Facts of the Case:

In this case, the petitioner was issued a Summary of Show Cause Notice (SCN) dated 02.05.2024 in Form GST DRC-01, bearing a reference number, wherein it was mentioned that the Show Cause Notice was attached. However, the attachment only contained a determination of tax and did not expressly call upon the petitioner to show cause. The petitioner did not submit a reply on the ground that no proper SCN had been issued. Subsequently, an Order in Form GST DRC-07 was passed on the basis that the petitioner had not replied and was deemed to have accepted the proposal. The attachments to both DRC-01 and DRC-07 did not contain any digital signature or authentication of the Proper Officer; they merely bore the notation “Sd/- Proper Officer”.

The petitioner contended that no proper SCN under Section 73(1) was issued. The documents were not authenticated as required under Rule 26(3). Bank accounts were frozen pursuant to the impugned order. The Department fairly admitted that no separate SCN was issued apart from the tax determination attached to DRC-01 and that the attachments did not show any digital signature.

Issue:

Whether a Summary of Show Cause Notice in Form GST DRC-01, along with a tax determination attachment, can substitute the mandatory Show Cause Notice under Section 73(1) of the CGST/SGST Act? Whether absence of authentication/digital signature by the Proper Officer vitiates the proceedings?

Held that:

The Court held that issuance of a proper Show Cause Notice under Section 73(1) is a mandatory precondition for initiation of proceedings. Rule 142 requires that a summary in Form DRC-01 be issued in addition to the SCN. The summary cannot replace the statutory requirement of a reasoned Show Cause Notice. The attachment containing tax determination was in the nature of a statement under Section 73(3) and could not be treated as a Show Cause Notice under Section 73(1). The Court further held that authentication by the Proper Officer is mandatory. Since Section 73 requires notices, statements, and orders to be issued by the “Proper Officer”, such documents must be duly authenticated. In absence of specific procedural provisions under Chapter XVIII, the authentication requirement under Rule 26(3) must be applied. Documents without digital signature/e-signature lack legal efficacy.

Also, the Court found clear violation of Section 75(4). The petitioner had opted for personal hearing in Form DRC-06, yet no hearing was granted. Even in cases where no reply is filed, an adverse order cannot be passed without complying with the statutory mandate of hearing.

Accordingly, the order was quashed. 

Case Name: Md. Shoriful Islam Versus The State of Assam, The Principal Commissioner State Tax Guwahati, The Assistant Commissioner of State Tax Nagaon, The Chief Manager State Bank of India Haibargaon Branch. dated 06.02.2026

To read the complete judgement 2026 Taxo.online 313