Safiya Malik

The Telangana High Court has held that show-cause notices and final orders issued without physical or digital signatures of the Proper Officer are invalid. The division bench comprising Acting Chief Justice Sujoy Paul and Justice Renuka Yara observed that statutory provisions under the Goods and Services Tax (GST) Act and corresponding Rules mandate authentication of such documents. The court set aside the impugned notices and orders and granted liberty to the authorities to issue fresh notices in accordance with the law.

In a batch of writ petitions, the petitioners, including M/s. Bigleap Technologies and Solutions Pvt. Ltd., challenged the legality and validity of show-cause notices and final orders issued under the GST Act. The primary contention was that these documents were placed on the government portal without bearing either a physical or digital signature of the Proper Officer. The petitioners relied on a decision of the same court in M/s. Silver Oak Villas LLP v. Assistant Commissioner (ST), arguing that in the absence of signatures, the notices and orders could not be legally enforced. Various high courts and the Supreme Court were also cited to support the argument that unsigned documents do not meet the statutory requirement of authentication. Sections 3 and 5 of the Information Technology Act, 2000, were referenced to assert that electronic documents must be authenticated through digital or physical signatures.

The respondents, represented by Special Government Pleader for State Tax Swaroop Oorilla, conceded that the notices and orders did not contain signatures but argued that this did not affect their validity. It was contended that the GST Act and GST Rules did not explicitly require signatures on such documents. The counsel distinguished the judgment in M/s. Silver Oak Villas, stating that it was based on a Bombay High Court ruling related to registration under Chapter-III of the GST Rules, which was not applicable to demand and recovery proceedings. Reference was made to a judgment of the Gauhati High Court in Dihingia Motors Pvt. Ltd. v. Union of India, which observed that GST Rules do not specify authentication requirements for notices and orders beyond the registration process.

The respondents stated that statutory forms used in demand and recovery proceedings, namely GST DRC-01 and GST DRC-07, do not explicitly mandate digital signatures. A Goods and Services Tax Network (GSTN) advisory from 2024 was cited, which stated that documents uploaded through the officer's login are deemed authenticated as they can only be generated after digital verification of the officer’s credentials. The respondents relied on Section 160 of the GST Act, arguing that minor defects in proceedings do not render them invalid if the substance of the law is followed.

The court noted that Rule 26 of the GST Rules prescribes authentication methods but applies specifically to registration matters. However, statutory forms DRC-01 and DRC-07, used in demand and recovery proceedings under Sections 73 and 74 of the GST Act, contain provisions for signatures, name, designation, and jurisdiction of the Proper Officer. The court observed: "When a statutory form contains a specific column earmarked for signature, the said requirement becomes a statutory obligation."

Precedents such as M/s. M.M. Rubber and Company v. Collector of Central Excise were cited, where it was held that an unsigned order lacks legal efficacy. The Supreme Court in Kailasho Devi Burman v. Commissioner of Income Tax held that a notice without authentication is invalid. The court recorded in its order: "A notice or final order can become legal or bear authenticity on its face only when it is physically or digitally signed by the Proper Officer."

Regarding Section 160 of the GST Act, the court stated that the provision prevents invalidation of proceedings due to minor defects but does not override substantive legal requirements. It held that the absence of signatures was not a technical defect but a fundamental flaw that went to the root of the matter.

The respondents relied on the GSTN advisory, but the court noted that it lacked statutory force. It observed: "Despite repeated query from the Bench, it could not be pointed out whether this advisory has any statutory backing or at least can be called as an executive instruction issued under any enabling provision." The court pointed out that even the advisory acknowledged that officers must authenticate notices and orders before issuance.

The court referred to Rule 142 of the GST Rules, which mandates service of notices and orders through prescribed forms. The forms DRC-01 and DRC-07 require the signature of the Proper Officer, making this a statutory requirement. The judgment noted: "Since statutory rules mandate authentication through signature, failure to comply renders the notices and orders invalid. The respondents are, however, at liberty to issue fresh show-cause notices in accordance with law."

The court considered the approach taken by various high courts, including Delhi, Andhra Pradesh, Kerala, and Gauhati, on the requirement of authentication for statutory notices. The principle of comity was also discussed. The court cited World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd., where the Supreme Court stated: "Courts of one state or jurisdiction will give effect to the laws and judicial decisions of another, not as a matter of obligation but out of deference and mutual respect."

The court concluded that the impugned notices and orders in all the writ petitions are invalid. It granted liberty to the respondents to issue fresh show-cause notices in accordance with law, stating: "Liberty is reserved to the respondents to issue fresh show cause notices/orders in accordance with law and, for undertaking this exercise afresh, the limitation will not be a hurdle for the respondents." It was clarified that the court had not expressed any opinion on the merits of the case. The writ petitions were allowed to the extent indicated, with no order as to costs.

Case Title: M/s. Bigleap Technologies and Solutions Pvt. Ltd. & Ors v. The State of Telangana & Ors

Case Number: W.P. No. 21101 of 2024 and connected batch matters

Bench: Justice Sujoy Paul and Justice Renuka Yara

[Read/Download order]