Soidur Rahman vs The State Of Assam And 3 Ors on 5 September, 2025
AI Legal Insights
This GST case law from the Gauhati High Court addresses the validity of GST DRC-07 orders issued without a proper Show Cause Notice (SCN) and opportunity for a hearing. The core issue revolves around compliance with Section 73(9) and Section 75(4) of the GST Act, concerning demand and recovery proceedings. The court examined whether a Summary of Show Cause Notice (GST DRC-01) and the Summary of Order (GST DRC-07) can be considered valid primary documents in the absence of proper authentication. This judgment emphasizes the importance of adherence to procedural safeguards and principles of natural justice in GST proceedings.
This case clarifies that GST authorities must properly authenticate all notices and orders, even those electronically issued. Taxpayers gain assurance that orders issued without proper authentication or a mandatory hearing can be challenged and potentially overturned.
- Ensure all GST notices and orders (DRC-01, DRC-07) are digitally signed or e-signed by the Proper Officer.
- Taxpayers are entitled to a hearing under Section 75(4) of the GST Act if requested or if an adverse decision is contemplated.
- The absence of a specific request for a hearing does not waive the right if an adverse decision is considered.
- Rule 26(3) regarding digital signatures applies to Chapter XVIII (Demand and Recovery) even though it is located in Chapter III.
- Lack of proper authentication on DRC-01 and DRC-07 renders them legally invalid.
QIs a digitally signed DRC-01 mandatory under GST?
Yes, the Gauhati High Court in Soidur Rahman vs The State Of Assam held that all GST notices and orders, including DRC-01, must be digitally signed or e-signed by the Proper Officer. This is based on Rule 26(3) of the CGST Rules, 2017, which applies to Chapter XVIII (Demand and Recovery).
QWhat constitutes a valid opportunity of hearing under section 75(4) of CGST Act?
Section 75(4) mandates a hearing either upon a written request by the taxpayer or if an adverse decision is contemplated. The use of "or" means both conditions are independent; an adverse decision without offering a hearing violates Section 75(4), even if no hearing was requested.
Ruling Summary
Outcome**
The Guwahati High Court set aside the impugned order dated 28.04.2024 passed in GST DRC-07. The writ petition was allowed. The Court granted the revenue authorities liberty to initiate de novo proceedings under Section 73 of the Act, if deemed appropriate. To facilitate this, the period between the issuance of the Summary of the Show Cause Notice (SCN) and the date a certified copy of this judgment is served upon the Proper Officer is to be excluded from the computation of the limitation period under Section 73(10) of the Act.
2. Core Issue
The core issues for determination were:
* Whether a proper Show Cause Notice (SCN) was issued prior to passing the impugned order under Section 73(9) of the State GST Act.
* Whether the tax determination document attached to the Summary of SCN (GST DRC-01) and the order attached to the Summary of Order (GST DRC-07) can be considered valid primary documents (SCN and Order) respectively.
* Whether the impugned orders conform to Section 75(4) of the State GST Act and the principles of natural justice, particularly regarding the opportunity of hearing.
* The validity of adverse orders passed without a proper, authenticated SCN and without granting an opportunity for a personal hearing.
3. Key Facts
* The petitioner received a Summary of Show Cause Notice (SCN) dated 12.12.2023 in Form GST DRC-01, along with an attachment concerning tax determination, for the tax period April 2018 - March 2019.
* The petitioner did not submit a reply, contending that no proper SCN was attached to the Summary in the portal.
* Subsequently, an order dated 28.04.2024 was passed in Form GST DRC-07, stating the reason for payment default was the assessee's failure to make payment within 30 days of the notice.
* The petitioner argued that neither the attachment to GST DRC-01 nor the attachment to GST DRC-07 was authenticated by the signature of a Proper Officer.
* The Summary of SCN (DRC-01) left the column for "date and time of personal hearing" blank (marked "NA").
4. Arguments (Taxpayer vs Revenue)
* Taxpayer (Soidur Rahman):
* No proper SCN was issued, only a Summary of SCN in DRC-01 with an attachment that did not explicitly require the petitioner to "show cause."
* The attachments to DRC-01 and DRC-07 lacked the signature/authentication of the Proper Officer, violating Rule 26 of the CGST Rules, 2017, which mandates digital or e-signature.
* An opportunity of hearing is mandatory under Section 75(4) of the GST Acts when an adverse decision is contemplated, regardless of whether the taxpayer requests it. The DRC-01 form left the hearing date blank.
* Cited precedents to emphasize that a summary cannot replace a proper SCN, and authentication is critical.
* Revenue (State of Assam and Ors.):
* The Summary of SCN in DRC-01, accompanied by the tax determination document, provided all necessary details for the petitioner to submit a reply.
* Conceded that there was no separate SCN apart from the tax determination enclosed with the Summary.
* Conceded that the attachments to DRC-01 and DRC-07 did not bear physical signatures, although they mentioned "Sd- Proper Officer."
* Argued that the Summaries in DRC-01 and DRC-07, when uploaded to the portal, are duly authenticated with digital signatures, as the portal cannot be operated otherwise.
5. Court’s Reasoning
* Validity of SCN: The Court held that Rule 142 of the CGST Rules, 2017, mandates the issuance of a Summary of SCN (DRC-01) along with a proper SCN under Section 73, not as a replacement for it. Section 73 requires the SCN to clearly state the reasons for its issuance. A statement under Section 73(3) cannot substitute an SCN under Section 73(1). Merely attaching a tax determination to a DRC-01 summary does not constitute a valid SCN and violates Section 73 and Rule 142(1)(a).
* Authentication: The Court found that the attachments to both the DRC-01 and DRC-07 summaries lacked legal value due to the absence of proper authentication by the Proper Officer. While Rule 26(3) of the CGST Rules, 2017, is located in Chapter III (Registration), the Court, relying on precedents, extended its applicability to Chapter XVIII (Demand and Recovery), mandating digital or e-signature for all notices, certificates, and orders. The absence of specific authentication rules in Chapter XVIII meant Rule 26(3) applied by default to ensure legal validity.
* Opportunity of Hearing: The Court emphasized Section 75(4) of the GST Acts, which mandates an opportunity of hearing either when a written request is made or when an adverse decision is contemplated. The use of "or" makes both conditions independent. Since the DRC-01 summary left the personal hearing details blank ("NA") and an adverse order was passed without providing such an opportunity, it violated both the statutory mandate of Section 75(4) and the principles of natural justice, rendering the order vitiated.
6. Statutory References
* Central Goods and Services Tax Act, 2017 (CGST Act)
* Section 2(91) (Proper Officer)
* Section 73 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or willful misstatement or suppression of facts)
* Section 73(1), 73(2), 73(3), 73(4), 73(9), 73(10)
* Section 75(4) (General provisions relating to determination of tax and other amounts)
* Section 160 (Defect in proceedings)
* Section 169 (Service of notice in certain circumstances)
* Central Goods and Services Tax Rules, 2017 (CGST Rules)
* Rule 26 (Method of authentication)
* Rule 26(3)
* Rule 142 (Notice and order for demand of amounts payable under the Act)
* Rule 142(1)(a)
* Information Technology Act, 2000
* Telangana Goods and Services Tax Act, 2017 (TGST Act) (referred to through a cited judgment)
* State GST Act (Assam GST Act, referred to as 'State Act' for analogous provisions like Section 73(9) and Section 75(4))
7. Precedents Cited
* M/s Silver Oak Villas LLP vs. the Assistant Commissioner ST {WP(C) No.6671/2024} (Telangana High Court, 14.03.2024)
* A.V. Bhanoji Row vs. Assistant Commissioner (ST) & Others, reported in (2024) 123 GSTR 432 (Andhra Pradesh High Court)
* Nkas Services Private Limited vs. State of Jharkhand & Others, reported in (2022) 99 GSTR 145 (Jharkhand High Court)
* LC Infra Projects Pvt. Limited vs. Union of India and Others, reported in (2020) 73 GSTR 248 (Karnataka High Court)
* Mahindra & Mahindra Limited vs. Union of India and Others, (WA No.172/2024) delivered on 10.04.2024 (Chhattisgarh High Court)
* Railsys Engineers Pvt. Ltd. V. Additional Commissioner of Central Goods and Services Tax (Appeals-II) reported in (2023) 112 GSTR 143
Key Legal Principles
- **Authentication:** The Court found that the attachments to both the DRC-01 and DRC-07 summaries lacked legal value due to the absence of proper authentication by the Proper Officer. While Rule 26(3) of the CGST Rules, 2017, is located in Chapter III (Registration), the Court, relying on precedents, extended its applicability to Chapter XVIII (Demand and Recovery), mandating digital or e-signature for all notices, certificates, and orders. The absence of specific authentication rules in Chapter XVIII meant Rule 26(3) applied by default to ensure legal validity.
- **Opportunity of Hearing:** The Court emphasized Section 75(4) of the GST Acts, which mandates an opportunity of hearing *either* when a written request is made *or* when an adverse decision is contemplated. The use of "or" makes both conditions independent. Since the DRC-01 summary left the personal hearing details blank ("NA") and an adverse order was passed without providing such an opportunity, it violated both the statutory mandate of Section 75(4) and the principles of natural justice, rendering the order vitiated.