The Gauhati High Court in the case of CONSTRUCTION CATALYSERS PRIVATE LIMITED, THE ASSAM GRAMIN VIKASH BANK, M/S. NITAI KANGSA BANIK AND ANR., THE ASSAM GRAMIN VIKASH BANK (FORMERLY KNOWN AS LANGPI DEHANGI RURAL BANK) , AURORA FINE ARTS VERSUS STATE OF ASSAM AND, THE PRINCIPAL COMMISSIONER OF STATE TAX, THE ASSISTANT COMMISSIONER OF STATE TAX GUWAHATI, THE UNION OF INDIA, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS NEW DELHI, THE PRINCIPAL COMMISSIONER STATE GST, ASSAM, THE ASSISTANT COMMISSIONER OF STATE TAX SILCHAR vide Order No. WP(C)/3912/2024, WP(C)/4619/2024, WP(C)/3933/2024, WP(C)/4379/2024, WP(C)/4618/2024, WP(C)/3910/2024 dated 26.09.2024, has issuance of a summary in GST DRC-01 without a proper Show Cause Notice is violative of Rule 142 of the CGST Rules, 2017. The absence of digital authentication and signatures on the attachments to GST DRC-01 and GST DRC-07 renders the orders invalid under Rule 26(3) of the CGST Rules. The orders passed without providing the petitioners with an opportunity of personal hearing are in contravention of Section 75(4) of the CGST Act and principles of natural justice. The Court quashed the impugned orders but granted liberty to the respondents to initiate de novo proceedings under Section 73, if deemed appropriate, for the relevant financial years. Additionally, it directed that the period between the issuance of the summary and the date of receipt of the certified judgment would be excluded from the limitation period for passing fresh orders. 

Facts of the Case:  The petitioner challenges the issuance of a Summary of the Show Cause Notice (SCN) in Form GST DRC-01 without a proper attachment of the detailed SCN, alleging that the attachments were unsigned and unauthenticated. Also, the petitioner highlighted that an enquiry had already been initiated by the Directorate General of GST Intelligence (DGGI) on the same matter, invoking Section 6(2)(b) of the Central GST Act, 2017, which prohibits parallel proceedings. Despite requesting a personal hearing, the order was issued in Form GST DRC-07, indicating that the petitioner's reply was unsatisfactory. 

Similar issue were also raised in multiple petitions, where the petitioner argued that summaries of SCNs in GST DRC-01 did not contain proper SCNs, nor were they duly signed by the Proper Officer, violating Rule 142 of the Central Goods and Services Tax Rules, 2017. Attachments in both GST DRC-01 and GST DRC-07 were unsigned and unauthenticated, breaching Rule 26 of the same rules, which mandates digital or e-signatures for authentication. Denial of proper opportunity for a hearing as mandated under Section 75(4) of the CGST Act, 2017, which requires a hearing if requested or if an adverse decision is contemplated.

The petitioners relied on several High Court decision, supporting the argument that unsigned documents and mere summaries cannot substitute a formal SCN, making the proceedings void. Also emphasing that the lack of hearing and procedural compliance violated the principles of natural justice.

Court's Observation and Decision:  

The Court observed as under:

A. Validity of SCNs: The Court noted that Section 73(1) mandates the issuance of a proper SCN, specifying reasons for initiating proceedings. A mere summary (GST DRC-01) with attachments is not a substitute for the proper SCN. The Court referenced Rule 142(1)(a) of the GST Rules, 2017, which requires the issuance of a summary (GST DRC-01) in addition to the SCN but does not replace the mandatory SCN.

B. Issuance of Orders and Digital Signatures:  Section 73(3) and Rule 26(3) of the Rules require that all notices, orders, and certificates issued by the Proper Officer must be authenticated with a digital or e-signature. In the present case, the SCNs and orders were not properly authenticated, rendering them ineffective.

C. Mandatory opportunity for a personal hearing:  Section 75(4) mandates an opportunity for a personal hearing. The Court found that in some cases, despite requests for a hearing, the petitioners were not afforded this opportunity. Thus, the orders violated the principles of natural justice.

The Court held as under:

• The issuance of a summary in GST DRC-01 without a proper Show Cause Notice is violative of Rule 142 of the CGST Rules, 2017.
• The absence of digital authentication and signatures on the attachments to GST DRC-01 and GST DRC-07 renders the orders invalid under Rule 26(3) of the CGST Rules.
• The orders passed without providing the petitioners with an opportunity of personal hearing are in contravention of Section 75(4) of the CGST Act and principles of natural justice.

The impugned orders issued under GST DRC-07 in these writ petitions are set aside. The matters are remanded back to the respondent authorities for fresh adjudication. The respondents are directed to issue proper Show Cause Notices in compliance with Rule 142 and provide an opportunity for personal hearings to the petitioners in accordance with Section 75(4) of the CGST Act, 2017.

To read the complete judgment 2024 Taxo.online 2299