College Hospital Bhangagarh Guwahati ... vs The State Of Assam And Ors on 25 June, 2025

Outcome
The Writ Petition is allowed. The impugned order dated 19.12.2023, passed under Section 73(9) of the State GST Act, is set aside. The respondents are granted liberty to initiate de novo proceedings under Section 73, if considered appropriate, by rectifying the procedural deficiencies. The period between the issuance of the Summary of the Show Cause Notice (GST DRC-01) and the date a certified copy of this judgment is served upon the Proper Officer shall 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:
i. Whether proper Show Cause Notices (SCNs) were issued prior to passing the impugned Order under Section 73(9) of the State Act.
ii. Whether the determination of tax and the Order attached to the Summary of the Show Cause Notice (GST DRC-01) and Summary of the Order (GST DRC-07) can be considered the valid SCN and Order respectively, especially regarding authentication.
iii. Whether the impugned orders under Section 73(9) of the State Act conform to Section 75(4) of the State Act and the principles of natural justice, specifically regarding the opportunity of hearing.

3. Key Facts
* The petitioner (HAEMOTOCON 2017) received a Summary of Show Cause dated 28.09.2023 in Form GST DRC-01 for the tax period July 2017 - March 2018, with an attachment detailing tax determination.
* The petitioner contended that no proper Show Cause Notice was attached to the Summary of Show Cause Notice (GST DRC-01).
* Due to the perceived lack of a proper SCN, the petitioner did not submit any reply.
* Subsequently, an order was passed on 19.12.2023 in Form GST DRC-07, citing the assessee's failure to make payment within 30 days of the notice.
* The petitioner alleged that both the attachment to GST DRC-01 and the Summary of the Order uploaded in GST DRC-07 were not authenticated by any signature of the Proper Officer.
* The Summary of the Show Cause Notice (DRC-01) had a blank field for the date of personal hearing, with other fields marked "NA".

4. Arguments
* Taxpayer (HAEMOTOCON 2017):
* Rule 142 of the CGST Rules requires a proper SCN under Section 73 to be issued along with an electronic summary in GST DRC-01. The attachment to DRC-01 was merely a determination of tax, not a proper SCN, as it lacked a clear requirement to "show cause."
* The attachments to GST DRC-01 and GST DRC-07 lacked the signature/authentication of the Proper Officer, violating Rule 26 of the CGST Rules, 2017.
* Section 75(4) of both the Central and State GST Acts mandates an opportunity of hearing where an adverse decision is contemplated, irrespective of whether a request for hearing is made. The DRC-01 left the date of hearing blank, thus violating this statutory mandate and the principles of natural justice.
* Revenue (State of Assam and Ors.):
* The Summary of the Show Cause Notice in Form GST DRC-01, accompanied by the determination of tax, provided all necessary details for the petitioner to submit a reply.
* While admitting that there was no separate SCN apart from the tax determination enclosed with the summary, the Revenue contended that the documents uploaded in the portal (DRC-01 and DRC-07) were duly authenticated with digital signatures, as the portal cannot be operated otherwise.
* They also pointed out that the attachments mentioned "Sd- Proper Officer."

5. Court’s Reasoning
* On Issue 1 (Lack of Proper SCN):
* The Court noted the clear distinction in Section 73 between a Show Cause Notice (SCN) and a Statement (determination of tax).
* Rule 142(1)(a) mandates serving a summary in DRC-01 along with the notice issued under Section 73. This implies that the SCN is the primary document, and the summary is merely supplementary.
* Relying on precedents, the Court held that a summary in DRC-01 cannot replace a proper SCN. Merely attaching a tax determination order to the summary does not constitute a valid initiation of proceedings under Section 73.
* Therefore, the impugned orders, passed without a proper SCN, violated Section 73 and Rule 142(1)(a).
* On Issue 2 (Authentication):
* The Court reiterated that the attached statement could not substitute a proper SCN.
* Regarding authentication, Rule 26(3) of the CGST Rules, 2017, mandates that notices, certificates, and orders be issued electronically with a digital or e-signature.
* Although Rule 26 falls under Chapter III (Registration) and not Chapter XVIII (Demand and Recovery), the Court, citing precedents (M/s Silver Oak Villas LLP, A.V. Bhanoji Row, Railsys Engineers Pvt. Ltd.), held that Rule 26(3) must be applied by default due to a regulatory gap in Chapter XVIII regarding authentication of notices/orders.
* Unauthenticated documents, even if uploaded to a digitally secured portal, lack legal validity as they do not bear the specific authentication of the Proper Officer as required by law. The mention "Sd- Proper Officer" without an actual digital or e-signature is insufficient.
* On Issue 3 (Opportunity of Hearing/Natural Justice):
* Section 75(4) explicitly mandates an opportunity of hearing when a written request is made or when an adverse decision is contemplated. The use of "or" means the latter condition (contemplation of adverse decision) independently triggers the requirement.
* The Court, relying on the Mahindra & Mahindra Ltd. precedent, emphasized that a statutory mandate for hearing cannot be circumvented.
* The DRC-01 summary explicitly left the personal hearing date as "NA," indicating no opportunity was provided. Even if no reply was filed, the Proper Officer cannot pass an adverse order without offering a hearing if an adverse decision is contemplated.
* Failure to provide such a hearing violates both Section 75(4) and the fundamental principles of natural justice.

6. Statutory References
* Central Goods and Services Tax Act, 2017 (CGST Act):
* Section 2(91): Definition of Proper Officer
* Section 73: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for reasons other than fraud or any wilful 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.
* Section 160: Rectification of mistakes apparent from the record.
* Section 169: Service of notice in certain circumstances.
* Central Goods and Services Tax Rules, 2017 (CGST Rules):
* Rule 26(3): Manner of authentication of documents (under Chapter III - Registration)
* Rule 142(1)(a), 142(1)(b): Notice and order for demand of amounts payable under the Act.
* FORM GST DRC-01 (Summary of Show Cause Notice)
* FORM GST DRC-02 (Summary of Statement)
* FORM GST DRC-07 (Summary of Order)
* Information Technology Act, 2000: Provisions related to digital/e-signatures.
* Telangana Goods and Services Tax Act, 2017
* Assam Goods and Services Tax Act, 2017 (referred to as State Act)

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 (2024) 123 GSTR 432 (Andhra Pradesh High Court)
* Nkas Services Private Limited vs. State of Jharkhand & Others (2022) 99 GSTR 145 (Jharkhand High Court)
* LC Infra Projects Pvt. Limited vs. Union of India and Others (2020) 73 GSTR 248 (Karnataka High Court)
* Mahindra & Mahindra Limited vs. Union of India and Others (WA No.172/2024) (Chhattisgarh High Court, 10.04.2024)
* Railsys Engineers Pvt. Ltd. V. Additional Commissioner of Central Goods and Services Tax (Appeals-II) (2023) 112 GSTR 143 (Unspecified High Court, likely relevant to the broader applicability of digital signatures)