status to avoid retrospective assessments.

Key Scenarios Where Section 63 Applies

Section 63 is triggered in two major scenarios. Here’s what you need to know:

✅ 1. Failure to Obtain GST Registration

This covers businesses or individuals who cross the turnover threshold or engage in inter-state or e-commerce supplies, but fail to register for GST. Despite the liability, they operate without being part of the tax system—this is where Section 63 steps in.

AUBSP Suggests: Use our GST Registration Eligibility Checker to instantly assess if you’re required to register!

❌ 2. Registration Cancelled but Liability Continues

If your GST registration has been cancelled under Section 29(2)—due to inactivity, fraud, or violations—but you still continue taxable activities, you’re liable. Section 63 empowers the officer to assess and recover dues for such periods.

Quick Tip: A cancelled registration doesn’t mean tax immunity. If you’re still making taxable supplies, you must re-register.

Powers of the Proper Officer under Section 63

The section starts with the clause:

“Notwithstanding anything to the contrary contained in section 73 or section 74 or section 74A…”

This gives officers overriding powers, even where other assessment sections apply.

Best Judgment Assessment

Without proper records, the officer estimates liability based on market trends, intelligence, and available data. This is not arbitrary but is grounded in fair judgment principles.

Assessment for Relevant Tax Periods

Only those periods during which the person was liable but failed to pay tax are covered. This ensures the scope remains targeted and justified.

AUBSP Reminder: Maintain all records—even if you’re unsure of your liability. Absence of records invites estimations that may not favor you.

Timeline for Issuing Assessment Order

The officer must issue the assessment order within five years from the due date for filing the annual return under Section 44 for the relevant financial year.

Breakdown with Example

• Financial Year: 2023–24
• Annual Return Due: December 31, 2024
• Assessment Deadline: December 31, 2029

This long window ensures the department has sufficient time to trace unregistered taxpayers and complete proceedings.

AUBSP Note: Just because a few years pass, don’t assume you’re off the hook. The law provides a long runway for action.

Crucial Proviso: Right to Be Heard

In line with principles of natural justice, the law mandates:

“No such assessment order shall be passed without giving the person an opportunity of being heard.”

This includes:

• Show-cause notices
• Reply submissions
• Personal hearings, if requested

The goal is not merely to impose tax but to allow the person to clarify or correct their stance.

Always Respond: Silence can lead to unfavourable assessments. Let AUBSP help you draft strong replies to GST notices.

Recent Amendment: Effective November 1, 2024

The Finance (No. 2) Act, 2024, via Notification No. 17/2024-Central Tax, added “Section 74A” to the list of overridden sections under Section 63.

This change, effective from November 1, 2024, reflects the law’s intent to plug complex evasion tactics where records are missing or falsified.

Impact of Including Section 74A

Now, even where detailed quantification of tax under Section 74A isn’t possible due to absence of records, the officer can still conduct a best judgment assessment under Section 63.

AUBSP Explains: This amendment is a serious message—if you’re trying to dodge the system by not maintaining records, the law can still estimate and recover your dues.

Conclusion: Why Section 63 Matters for You

Section 63 is more than just a tax recovery mechanism—it’s a compliance enforcement tool with far-reaching implications. With its wide scope, extended timelines, and recent empowerment via Section 74A, it sends a clear signal to non-compliant taxpayers.

At AUBSP, we strongly urge businesses and professionals to:

• Regularly review their registration eligibility
• Respond to all notices promptly
• Keep accurate records
• Avoid risky tax behaviour

💡 Stay ahead, stay compliant—subscribe to AUBSP.com for weekly GST insights and expert compliance tools.

Need Help with GST Compliance or Assessment Notice?

Whether it’s a registration lapse, a show-cause notice, or a Section 63 assessment, our GST experts can guide you with personalized advice.

📧 Contact AUBSP Today or use our free GST Legal Support Tool to get started!

FAQs on Section 63 of CGST Act 2017

What is Section 63 of the CGST Act, 2017?
Section 63 allows GST authorities to assess the tax liability of persons who are liable to pay tax but are either unregistered or whose registration has been cancelled.

When did Section 63 become effective?
Section 63 became effective from July 1, 2017, as notified through Notification No. 9/2017-Central Tax.

Who can be assessed under Section 63?
Any person who is liable to register under GST but has failed to do so, or whose registration has been cancelled but continues to be liable for tax, can be assessed under this section.

What is best judgment assessment under GST?
Best judgment assessment is when the proper officer estimates a taxpayer’s liability based on available facts, market data, or intelligence in the absence of complete records.

Is an opportunity of being heard mandatory before passing the order?
Yes, the law mandates that the taxpayer must be given an opportunity of being heard before any assessment order is passed under Section 63.

What is the time limit for issuing an assessment order under Section 63?
The assessment order must be issued within five years from the due date of filing the annual return for the relevant financial year under Section 44.

What is the due date of filing the annual return under Section 44?
The due date for filing the annual return is generally December 31 of the following financial year.

What happens if someone continues business after GST registration is cancelled?
If the person continues making taxable supplies after cancellation, they are still liable to pay GST and can be assessed under Section 63.

Does Section 63 override other sections?
Yes, it overrides Sections 73, 74, and, after the 2024 amendment, Section 74A.

What is Section 74A and how is it related to Section 63?
Section 74A deals with evasion of tax where exact liability cannot be quantified due to missing records. Section 63 now overrides 74A, allowing assessments even in such cases.

Can an unregistered person voluntarily register to avoid action under Section 63?
Yes, voluntarily registering and complying with GST requirements can help avoid penalties and best judgment assessments.

Can penalties be imposed under Section 63?
Yes, penalties may be levied in addition to the tax amount determined under best judgment assessment if non-compliance is established.

How does GST officer gather information for assessment under Section 63?
Officers use available data such as third-party information, market analysis, bank statements, and other credible sources to assess liability.

What if a person disagrees with the assessment under Section 63?
They can appeal the assessment order through the appellate mechanism provided under the GST law, starting with the appellate authority.

Is Section 63 assessment applicable to composition taxpayers as well?
Yes, if a composition taxpayer fails to register or continues business after cancellation, Section 63 can still be invoked.

Can show-cause notices be issued under Section 63?
Yes, issuing a show-cause notice is typically the first step in ensuring the person is given an opportunity to respond.

What kind of businesses are most at risk under Section 63?
Businesses operating without registration despite being liable—like e-commerce sellers, inter-state suppliers, or those above the turnover threshold—are most at risk.

Can assessment under Section 63 be initiated for previous years?
Yes, as long as it is within the five-year time limit from the annual return due date for that financial year.

Does Section 63 apply if there is partial non-registration (e.g., multiple branches)?
Yes, if any branch or location that is liable to be registered is not registered, it may fall under Section 63.

Are there any safeguards against misuse of power under Section 63?
The mandatory provision of giving an opportunity of being heard and the right to appeal act as safeguards against arbitrary assessments.

Does Section 63 apply to casual taxable persons and non-resident taxpayers?
Yes, if such persons are liable but fail to register or continue operations after cancellation, they can be assessed under Section 63.

Is recovery initiated immediately after assessment under Section 63?
If the tax is not paid within the specified time after assessment, recovery proceedings can be initiated under GST law.

What should a taxpayer do upon receiving a notice under Section 63?
They should promptly respond, submit evidence of compliance or reasons for non-registration, and request a personal hearing if needed.

How can AUBSP help with Section 63 compliance?
AUBSP provides expert guidance, compliance tools, and legal support to help taxpayers navigate GST assessments and avoid best judgment proceedings.