Sanchayita Lahkar

The High Court of Gauhati Single Bench of Justice Sanjay Kumar Medhi set aside an order issued under the GST framework on grounds of procedural lapses. The Court held that the order, which was based solely on a tax determination attachment accompanying a summary show cause notice in FORM GST DRC-01, lacked legal validity in the absence of a properly authenticated and substantive show cause notice. The Court further found that the issuance of the summary in FORM GST DRC-01 did not satisfy the statutory mandate under Section 73(1) of both the Central and State GST Acts.

The Court directed that the impugned order dated 29.04.2024 be quashed and granted liberty to the authorities to initiate fresh proceedings, if deemed necessary, in accordance with law. Additionally, it instructed that the time period between the issuance of the summary show cause notice and the service of the present judgment be excluded from the limitation period computation under Section 73(10) of the Act. The judgement reaffirmed the necessity of issuing a formal, properly authenticated show cause notice and affording an opportunity for hearing before passing an adverse order under the GST regime.

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The petitioner, carrying on business under the trade name M/s Alom Enterprise in Bongaigaon, Assam, challenged a tax order issued under the Assam Goods and Services Tax (AGST) Act. The business was registered under GST laws, and the dispute revolved around a summary of show cause notice issued for the tax period from April 2018 to March 2019.

On 05.12.2023, a summary in FORM GST DRC-01 was issued through the GST portal, accompanied by an attachment purporting to determine tax liability. The petitioner contended that no separate show cause notice was issued and that the attached document did not mention any directive requiring the petitioner to show cause. The petitioner also argued that the document lacked the signature or proper authentication of the Proper Officer, contrary to statutory requirements.

Subsequently, an order dated 29.04.2024 was issued in FORM GST DRC-07. The petitioner did not respond to the initial notice due to the absence of a proper show cause notice in the portal. The petitioner was represented by Shri Amit Goyal, Advocate. The respondents—the State of Assam and its tax authorities—were represented by Shri B. Choudhury, Standing Counsel, Finance and Taxation Department.

On 28.07.2025, the Court queried the respondents about the existence of a proper show cause notice. No conclusive reply was provided. During the hearing, it was acknowledged that the only communication made was the summary in DRC-01 and the tax determination attachment. The respondents admitted that no separate show cause notice was issued and that the attached document bore the words "Sd- Proper Officer" without any valid digital or e-signature.

The petitioner relied on Rule 142 of the Central Goods and Services Tax Rules, 2017, which mandates that a proper show cause notice must be issued under Section 73, and a summary thereof is to be served electronically in FORM GST DRC-01. The petitioner further relied on Rule 26, which prescribes authentication of notices and orders through digital or e-signature. It was submitted that in the absence of such authentication, the documents lose legal validity.

The petitioner cited judgments from various High Courts in support, including:

• M/s Silver Oak Villas LLP v. Assistant Commissioner ST (Telangana High Court), where an unsigned order was held invalid under Rule 26(3).

• A.V. Bhanoji Row v. Assistant Commissioner (ST) (Andhra Pradesh High Court).

• Nkas Services Pvt. Ltd. v. State of Jharkhand (Jharkhand High Court).

• LC Infra Projects Pvt. Ltd. v. Union of India (Karnataka High Court).

The petitioner also raised the issue of violation of Section 75(4) of the Act, arguing that no opportunity for personal hearing was granted, even though an adverse decision was contemplated. It was submitted that the relevant column for personal hearing in the DRC-01 summary was left blank.

In response, the State counsel maintained that the summary in DRC-01 along with the tax determination attachment constituted sufficient notice. However, it was conceded that no separate authenticated show cause notice was issued and that the summary and order attachments lacked digital signature.

The Court framed three issues:

1. Whether proper show cause notices were issued under Section 73(9)?

2. Whether the documents attached to GST DRC-01 and DRC-07 qualified as valid SCN and order respectively?

3. Whether the impugned orders adhered to Section 75(4) and principles of natural justice?

The Court recorded, "The Summary of the SCN issued in FORM GST DRC-01 does not substitute the proper SCN required under Section 73(1) of both the Central and State GST Acts." It held that Section 73 mandates the issuance of a proper show cause notice when it appears that tax has not been paid, short-paid, or input tax credit has been wrongly availed or utilized.

The Court observed, "Section 73(9) requires the Proper Officer to determine the tax, interest, and penalty after considering the representation." A combined reading of subsections (1) to (4) reveals that the legislature clearly distinguishes between a Show Cause Notice and a Statement. Even a statement under Section 73(3) does not eliminate the requirement for a separate and proper SCN.

On the role of summaries, the Court stated, "The issuance of the Show Cause Notice and the Statement of determination of tax by the Proper Officer are mandatory requirements in addition to the Summary of Show Cause Notice in GST DRC-01 and Summary of the Statement in GST DRC-02." It cited the judgment in Nkas Services Pvt. Ltd. which held that a summary in GST DRC-01 cannot replace a proper SCN.

The Court found that the attached documents lacked authentication, noting, "The attachments to both DRC-01 and DRC-07 summaries lack legal value, as they bear no authentication by the Proper Officer, violating Rule 26(3)." It referred to Silver Oak Villas LLP, which held that unsigned notices lose efficacy under Rule 26(3) of the Rules of 2017.

The Court elaborated on Rule 26(3), stating, "All notices, certificates and orders under the provisions of this Chapter shall be issued electronically by the proper officer... through digital signature certificate or through E-signature..." It recognized that Rule 26 falls under Chapter III (Registration), but accepted its broader application, citing judicial interpretation.

"Given the critical importance of authentication by the Proper Officer, the Court held that, until proper rules or notifications are issued by the Board to address this gap, Rule 26(3)... must be applied by default."

With respect to the opportunity of hearing, the Court recorded, "The Summary of the Show Cause Notice did not mention any date of hearing, leaving the relevant column blank." It held that "Failure to provide such a hearing renders the second part of Section 75(4) meaningless."

The judgment referred to Mahindra & Mahindra Ltd. v. Union of India, observing, "Where a statute mandates a hearing, it must be granted, and failure to do so renders the provision ineffective and violative of natural justice."

The Court set aside the impugned order with the following direction: "The impugned order dated 29.04.2024 is interfered with and set aside." It further clarified, "However, as it appears that the respondents have proceeded under the mistaken impression that attaching the determination of tax to the summary constitutes a valid Show Cause Notice, the Court grants them liberty to initiate de novo proceedings under Section 73, if considered appropriate."

To facilitate this, the Court instructed: "The period between the issuance of the Summary of the Show Cause Notice and the date when a certified copy of this judgment is served upon the Proper Officer be excluded from the computation of the limitation period under Section 73(10) of the Act."

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The Court reiterated, "A formal and duly authenticated SCN is mandatorily required to initiate proceedings under Section 73." It held that "The Statement of tax determination under Section 73(3), which is attached to the summary in the present case cannot be treated as a valid SCN."

It also stated, "The SCN, the Statement, and the final Order under Section 73(9) must be issued and passed only by the Proper Officer... These documents must be properly authenticated in accordance with Rule 26(3) of the CGST Rules, 2017."

The judgment concluded with, "The writ petition accordingly stands allowed in the manner indicated above."

Advocates Representing the Parties:

For the Petitioners: Shri Amit Goyal, Advocate

For the Respondents: Shri B. Choudhury, Standing Counsel, Finance and Taxation Department

Case Title: Naser Ali Mondal v. The State of Assam and Others

Neutral Citation: GAHC010160812025

Case Number: WP(C)/4157/2025

Bench: Justice Sanjay Kumar Medhi