Section 64 Of The CGST Act, 2017: Jurisdictional Limits On Summary Assessment And Judicial Interpretation

Introduction

Section 64 of the CGST Act, 2017 is one of the most extraordinary assessment provisions under the GST framework. It empowers tax authorities to conduct summary assessment proceedings in limited and urgent circumstances where immediate intervention is necessary to safeguard the interests of revenue.

However, the nature of this power requires that it be exercised with extreme caution. It is not intended to serve as a substitute for regular adjudication under Sections 73 or 74 of the CGST Act, nor can it be invoked merely because the tax department suspects tax evasion or seeks quicker determination of liability.

Statutory Framework of Section 64¹

Section 64(1) of the CGST Act permits the proper officer, with prior permission of the Additional Commissioner or Joint Commissioner, to summarily assess the tax liability of a person where:

• evidence showing tax liability comes to the notice of the officer;
• prior approval is obtained from the competent higher authority; and
• the officer has sufficient grounds to believe that any delay in assessment may adversely affect the interest of the revenue.

Section 64(2) further provides a safeguard by enabling the taxable person to apply within thirty days for withdrawal of such order. If the Additional Commissioner or Joint Commissioner considers the summary assessment order to be erroneous, the same may be withdrawn and proceedings may thereafter continue under Section 73, Section 74 or Section 74A.

The structure of the provision itself indicates that Section 64 is not designed as a final adjudicatory mechanism. It is merely an emergency power intended to address exceptional situations where delay may frustrate recovery.

Summary Assessment as an Extraordinary Measure

The legislative intent behind Section 64 becomes evident when compared with other provisions under Chapters XII and XV of the CGST Act.

The Act provides substantial timelines for regular determination of tax liability:

In contrast, Section 64 does not prescribe an independent limitation period. However, and Audit Manual² issued by the Department of Karnataka specifically states that proceedings under this provision cannot be initiated after expiry of 5 years from the due date of filing of the annual returns.

Therefore, given that the law already grants tax authorities up to five years to undertake detailed adjudication under the regular process, summary assessment is justifiable where waiting for that regular process, even momentarily, would result in irreparable prejudice to revenue.

Mere Allegations of Tax Evasion Are Insufficient

A recurring issue in summary assessment proceedings is the tendency to invoke Section 64 on the basis of suspected suppression, alleged cash transactions, or assumptions regarding tax evasion.

Such grounds, by themselves, are insufficient. The statutory test is not whether tax liability is suspected. The relevant aspect for consideration is whether delay in assessment would adversely affect the interest of revenue.

Allegations of suppression or evasion are matters to be examined through the regular adjudication process under Section 73, 74 and 74A. Section 64 cannot be used to bypass these safeguards merely because the department perceives the matter to involve serious allegations.

Their own Audit Manual³ also lays down guidelines on how Section 64 is ought to be proceeded with. The Officer must have a reason to believe that the taxpayer would fail to discharge the tax liability. It cannot be initiated against registered taxpayers filing returns regularly.

Requirement of Cogent Reasons and Recorded Satisfaction

The exercise of extraordinary statutory power requires clear application of mind and recorded satisfaction.

In Competition Commission of India v. Steel Authority of India Ltd.⁴, while interpreting similar emergency powers under the Competition Act, the Supreme Court held that such powers must be exercised sparingly and only under compelling and exceptional circumstances.

The Court emphasized that the authority must record clear satisfaction demonstrating the necessity for immediate action.

Similarly, the Bombay High Court in High Ground Enterprises Ltd. v. Union of India⁵, while interpreting Section 67 of the CGST Act, observed that merely stating that action is necessary, without recording cogent reasons, amounts to mechanical exercise of power.

This principle directly governs summary assessment proceedings. The tax department must demonstrate specific facts showing why delay would prejudice revenue. General assertions or formulaic recitals of statutory wording are insufficient.

Judicial Trends under Tax Laws

In a recent decision in the case of S.A. Aromatics Pvt. Ltd. vs. Union of India⁶ a summary assessment under Section 64 was intended. Though the issue adjudicated in the said decision was different, the Hon’ble Allahabad High Court observed that it may only be resorted to in limited circumstances of some information coming to the knowledge of the Proper Officer, purely in the interest of revenue, only if such Officer is of the belief that any delay in implementing such procedure would affect the interests of revenue.

 Section 64 of the CGST Act is in pari materia to Section 38(5) of the Karnataka Value Added Tax Act, 2003⁷(‘KVAT Act’). The KVAT Act was replaced by the GST Law and as per the erstwhile provision, immediate assessment could be undertaken only where the authority had ‘reason to believe’ that the dealer would fail to pay tax and immediate action was necessary.

The Karnataka High Court’s interpretation of this provision offers valuable guidance. In TTK Healthcare Ltd. v. Assistant Commissioner of Commercial Taxes⁸, the Court held that where the assessee was an established dealer and there was no material suggesting risk of evasion or disappearance from the reach of law, invocation of protective assessment was unsustainable. The Court specifically observed that such provisions are intended for “special situations.”

Given the similarity in statutory purpose, the same restrictive interpretation must apply to Section 64 of the CGST Act.

Mechanical Invocation Defeats Legislative Intent

An important factor in determining the validity of summary assessment is the conduct of the assessee. The invocation of Section 64 must be based on objective indicators such as:

• likelihood of absconding;
• attempts to close all their assets;
• persistent non-compliance;
• refusal to participate in proceedings; or
• circumstances suggesting immediate necessity to recover tax.

Conversely, where an assessee has:

• regularly filed returns;
• discharged tax liabilities;
• cooperated during investigation; and
• furnished all relevant documents,

it becomes difficult to justify invocation of Section 64.

The credibility and compliance history of the assessee must therefore play a central role in assessing whether summary proceedings are warranted. The provision cannot be triggered solely because the department alleges significant liability or disapproves of the assessee’s business model.

 Another concern frequently observed is the hurried invocation of Section 64 after prolonged investigation. Prolonged inaction strongly indicates that the circumstances never warranted extraordinary intervention.

Conclusion

Section 64 of the CGST Act is an exceptional provision intended to address extraordinary situations where delay in assessment would seriously prejudice revenue interests. Its invocation requires strict satisfaction of jurisdictional preconditions, supported by specific material and cogent reasons.

Judicial interpretation has consistently emphasized that summary assessment is a special remedy meant only for exceptional situations. The provision must therefore be construed strictly, and any invocation without satisfying the statutory preconditions would be liable to be set aside.

Footnotes

^{1 64. (1) The proper officer may, on any evidence showing a tax liability of a person coming to his notice, with the previous permission of Additional Commissioner or Joint Commissioner, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue:}

^{Provided that where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be assessed and liable to pay tax and any other amount due under this section.}

^{(2) On an application made by the taxable person within thirty days from the date of receipt of order passed under sub-section (1) or on his own motion, if the Additional Commissioner or Joint Commissioner considers that such order is erroneous, he may withdraw such order and follow the procedure laid down in section 73 or section 74 or section 74A.}

^{2 Chapter 16, page 158, Karnataka GST Audit Manual, 2021 -  https://gst.karnataka.gov.in/latestupdates/Ewebappfrom181PubGstProNewManualGSTAuditManual.pdf}

^{3 Chapter 16, page 157, Karnataka GST Audit Manual, 2021 -  https://gst.karnataka.gov.in/latestupdates/Ewebappfrom181PubGstProNewManualGSTAuditManual.pdf}

^{4 Competition Commission of India v. Steel Authority of India Ltd and Anr. reported at (2010) 10 SCC 744}

^{5 High Ground Enterprises Ltd. V. Union Of India reported at 2020 (33) G.S.T.L. 169 (Bom.)}

^{6 (2026) 40 Centax 28 (All.) [20-01-2026]}

^{7 S. 38 – Assessment of tax.}

^{8 WP No. 18567/2006, Karnataka High Court, decided on 22.12.2006}

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