The Court held that the GST regime mandates a specific assessment mechanism for unregistered persons and that Sections 73 or 74 cannot be directly invoked bypassing Section 63.

The Madras High Court recently quashed a show cause notice issued under Section 74 of the CGST Act against an unregistered educational institution, holding that the Department was required to first invoke Section 63 of the Act when dealing with a person who has not obtained registration [The Managing Director, M/s. Queen Mira International School v. Union of India and Others].

The petitioner, an educational institution claiming exemption under Serial No. 66 of Notification No. 12/2017-Central Tax (Rate), was served with a show cause notice under Section 74 alleging non-registration and non-payment of tax on services provided. The institution challenged the notice before the High Court contending that it was exempt from tax and that the Department had no foundational basis for invoking the extended period provision.

Justice C. Saravanan, while acknowledging that the question of whether the petitioner was genuinely entitled to the exemption was a matter for the authorities to adjudicate, drew a critical distinction between the GST regime and earlier indirect tax statutes. The Court observed that unlike the Central Excise Act, 1944, or the Finance Act, 1994, the GST law provides a specific machinery under Section 63 for assessment of unregistered persons. Section 63 empowers the proper officer to assess the tax liability of an unregistered taxable person to the best of his judgment, and the Court noted that this provision operates notwithstanding anything contained in Section 73 or Section 74. The Court also drew support from a recent decision in MRF Limited v. Additional Director DGGI, Delhi Zonal Unit (2026) 155 GSTR 91.

Accordingly, the High Court quashed the impugned show cause notice and granted liberty to the Department to issue a fresh notice in Form ASMT-14 under Section 63, leaving it open for the petitioner to raise all available contentions, including its claim of exemption. The decision underscores a significant procedural safeguard in the GST architecture — the Department cannot leapfrog the statutory mechanism designed for unregistered persons and directly invoke the more stringent provisions of Sections 73 or 74.

2026-juristway.com-2822-HC(Madras)-GST  |  High Court of Madras  |  WP(MD) No. 27719 of 2026  |  24.09.2026