GST show cause and order in Statutory Forms DRC-01 and DRC-07 without any digital or physical signature are a nullity
In a recent judgment, High Court has held that GST show cause and order in Statutory Forms DRC-01 and DRC-07 without any digital or physical signature are a nullity. In both the Statutory Forms DRC-01 & DRC-07, it is imperative to provide signature, name, designation, jurisdiction and address.
ABCAUS Case Law Citation:
4550 (2025) (05) abcaus.in HC
In the instant appeal, several Writ Petitions were filed challenging the legality, validity and propriety of the show-cause notices and final orders which admittedly did not contain physical or digital signatures of the Proper Officer’ although the impugned show-cause notices and final orders were placed on the Portal.
On The strength of a judgment of the Co-ordinate Bench, it was submitted that the view taken in the said judgment was consistently followed in several matters. Therefore, in absence of any physical or digital signature on the impugned show-cause notices and orders. the same cannot sustain judicial scrutiny.
On the other hand, the Department admitted that the impugned show cause notices and orders did not contain physical or digital signatures. However, it was contended that absence of signature will not cause any dent to the show cause notices or orders, if the scheme of the Central Goods and Services Act 2017 (GST Act) and The Central/Telangana State Goods (GST Rules) are examined.
It was submitted that the judgment relied upon by the Petitioner was relating to “Registration” which is dealt with by the Chapter III of the Rules. It was submitted that the judgment of the Co-ordinate Bench Bench was based on the judgment of the Bombay High Court. The bench also heavily relied upon Rule 26 (3) of the GST Rules which clearly it relates to Chapter III. Thus, the judgment of the Bombay HC and Rule 26 (3) of the GST Rules are of no assistance to the petitioners because neither the said Rule nor the judgment dealt with either issuance of show-cause notices or passing of final order.
The Department placed reliance on the judgment of Gauhati High Court wherein judgment of the Co-ordinate Bench was considered. The Single Judge of Gauhati High court in the said judgment opined that the manner in which the Proper Officer should authenticate the show-cause notice or order in so far as other chapters, the GST Rules are silent except chapter-Ill which deals with Registration. Thus, it was submitted that the view taken by the Co-ordinate Bench and relied upon by the Petitioners was clearly distinguishable and not binding.
It was further argued that the Statutory forms issued under Chapter Ill are in Form GST REG. Chapter-XVIII of the GST Rules deals with ‘Demands and Recovery’, and Forms under this Chapter are in FORM GST DRC. Rule 142 of Chapter XVIII of the GST Rules deals with the procedure of issuing demand notice and passing of demand order. Rule 142(1)(a) deals with serving of summary of notice in Form GST DRC-01 and Rule 142 (5) deals with summary or order to be uploaded electronically in Form GST DRC-07. In both the Rules, it is nowhere mentioned that summary of notice or order requires digital signature on it.
The Hon’ble High Court observed that the issue has been considered by the Gauhati High Court and Kerala High Court. The Gauhati High Court opined that unless the void is fulfilled in relation to requirement of signature in the notice/order, the requirement of Rule 26 of the GST Rules can be followed. The Kerala High Court, although, did not agree with the view taken by the Co-ordinate Bench to the extent reliance placed on Rule 26(3) of the GST Rules, otherwise ruled in agreement wite the findings in the judgment of Co-ordinate Bench.
The Hon’ble High Court further observed that the Co-ordinate Bench had not only considered the judgment of Bombay High Court and Rule 26(3) of the GST Rules, it considered other judgments of different High Courts including Delhi and Andhra Pradesh High Courts and came to hold that in view of judicial precedents the impugned order being an unsigned document lost its efficacy under the GST Act and the GST Rules.
The Hon’ble High Court further observed that Rule 26 of the GST, Rules deals with ‘Method of authentication, Sub Rule (3) of Rule 26, in no uncertain terms, makes it clear that it talks about notice, certificates and orders issued under the provisions of Chapter-Ill. To this extent, there is no difficulty in accepting the argument of the Department that unsigned document will not be hit by Rule 26(3) of the GST Rures. However, it is apposite to note that Sections 73 and 74 of the GST Act are the substantive provisions for ‘Demands and Recovery’. In order to translate Demands and Recovery In the instant appeal, the assessee had challenged the order of CIT(A) in confirming reality, Rules were introduced and the Rules are pregnant with statutory Forms for effectively exercising the power
The Hon’ble High Court opined that undisputedly, Statutory Form GST DRC-07 talks about ‘summary of show cause notice’. Likewise, GST DR-07 talks about ‘summary of the order’. In both the Statutory Forms namely DRC-01 and DRC-07, it is imperative to provide signature, name, designation, jurisdiction and address.
The Hon’ble High Court observed that there is no ‘head on’ between Sections 73/74 of the GST Act and DRC-01 and DRC-07 and hence rejected the contention that since Sections 73/74 of the GST Act are silent about the requirement of digital/physical signature and therefore any such requirement in DRC-01 and DRC-07 can be ignored.
Placing reliance on the judgments of Hon’ble Supreme Court and also the statutory requirement ingrained in DRC-01 and DRC-07, the Hon’ble High Court held that a notice or Final order can become legal or bear authenticity on its forehead only when it is physically/digitally signed by the Proper Officer.
The Revenue had also contended that in view of the provisions of section 160, the assessment proceedings cannot be invalidated on technical grounds. The Hon’ble High Court noted that a reading of sub-section (1) of Section 160 of the GST Act makes it clear that the assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice summons and other proceedings shall not will not become invalid for any mistake, defect or omission if in substance and same is in conformity with and according to the intent, purpose and requirement of the Act or any existing law. However, since the requirement of the GST Rules read with Forms is to put the signature on DRC-01 and DRC-07, these provisions do not help.
The Hon’ble High Court in view that Form DRC-01 and DRC-07 have statutory backing, also rejected the argument that as provided in sub-section (2) of Section 160 of the GST Act, since Petitioners had already acted upon the notices in certain cases and filed their reply and therefore notices cannot be invalidated.
The Hon’ble High Court also rejected the reliance placed by the Department on an internal advisory by observing that it is a trite law that if a law prescribes a thing to be done in a particular manner, the same must be done in the same manner and other methods are forbidden.
As a result, the Hon’ble High Court set aside the impugned notices and orders in. Liberty was given to the Department to issue fresh show cause notices/orders in accordance, with law and, for under taking this exercise afresh, the limitation will not be a hurdle.
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