Composite GST Notice for Multiple Years Invalid; Signature Defect Plea Rejected

Composite GST Notice for Multiple Years Invalid; Signature Defect Plea Rejected

 Validity of Digital Signature on Notices (Section 169)

Whether a Show Cause Notice (SCN) and Adjudication Order issued electronically are invalid if they do not bear a physical or visible digital signature, even if they contain a Reference Number (RFN) and are communicated via the GST portal.

Decision:

• The High Court ruled in favour of the Revenue on this specific point.

• Rule 26(3) vs Rule 142: The Court clarified that Rule 26(3), which mandates a digital signature certificate (DSC), applies primarily to registration applications and returns (Chapter 3). Adjudication notices under Sections 73/74 are governed by Rule 142.

• Electronic Validity: Electronic issuance of notices via the common portal, accompanied by a generated Reference Filing Number (RFN), presupposes authentication.

• Section 160 Validation: Once the registered person has acted upon the notice (e.g., by filing a reply or participating), they cannot later challenge the validity of the notice based on a technical defect like the absence of a visible signature, as Section 160 validates such proceedings.

Composite SCN for Multiple Tax Periods (Section 74)

Whether a single, composite Show Cause Notice (SCN) and Order-in-Original (OIO) covering multiple financial years (e.g., 2017-18 to 2022-23) is legally permissible under the GST Act, or if separate notices are mandatory for each tax period.

Decision:

• The High Court ruled in favour of the assessee on this substantial legal ground.

• Composite Proceedings Invalid: Relying on the Division Bench ruling (dated 17.09.2025), the Court held that the GST Act envisages year-wise or period-wise adjudication. Issuing a single “omnibus” notice or order clubbing multiple distinct financial years is impermissible.

• Separate Adjudication Mandatory: The Proper Officer must issue separate SCNs and pass separate orders for each assessment year (or tax period). A composite order deprives the taxpayer of specific defenses and statutory rights (like limitation periods) applicable to each distinct year.

• Pre-2021 Intimation (DRC-01A): For the tax periods prior to 2021, the Court reiterated the principle from New Morning Star Travels that the failure to issue the pre-SCN intimation in Form GST DRC-01A (which was mandatory at that time) vitiates the assessment.

• Outcome: The composite Order-in-Original (dated 09.01.2025) and the accompanying DRC-07 summaries were set aside. The matter was remanded for fresh action, requiring the department to issue separate notices for each year.

Key Takeaways

• One Year, One Notice: Tax authorities cannot bunch 5-6 years of tax demands into a single mega-notice. This is a major procedural victory for taxpayers, ensuring assessments are focused and period-specific.

• Digital Signatures: Taxpayers should not bank solely on the “missing signature” defense if the notice was received on the portal with a valid RFN, as courts are treating digital trails as sufficient authentication.

• Old Procedural Rights: For older disputes (pre-2020/21), checking if Form DRC-01A was issued is a critical defense strategy, as its absence can kill the demand entirely.