Section 63 – Assessment of Unregistered Persons Under GST: Process, Notice, Order and Compliance Guide

Not Registered Under GST But Taxable Activity Continues? Understand Section 63 Before Receiving Assessment Proceedings

GST registration is mandatory for persons who cross the prescribed threshold limits or fall under specific compulsory registration categories under GST law.

However, in certain situations, a person who is liable to obtain GST registration may fail to register and continue carrying out taxable activities.

Such situations can result in GST assessment proceedings under Section 63 of the CGST Act, 2017.

Section 63 deals with assessment of unregistered persons who are liable to obtain registration but have failed to do so or persons whose taxable activities create GST liability despite not having a valid registration.

Section 63 may become relevant where a person is liable to be registered but has failed to obtain registration, including circumstances where taxable activity continues despite cancellation and the person remains liable under the applicable GST provisions.

The purpose of this provision is to ensure that taxable persons cannot avoid GST liability merely by not obtaining registration.

The GST department can determine tax liability based on available information and issue an assessment order when a person fails to comply with registration requirements.

Many businesses are unaware about:

• When GST registration becomes mandatory.
• What happens if a taxable person does not obtain registration.
• How GST department assesses unregistered persons.
• Whether a cancelled GST registration removes past tax liability.
• What documents are required during assessment proceedings.

This detailed guide explains:

• Meaning of Section 63 GST.
• Applicability of assessment of unregistered persons.
• When Section 63 proceedings can begin.
• GST ASMT-16 notice.
• GST ASMT-17 assessment order.
• Best judgment assessment process.
• Tax liability determination.
• Difference between Section 62 and Section 63.
• Taxpayer rights.
• Practical examples.
• Common mistakes.
• Compliance checklist.

What Is Section 63 of GST Act?

Section 63 of the CGST Act deals with assessment of persons who are liable to obtain GST registration but have failed to obtain such registration.

Under this provision, the proper officer may proceed to assess the tax liability of such persons.

The assessment is conducted according to the available facts and information gathered by the GST authorities.

Unlike regular taxpayers who file GST returns and determine their own tax liability, an unregistered person assessed under Section 63 may have liability determined by the department.

The provision ensures that businesses cannot avoid GST obligations by:

• Not applying for registration.
• Continuing taxable activities without registration.
• Failing to comply with GST requirements.

When Does Section 63 GST Become Applicable?

Section 63 may become relevant in situations where:

• A person is liable to obtain GST registration but fails to do so.
• A person carries out taxable supplies without registration.
• A person continues taxable activity despite cancellation of registration and remains liable under applicable GST provisions.

The applicability depends on the facts of each case, including:

• Nature of business activity.
• Turnover.
• Taxability of supplies.
• Registration requirements.
• Applicable GST provisions.

Understanding GST Registration Requirement

GST registration is generally required when a person becomes liable under GST law.

The requirement may depend on factors such as:

• Aggregate turnover.
• Nature of supply.
• State or Union Territory.
• Type of business activity.
• Compulsory registration provisions.

A person who crosses applicable limits or falls under mandatory registration categories cannot avoid GST compliance by remaining unregistered.

Examples Where Section 63 May Apply

Example 1: Business Crosses Registration Threshold

ABC Traders operates a taxable goods business.

During the financial year, its turnover exceeds the applicable GST registration threshold.

However, the business does not apply for GST registration and continues making taxable supplies.

The GST department identifies the activity and initiates assessment proceedings under Section 63.

The officer determines:

• Taxable turnover.
• GST liability.
• Applicable interest and other consequences.

Example 2: Taxable Activity Continues After Cancellation of Registration

XYZ Enterprises had GST registration cancelled under applicable provisions.

After cancellation, the business continues taxable activities that create GST liability.

Since the person may still remain liable under applicable GST provisions, Section 63 may become relevant depending on the circumstances.

The department may examine:

• Date of cancellation.
• Taxable supplies made after cancellation.
• Registration liability.
• Tax payable.

Example 3: Person Never Obtained GST Registration

A service provider provides taxable services and crosses the applicable registration limit.

However, the person never applies for GST registration.

The GST department receives information about taxable activity and initiates proceedings to determine liability.

Difference Between Section 63 and Normal GST Assessment

Difference Between Section 62 and Section 63 GST

Both sections involve assessment where normal return-based compliance is not available, but they apply in different situations.

Section 62 applies to registered taxpayers who fail to furnish returns, whereas Section 63 applies to persons who should have obtained registration but failed to do so.

GST Notice Under Section 63

Before passing an assessment order, the GST officer issues a notice to the concerned person.

The notice provides an opportunity to the person to:

• Explain their position.
• Provide supporting documents.
• Clarify registration status.
• Submit relevant information.

The taxpayer should carefully review the notice and respond within the prescribed timeline.

GST ASMT-16 Notice

The notice for assessment of unregistered persons is issued through:

FORM GST ASMT-16

The notice generally includes:

• Reason for assessment.
• Period under examination.
• Proposed tax liability.
• Information relied upon by the department.

The person should examine the notice carefully and prepare a detailed response.

Detailed Process of Assessment Under Section 63 GST

Section 63 assessment applies when a person who is liable to obtain GST registration fails to obtain registration and continues taxable activities.

Since the person is not registered under GST, regular return-based assessment is not possible. Therefore, the GST officer determines tax liability based on available information and material gathered during proceedings.

The assessment process generally involves the following stages:

Step 1: Identification of Unregistered Taxable Person

The process begins when GST authorities identify that a person may be liable for registration but has not obtained GST registration.

Information may be received through:

• Departmental verification.
• Third-party information.
• Business intelligence reports.
• E-way bill data.
• Banking information.
• Other available records.

The officer examines whether the person was required to obtain GST registration under applicable provisions.

Step 2: Issue of Notice Under Section 63

Before passing an assessment order, the proper officer issues a notice to the concerned person.

The notice provides an opportunity to explain:

• Whether GST registration was required.
• Nature of business activity.
• Turnover details.
• Taxability of supplies.
• Reasons for non-registration.

The person may submit:

• Business records.
• Sales details.
• Purchase records.
• Registration-related explanations.
• Other supporting documents.

Step 3: Examination of Available Information

Since the person has not filed GST returns, the officer relies on relevant information available or gathered.

The officer may examine:

• Sales invoices.
• Purchase records.
• Bank transactions.
• E-way bill details.
• Online marketplace records.
• Financial statements.
• Customer details.
• Other business information.

The assessment should be based on relevant facts and material collected during proceedings.

Step 4: Determination of Tax Liability

After considering available information and the response submitted by the person, the GST officer determines:

• Taxable turnover.
• Applicable GST rate.
• GST liability.
• Interest liability.
• Other applicable dues.

The officer determines liability based on the facts of the case and available evidence.

Step 5: Passing of Assessment Order

After completing the assessment, the order is issued through:

FORM GST ASMT-17

The order communicates:

• Basis of assessment.
• Tax liability determined.
• Applicable interest.
• Other amounts payable.

The person should carefully review the order and understand the basis on which liability has been calculated.

GST ASMT-17 Assessment Order Under Section 63

FORM GST ASMT-17 is the assessment order issued after completion of proceedings against an unregistered person.

The order may include:

• Details of taxable activity.
• Period of liability.
• Turnover considered.
• GST calculation.
• Amount payable.

The taxpayer should evaluate whether:

• Registration was actually required.
• Turnover calculation is correct.
• Tax rate applied is appropriate.
• Supporting facts were properly considered.

Documents Required During Section 63 Proceedings

A person facing Section 63 assessment should maintain and submit relevant documents to establish the correct tax position.

Important documents may include:

1. Business Registration and Identity Documents

Examples:

• PAN details.
• Business ownership documents.
• Address proof.
• Agreements related to business activity.

2. Sales Records

Important records include:

• Sales invoices.
• Customer details.
• Order records.
• Payment receipts.

These documents help establish actual turnover.

3. Purchase Records

Businesses should maintain:

• Purchase invoices.
• Expense records.
• Supplier details.

These records help verify business operations.

4. Financial Records

The department may examine:

• Bank statements.
• Books of accounts.
• Ledger records.
• Profit and loss statements.

5. Digital Transaction Records

Depending on the nature of business, relevant records may include:

• Online marketplace statements.
• Payment gateway records.
• Digital sales reports.

How GST Liability Is Determined Under Section 63

The GST officer considers various factors while determining liability.

Important areas include:

1. Verification of Turnover

The officer may analyse:

• Total sales.
• Business receipts.
• Invoice records.
• Bank transactions.

Example:

A person receives business payments of ₹80 lakh during a financial year but has no GST registration despite being liable.

The department may examine whether these receipts represent taxable supplies.

2. Verification of Taxability

Not every receipt is automatically taxable.

The officer may examine:

• Nature of goods/services.
• Exemptions.
• Non-taxable transactions.
• Place of supply.

3. GST Rate Determination

The applicable GST rate depends on:

• Product classification.
• Service category.
• HSN/SAC classification.
• Relevant GST notifications.

Incorrect application of GST rate can affect final liability.

Interest and Other Consequences Under Section 63

Where tax liability is determined under Section 63, additional consequences may arise.

These may include:

• Tax payment obligation.
• Interest liability.
• Penalty provisions.
• Registration-related consequences.

The exact impact depends on facts of the case and applicable GST provisions.

Practical Example: Assessment of Unregistered Trader

ABC Traders sells taxable goods through a local business network.

The business crosses the GST registration threshold but does not obtain registration.

The GST department receives information regarding the activity.

During verification, authorities examine:

• Bank statements.
• Sales records.
• Purchase invoices.

The officer determines that GST registration was required and calculates:

• Taxable turnover.
• GST liability.
• Applicable interest.

Assessment proceedings are completed under Section 63.

Practical Example: Online Seller Without GST Registration

XYZ Enterprises sells products through an online platform.

The business does not obtain GST registration despite crossing applicable requirements.

The department receives marketplace transaction data and examines:

• Sales value.
• Customer transactions.
• Payment records.

Based on available information, assessment proceedings may be initiated under Section 63.

Section 63 Assessment and Registration Liability

A common misunderstanding is that a person can avoid GST liability by not obtaining registration.

However, GST liability depends on:

• Nature of supply.
• Turnover.
• Applicable registration provisions.

Failure to obtain registration does not remove tax liability if registration was legally required.

Difference Between Section 63 and Section 67 Investigation

Section 63 focuses on determining liability, while Section 67 provides investigation powers where specific circumstances require inspection, search, or seizure.

Taxpayer Response During Section 63 Proceedings

A person receiving Section 63 notice should:

• Review the allegations.
• Verify registration requirement.
• Collect business records.
• Prepare turnover reconciliation.
• Submit a proper explanation.

A timely and detailed response can help avoid incorrect assessment.

Common Mistakes Businesses Make Under Section 63 GST

Section 63 proceedings generally arise because a person fails to evaluate GST registration requirements or does not maintain proper records of taxable activities.

Many businesses face difficulties during assessment because of avoidable compliance gaps.

1. Assuming GST Registration Is Not Required

One of the most common mistakes is assuming that GST registration is not required without properly checking applicable provisions.

Registration liability depends on various factors, including:

• Aggregate turnover.
• Nature of goods or services.
• State or Union Territory.
• Compulsory registration provisions.
• Type of business activity.

Businesses should regularly review whether their GST registration requirements have changed.

2. Continuing Taxable Activity Without Registration

A person cannot avoid GST liability merely by not obtaining registration.

If a person is legally required to register but continues taxable activities without registration, GST authorities may initiate assessment proceedings.

Businesses should evaluate registration requirements before starting or expanding operations.

3. Not Maintaining Proper Business Records

Unregistered businesses often fail to maintain proper documentation.

Important records include:

• Sales invoices.
• Purchase invoices.
• Bank statements.
• Expense records.
• Customer details.
• Supplier details.
• Accounting records.

Proper records help establish the actual nature and value of transactions during assessment.

4. Ignoring GST Department Notices

Ignoring communication from GST authorities can lead to assessment based on information available with the department.

Businesses should regularly monitor:

• GST portal communications.
• Registered email.
• Department notices.

A timely response provides an opportunity to explain facts before the assessment order is passed.

5. Not Providing Supporting Evidence

During Section 63 proceedings, the person should provide relevant evidence to support their position.

Examples:

If the department considers certain receipts as taxable turnover, the taxpayer may provide:

• Agreements.
• Invoices.
• Payment details.
• Nature of transactions.
• Exemption-related documents.

6. Not Reviewing Tax Calculation

Before accepting an assessment order, businesses should verify:

• Turnover considered.
• GST rate applied.
• Tax calculation.
• Interest computation.

Errors in calculation should be identified and appropriately addressed.

Rights of Person During Section 63 Assessment Proceedings

Even though Section 63 deals with unregistered persons, the person undergoing assessment has important procedural rights.

1. Right to Receive Notice

Before passing the assessment order, the person should receive a notice providing an opportunity to explain:

• Registration position.
• Business activity.
• Turnover details.
• Tax liability.

2. Right to Submit Documents and Explanation

The person can submit:

• Financial records.
• Sales details.
• Purchase documents.
• Transaction explanations.
• Other supporting evidence.

The submitted information should clearly explain the actual business position.

3. Right to Challenge Incorrect Assessment

If the person believes that:

• Registration was not required.
• Turnover calculation is incorrect.
• Tax rate applied is wrong.
• Facts were misunderstood.

appropriate legal remedies may be available under GST law.

4. Right to Professional Assistance

GST assessment proceedings involve technical issues relating to:

• Registration provisions.
• Taxability.
• Turnover calculation.
• GST rates.

Professional assistance can help present facts properly before authorities.

How Businesses Can Avoid Section 63 GST Proceedings

A proactive compliance approach helps businesses avoid unexpected GST assessment.

1. Evaluate GST Registration Requirements Regularly

Businesses should review:

• Annual turnover.
• Business expansion.
• New states of operation.
• Changes in goods/services.

This helps identify when GST registration becomes mandatory.

2. Maintain Proper Accounting Records

Even businesses below GST registration limits should maintain:

• Sales records.
• Purchase records.
• Expense details.
• Banking records.

Proper records make future compliance easier.

3. Conduct Periodic GST Compliance Reviews

Businesses should periodically review:

• Registration requirements.
• Taxability of supplies.
• Turnover calculations.
• GST obligations.

4. Respond Quickly to Department Communication

Any GST communication should be reviewed carefully.

Early response can help:

• Correct misunderstandings.
• Submit supporting documents.
• Avoid adverse assessment.

Section 63 GST Compliance Checklist

Frequently Asked Questions (FAQs)

1. What is Section 63 of GST Act?

Section 63 of the CGST Act deals with assessment of persons who are liable to obtain GST registration but have failed to obtain such registration.

The GST officer may determine tax liability based on available information and material gathered during proceedings.

2. When does Section 63 GST apply?

Section 63 may become relevant where a person is liable to be registered but has failed to obtain registration, including circumstances where taxable activity continues despite cancellation and the person remains liable under applicable GST provisions.

3. What is the difference between Section 62 and Section 63 GST?

Section 62 applies to registered persons who fail to furnish GST returns.

Section 63 applies to persons who are liable to obtain GST registration but have failed to obtain registration.

4. Can GST liability arise if a person is not registered?

Yes.

Failure to obtain GST registration does not remove tax liability if the person was legally required to register under GST law.

5. What form is used for Section 63 notice?

The notice for assessment of unregistered persons is issued through:

FORM GST ASMT-16

6. What form is used for Section 63 assessment order?

The assessment order is issued through:

FORM GST ASMT-17

7. Can an unregistered person challenge Section 63 assessment?

Yes.

If a person disagrees with the assessment, available legal remedies under GST law may be explored.

8. What information can GST officers use for Section 63 assessment?

GST officers may use relevant material available or gathered, including:

• Business records.
• Bank details.
• Sales information.
• E-way bill data.
• Other transaction-related information.

9. Does cancellation of GST registration remove previous tax liability?

No.

Cancellation of registration does not automatically remove tax liability for periods where GST was payable under applicable provisions.

10. How can businesses avoid Section 63 proceedings?

Businesses should:

• Monitor GST registration requirements.
• Maintain proper records.
• Review turnover regularly.
• Seek professional guidance when required.

Need Help With Section 63 GST Assessment or Registration Compliance?

GST assessment proceedings for unregistered persons require careful evaluation of registration requirements, taxable activity, turnover calculation, and supporting records.

At FilingSuvidha, our GST experts help businesses understand GST obligations, handle assessment proceedings, review notices, and maintain proper compliance.

Our GST support services include:

✔ Section 63 GST Assessment Assistance
✔ GST Registration Requirement Review
✔ GST Notice Analysis
✔ GST Compliance Consultation
✔ Tax Liability Review
✔ GST Documentation Support
✔ Professional GST Advisory Services

Facing GST assessment due to non-registration or unsure whether GST registration is applicable for your business? Connect with FilingSuvidha experts today and get professional guidance to manage your GST compliance effectively.

Contact FilingSuvidha

📞 Phone: +91-9625995981
📧 Email: info@filingsuvidha.com
🌐 Website: https://filingsuvidha.com/