Shri Shambhu Prasad vs The State Of Assam And Ors on 8 January, 2025

Here's a summary of the judgment:

1. Outcome
The writ petition was disposed of. The impugned order dated 25.04.2024 issued by the respondent no. 3 was set aside and quashed. The Court granted liberty to the respondent authorities to initiate de novo proceedings under Section 73 of the CGST/AGST Act, if deemed fit, for the relevant financial year. The period from the date of issuance of the Summary of the Show Cause Notice (GST DRC-01) on 14.12.2023 until the date a certified copy of this judgment is served upon the Proper Officer, is to be excluded when computing the limitation period under Section 73(10) of the Act.

2. Core Issue
The core issue was whether a Summary of Show Cause Notice in Form GST DRC-01, accompanied by an unsigned attachment detailing tax determination, can be considered a valid Show Cause Notice as mandated by Section 73(1) of the CGST/AGST Act, and whether a subsequent order passed without providing a requested opportunity of hearing or proper authentication is valid in law.

3. Key Facts
* The petitioner received a Summary of Show Cause Notice dated 14.12.2023 in Form GST DRC-01.
* The DRC-01 stated an "attached" Show Cause Notice, but the actual attachment was merely a "determination of tax" document, not a formal Show Cause Notice requiring a response.
* The petitioner did not reply to this notice, asserting the absence of a proper Show Cause Notice.
* Subsequently, an Order dated 25.04.2024 was issued in Form GST DRC-07, stating that the taxpayer had not replied or contested the notice.
* Crucially, the attachments to both the GST DRC-01 (determination of tax) and the GST DRC-07 (manner of determination) lacked any signature of the Proper Officer.
* The petitioner had specifically requested an opportunity for personal hearing in the reply form (GST DRC-06), but no such hearing was provided before the adverse order was passed.

4. Arguments
* Taxpayer (Petitioner):
* No proper Show Cause Notice (SCN) as mandated by Section 73 and Rule 142 was issued. The attachment to DRC-01, being a mere "determination of tax," cannot substitute a formal SCN.
* The attachment to DRC-01 and the subsequent order in DRC-07 were not authenticated with the digital/e-signature of the Proper Officer, violating Rule 26(3) of the CGST Rules, thereby rendering them ineffective.
* The petitioner was denied the statutory right to an opportunity of hearing, violating Section 75(4) of the Act and the principles of natural justice.
* Revenue (Respondent):
* The Summary of Show Cause Notice in Form DRC-01, along with the attached "determination of tax," provided sufficient details for the petitioner to submit a reply.
* Conceded that there was no separate formal Show Cause Notice issued apart from the "determination of tax" attachment.
* Conceded the attachments lacked physical signatures but noted they mentioned "Sd- Proper Officer."
* Submitted that the Summary of the Show Cause Notice and Order, when uploaded to the GST portal, are digitally authenticated, making them valid.

5. Court’s Reasoning
* Invalidity of Show Cause Notice: The Court held that Section 73 of the Act mandates the issuance of a proper Show Cause Notice (SCN) specifying the reasons for initiating proceedings. Rule 142(1)(a) requires a summary of the SCN (DRC-01) to be served along with the actual notice, implying that DRC-01 cannot substitute the substantive SCN. The attachment detailing "determination of tax" is distinct from the SCN and cannot fulfill the requirement of Section 73(1). Therefore, initiating proceedings without a proper SCN is illegal.
* Lack of Authentication: The Court emphasized that Rule 26(3) of the CGST Rules mandates electronic authentication (digital or e-signature) of notices, certificates, and orders by the Proper Officer. While Rule 26(3) specifically refers to Chapter III (Registration), the Court extended its applicability to other chapters, including Chapter XVIII (Demand and Recovery), due to the "utmost necessity of authentication" by the Proper Officer. The mere mention of "Sd- Proper Officer" without actual digital authentication renders the documents ineffective and redundant.
* Violation of Opportunity of Hearing: Section 75(4) of the Act provides a statutory safeguard, mandating an opportunity of hearing if requested or when an adverse decision is contemplated. The petitioner had explicitly requested a personal hearing. Passing an adverse order without providing this requested opportunity, especially when the initial SCN itself was flawed (leading to no reply), violates Section 75(4) and principles of natural justice.
* The Court found that the impugned order violated Section 73, Rule 142(1)(a), Rule 26(3), and Section 75(4) of the Act and Rules.

6. Statutory References
* Central Goods and Services Tax Act, 2017 / Assam Goods and Services Tax Act, 2017:
* Section 2(91) (Definition of Proper Officer)
* Section 73 (Sub-sections 1, 2, 3, 4, 9, 10) (Determination of tax not paid or short paid, etc.)
* Section 75(4) (General provisions relating to determination of tax and other amounts)
* Section 50 (Interest payable)
* Sections 160 & 169 (referred to by a cited precedent for their inability to save unsigned documents)
* Central Goods and Services Tax Rules, 2017:
* Rule 26(3) (Authentication of notices, certificates, and orders)
* Rule 142(1)(a), (b) (Notice and order for demand of amounts payable under the Act)
* Forms GST DRC-01, GST DRC-02, GST DRC-06, GST DRC-07
* Information Technology Act, 2000
* Constitution of India: Article 21
* Telangana Goods and Services Tax Act, 2017 (referred to by a cited precedent)

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): Held that an unsigned document loses efficacy under Rule 26(3) and the TGST Act; an SCN and impugned order are unsustainable without signature.
* A.V. Bhanoji Row vs. Assistant Commissioner (ST) & Others, (2024) 123 GSTR 432 (Andhra Pradesh High Court): Held that absence of the Proper Officer's signature makes the document void and inoperative; Sections 160 and 169 cannot save an unsigned order/notice.
* Nkas Services Private Limited vs. State of Jharkhand & Others, (2022) 99 GSTR 145 (Jharkhand High Court): Held that a Summary of Show Cause Notice (GST DRC-01) cannot substitute the requirement of a proper Show Cause Notice.
* LC Infra Projects Pvt. Limited vs. Union of India and Others, (2020) 73 GSTR 248 (Karnataka High Court): Observed that issuance of a Show Cause Notice is sine qua non for proceeding with recovery of interest and penalty.
* Railsyls Engineers Private Limited vs. Additional Commissioner of Central goods and Services Tax (Appeals-11) and Anr., (2023) 112 GSTR 143 (Delhi High Court): Held there was a requirement for digital signatures on the Show Cause Notice and Order in Original.
* Mahindra & Mahindra Limited (Chhattisgarh High Court) (as cited in the judgment): Held that when the statute contains a mandate of hearing, the same has to be granted, else it would render the provision porous. (Note: The judgment internally references this case with a 'supra' link that points to "Nkas Services Private Limited vs. State of Jharkhand & Others", indicating a potential misattribution or typographical error in the original judgment text itself, but the principle for which it was cited is noted.)