The Karnataka High Court has directed the Joint Commissioner of Commercial Taxes to decide a taxpayer’s pending application seeking withdrawal of a summary assessment order under Section 64(2) of the Central Goods and Services Tax Act, 2017 and the Karnataka Goods and Services Tax Act, 2017 within four weeks.
The bench of Justice B.M. Shyam Prasad observed that although Section 64 provides an immediate remedy against an allegedly erroneous summary assessment, that remedy can be meaningful only if the taxpayer’s application is decided within a reasonable period and after granting an adequate opportunity of hearing.
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The Assistant Commissioner of Commercial Taxes had passed a summary assessment order against the company on March 7, 2026 under Section 64 of the CGST and KGST Acts.
The officer reportedly assumed jurisdiction on the ground that the company had entered into transactions with three suppliers who, following an inspection, were found not to be operating from their registered places of business.
Along with the assessment order and its summary in Forms GST ASMT-16 and GST DRC-07, the authorities initiated recovery proceedings by issuing Form GST DRC-13 to the company’s banker, ICICI Bank Limited.
The company approached the High Court seeking the quashing of the assessment order, the demand summary and the recovery notice. It also sought a direction to the bank to release the lien placed on its account and permit it to operate the account.
The company had filed an application on April 6, 2026 under Section 64(2), requesting the competent authority to withdraw the summary assessment order. However, the application remained pending without any decision.
The company contended that the assessment order was erroneous and had been passed without granting a proper opportunity to the taxpayer.
The company argued that the assessing officer had assumed jurisdiction without recording the essential statutory satisfaction that there were sufficient grounds to believe that any delay in assessment would adversely affect the interests of the Revenue.
The company sought restoration of the proceedings for reconsideration. Alternatively, it requested the Court to direct the Joint Commissioner to decide the pending application under Section 64(2), particularly since no action had been taken on it for several months.
The department defended the assessment order, submitting that it was a reasoned decision based on the finding that the petitioner had transacted with suppliers who were not operating from their registered business premises.
The department also disputed the applicability of an earlier decision relied upon by the company, stating that the earlier matter involved different facts and that the application under Section 64(2) had been restored for reconsideration because of the peculiar circumstances of that case.
However, the State did not dispute that the taxpayer’s request for an early decision on its pending Section 64(2) application was fair and reasonable.
The High Court examined the scope of Section 64, which permits the proper officer to undertake a summary assessment in certain special cases.
Under Section 64(1), a proper officer may assess a person’s tax liability on the basis of evidence showing such liability, but only with the prior permission of the Additional Commissioner or Joint Commissioner.
The provision is intended to protect the interests of Revenue and can be invoked where the officer has sufficient grounds to believe that any delay in passing the assessment order may adversely affect the Revenue’s interests.
The Court emphasised that the power is subject to the existence of evidence and the recording of sufficient reasons supporting the belief that delay would harm the Revenue.
Under Section 64(2), a taxable person can apply for withdrawal of a summary assessment order within 30 days from the date of its receipt.
The Additional Commissioner or Joint Commissioner may also examine such an order on their own motion. If the authority finds that the summary assessment order is erroneous, it may withdraw the order and direct that the regular adjudication procedure under Sections 73 or 74 be followed.
The High Court explained that Section 64(2) gives an affected taxpayer an immediate statutory remedy. However, keeping such an application pending indefinitely would undermine the purpose of the remedy.
“The affected taxable person thus has been given immediate remedy but for this remedy to be meaningful, the application under Section 64(2) of the KGST Act/CGST Act must be decided within a reasonable period of time,” the Court observed.
the High Court held that while considering a withdrawal application, the authority must grant the taxpayer an opportunity to respond to both foundational aspects of a Section 64 assessment.
The opportunity must allow the taxpayer to contest: the reasons for alleging the tax liability; and the grounds for believing that delay would adversely affect the interests of Revenue.
In the present case, the company’s application had remained pending since April 6, 2026 without any outcome. The Court therefore accepted the company’s alternative request for a time-bound decision.
The High Court declined to interfere directly with the March 7 summary assessment order at this stage, observing that the merits of the company’s grievance were yet to be examined by the competent authority under Section 64(2).
Allowing the petition in part, the Court directed the Joint Commissioner of Commercial Taxes (Administration) to decide the company’s application within four weeks from the date of its first appearance following the High Court’s order.
The company was directed to appear before the Joint Commissioner on September 30, 2026 without waiting for any further notice. It was also granted liberty to produce documents supporting its application.
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