Demand Order Vitiated by Lack of Digital Signature on Preceding Intimation and SCN
Issue: Whether a demand order passed under Section 73 is valid if the preceding Form GST DRC-01A (intimation) and the show cause notice (SCN) do not bear the digital signature of the issuing authority, as mandated by Rule 26(3).
Facts:
- Form GST DRC-01A was issued to the assessee under Section 73(1) of the CGST Act, followed by a show cause notice.
- An order was subsequently passed based on this SCN.
- The assessee contended that both Form GST DRC-01A and the SCN did not bear the digital signature of the issuing authority, which they argued was a mandatory requirement as per Rule 26(3) of the CGST Rules.
- The respondents attempted to defend the order by claiming that the order itself contained a signature.
Decision: The High Court held that since the preceding intimation (Form GST DRC-01A) and the show cause notice did not bear the digital signature of the respondent authority, they were vitiated. Consequently, the order passed based on these vitiated documents was also vitiated. The writ petition was allowed, and the impugned order was set aside.
Key Takeaways:
- Mandatory Digital Signature: Rule 26(3) of the CGST Rules mandates that certain documents, including intimations and show cause notices, must bear the digital signature of the issuing authority. This is not merely a procedural formality but a crucial requirement for the validity of the communication.
- Consequence of Non-Compliance: Failure to comply with the mandatory requirement of a digital signature on the foundational documents (intimation and SCN) renders these documents invalid.
- Vitiation of Subsequent Order: If the preceding intimation and show cause notice are vitiated due to non-compliance, any order passed based on such defective foundations will also be deemed vitiated and is liable to be set aside.
- Procedural Rectitude: This judgment underscores the importance of strict adherence to procedural requirements in tax administration, as non-compliance can lead to the quashing of demand orders, irrespective of the merits of the demand itself.
HIGH COURT OF JHARKHAND
Sandip Kumar Singh
v.
State of Jharkhand
M.S. RAMACHANDRA RAO, CJ.
and Rajesh Shankar, J.
and Rajesh Shankar, J.
W.P. (T) No. 2129 of 2025
MAY 6, 2025
P.P.N. Roy, Sr. Adv. and Deepak Kumar Ruia, Adv. for the Petitioner. Sahbaj Akhtar, A.C. to AAG-III for the Respondent.
ORDER
1. Heard the learned counsel for the petitioner and Mr. Sahbaj Akhtar, counsel for the respondents.
2. Counsel for the petitioner contends that Form GST DRC-01A dt. 06.12.2022 issued to the petitioner under section 73(1) of the Jharkhand GST Act as well as the show cause notice under section 73 (Annexure-5 dt. 29.4.2023) on the basis of which Annexure-7 order dt. 31.07.2023 has been passed for the financial year 2021-2022 by 5th respondent does not bear the signature of the issuing authority which is mandatory as per Rule 26(3) of the (Jharkhand Goods and Service Tax) Rules, 2017 which mandate issuance of notices, certificates or orders only through a digital signature certificate and that Annexure-7 order passed by the 5th respondent, therefore, cannot be sustained.
3. Reliance is also placed on the judgment of this Court in Rajendra Modi v. State of Jharkhand [W.P. (T) No. 1354 of 2025, dated 21-3-2025].
4. Though, counsel for the respondents sought to sustain the same contending that Annexure-7 which is the impugned order contains the signature of the 5th respondent, we do not find any merit in the said contention for the reason that the preceding intimation being DRC-01A and the show cause notice under section 73 dt. 29.04.2023 do not bear the digital signature of the 5th respondent and, therefore, are vitiated. Consequently, Annexure-7 is also vitiated.
5. Accordingly, the writ petition is allowed. Annexure-7 and 8 are both set-aside but liberty is granted to the respondents to initiate proceeding afresh in a proper manner, give opportunity to the petitioner to reply to the intimation/show cause notice and then pass a reasoned order in accordance with law.