College Hospital Bhangagarh Guwahati … vs The State Of Assam And Ors on 25 June, 2025

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Gauhati High Court

College Hospital Bhangagarh Guwahati … vs The State Of Assam And Ors on 25 June, 2025

Author: Sanjay Kumar Medhi

Bench: Sanjay Kumar Medhi

                                                                               Page No.# 1/13

GAHC010108812025




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                              THE GAUHATI HIGH COURT
   (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                               Case No. : WP(C)/2918/2025

            HAEMOTOCON 2017
            OFFICE 1ST FLOOR DEPARTMENT OF CLINICAL HAEMATOLOGY
            HAEMATOCON 2017 CONFERENCE SECRETARIAT GUWAHATI MEDICAL
            COLLEGE HOSPITAL BHANGAGARH GUWAHATI KAMRUP
            METROPOLITAN ASSAM REPRESENTED BY ONE OF ITS TRUSTEE SRI
            DAMODAR DAS RESIDENT OF JP AGARWALLA ROAG

            VERSUS

            THE STATE OF ASSAM AND ORS
            REPRESENTED BY THE COMMISSIONER AND SECRETARY , FINANCE
            DEPARTMENT ASSAM GUWAHATI

            2:THE PRINCIPAL COMMISSIONER OF STATE TAX ASSAM
            ASSAM GUWAHATI

            3:THE ASSISTANT COMMISSIONER OF STATE TAX
             GUWAHATI C 5 GUWAHATI C GUWAHATI ZONE C ASSA


                                        BEFORE

                Hon'ble MR. JUSTICE SANJAY KUMAR MEDHI

                                  JUDGMENT & ORDER


Advocate for the petitioner      : Shri Amit Goyal, Advocate
Advocate for the respondents      : Shri B. Gogoi, SC, Finance and Taxation Department.
Date of hearing                  : 25.06.2025
Date of judgment                 : 25.06.2025.
                                                                     Page No.# 2/13




Heard Shri Amit Goyal, learned counsel appearing on behalf of the
petitioner. Also heard Shri. B. Gogoi, the learned Standing Counsel of the
Finance and Taxation Department of the Government of Assam.

2. Before dealing with the issue involved, the brief facts of the case may be
put in a nutshell.

3. The petitioner was issued a Summary of Show Cause dated 28.09.2023 in
GST DRC-01 for the tax period from July 2017- March 2018 along with an
attachment as regards the determination of tax. It is the case of the petitioner
that as there was no proper Show Cause Notice attached to the Summary of the
Show Cause Notice dated 28.09.2023 in the portal, the petitioner did not submit
any reply. Subsequent thereto, an order was passed on 19.12.2023 in GST DRC-
07 and the reason assigned is that the assessee failed to make payment within
30 days of issue of notice. It is contended that the attachment as well as the
Summary of the Order uploaded in GST DRC-01 and GST DRC-07 were not
authenticated by any signature of the Proper Officer.

4. This Court had passed an order dated 30.05.2025 requiring the learned
counsel appearing on behalf of the respondent authorities as to whether there
were proper Show Cause Notices. In reply thereto, no positive response could
be made.

5. Shri Goyal, the learning counsel appearing on behalf of the petitioners
submitted that it is the requirement in terms of Rule 142 of the Central Goods
and Services Tax Rules, 2017 (for short, ‘the Rules of 2017’) that the notice
under Section 73 has to be issued and a summary thereof is to be additionally
issued electronically in Form GST DRC-01. The learned counsel for the
Page No.# 3/13

petitioners submitted that under no circumstances the attachment to the GST
DRC-01 can be said to be a Show Cause Notice inasmuch as in the said
attachment, there is no mention that the petitioner is required to show cause.
Additionally, he submitted that the said attachment to the DRC-01 does not
contain the signature of the Proper Officer and it is the mandate of Rule 26 of
the Rules of 2017 that the Show Cause Notice had to be authenticated with
digital signature or through E signature as specified under the provisions of the
Information Technology Act, 2000 or verified by any other mode of signature or
verification as notified by the Board in that behalf. In that regard, the learned
counsel for the petitioner submitted that the learned Division Bench of the
Telangana High Court in the case of M/s Silver Oak Villas LLP vs. the
Assistant Commissioner ST {WP(C) No.6671/2024} vide its judgment
and order dated 14.03.2024 had dealt with Rule 26 of the Rules of 2017 and
categorically opined that since the impugned order therein was an unsigned
document, it lost its efficacy in the light of Rule 26 (3) of the Rules of 2017 as
well as the Telangana Goods and Services Tax Act, 2017 and the Rules framed
therein under. It was also observed therein that the Show Cause Notice as also
the impugned order would not be sustainable and deserved to be set aside and
quashed. The learned counsel has relied upon the case of the Division Bench of
the Andhra Pradesh High Court in A.V. Bhanoji Row vs. Assistant
Commissioner (ST) & Others, reported in (2024) 123 GSTR 432. Reliance
has also been placed on the case of Nkas Services Private Limited vs.
State of Jharkhand & Others
, reported in (2022) 99 GSTR 145, the
learned Division Bench of the Jharkhand High Court and another judgment of
the Karnataka High Court in the case of LC Infra Projects Pvt. Limited vs.
Union of India and Others
, reported in (2020) 73 GSTR 248.

Page No.# 4/13

6. He has submitted that even in a case where an adverse decision is
contemplated to be passed, there is a requirement for providing an opportunity
of hearing irrespective of whether the petitioners seek such an opportunity. By
referring to the Summary of the Show Cause Notice issued in GST DRC-01, he
has submitted that there is no mention whatsoever about the date of hearing
and the Column had been left blank. He submitted that use of the word ‘or’ in
Section 75(4) of the Central Act as well as State Act in between the words
‘when a request is received in writing from the person chargeable with tax or
penalty’ and ‘where any adverse decision is contemplated against such person’
clearly shows the legislative intent to the effect that irrespective of a request
made or not but when an adverse decision is contemplated an opportunity for
hearing is mandated. The learned counsel for the petitioner had referred to the
judgment of the learned Division Bench of the Chhattisgarh High Court in the
case of Mahindra & Mahindra Limited vs. Union of India and Others,
(WA No.172/2024) delivered on 10.04.2024 wherein the learned Division
Bench dealt with the scope and ambit of Section 75 (4) of the Central Act and
observed that when the statute contains a mandate of hearing which is a
synonym to natural justice, it cannot be given a go by or can be made porous.
The learned counsel for the petitioner therefore submitted that in the instant
cases as the impugned orders have been passed without giving a proper
opportunity of hearing as mandated under Section 75 (4) of both the Central
Act as well as the State Act, the impugned orders are liable to be interfered
with.

7. Per contra, Shri Gogoi, the learned Standing Counsel, Finance and Taxation
Department of the Government of Assam submitted that the respondent
authorities have issued the Summary of the Show Cause Notice in Form DRC-01
Page No.# 5/13

which was accompanied by the determination of tax which as per the
respondents would have provided all the details so that the petitioners could
have submitted the reply. The learned counsel, however, fairly submitted that
there is no separate Show Cause Notice apart from the determination of tax
enclosed to the Summary of the Show Cause Notice. On the question of lack of
signatures in the attachments to the GST DRC-01 as well as the GST DRC-07,
the learned counsel fairly submitted that the materials on record do not show
that there is/are any signature(s) in the attachment to the Summary to the
Show Cause Notice as well as Summary to the Order issued in Forms GST DRC-
01 and GST DRC-07 respectively. He however submitted that in the attachments
it is mentioned as ‘Sd- Proper Officer’. The learned counsel further submitted
that when the Summary of the Show Cause Notice as well as the Summary of
the Order are uploaded in GST DRC-01 and GST DRC-07, the same are duly
authenticated in the portal with digital signatures and without such
authentication, the portal cannot be operated.

8. From the materials on record as well as the submissions advanced, the
following issues will arise for determination.

(i) Whether Show Cause Notices were issued prior to passing the
Impugned Order under Section 73 (9) of the State Act?

(ii) Whether the determination of tax as well as the Order attached to the
Summary of the Show Cause Notice in GST DCR-01 and Summary of the
Order in GST DCR-07 can be said to be the Show Cause Notice and Order
respectively?

(iii) Whether the impugned orders under Section 73 (9) of the State Act is
in conformity with Section 75(4) of the State Act and is in consonance
Page No.# 6/13

with the principles of natural justice?

9. The records show that in GST DRC-01 issued to the petitioner, it is stated that
a Show Cause Notice is attached. The respondents claim that the attached
document which includes the tax determination, constitutes the SCN. The core
issue is whether such an attachment qualifies as a valid SCN under the Central
and State GST Acts and their respective Rules. Notably, all the SCN summaries
were issued under Section 73. Section 73 would show that the said provision is
set into motion when it appears to the Proper Officer that:-

(a) Any tax has not been paid; or

(b) Any tax short paid; or

(c) Any tax erroneously refunded; or

(d) Where input tax credit had been wrongly availed or utilized, for any reason
other than the reason of fraud or any willful misstatement or suppression of
facts to evade tax.

10. Considering that it is only in the circumstances referred to above, the
Proper Officer is mandated to issue a SCN only under specific circumstances as
outlined in Section 73. Therefore, the SCN must clearly state the reasons and
circumstances justifying its issuance under this section. Only then can the
recipient effectively respond, particularly if they wish to challenge the
applicability of Section 73. Section 73(9) requires the Proper Officer to
determine the tax, interest, and penalty after considering the representation.
Section 73(2) and 73(10) are interconnected, while Section 73(10) allows
passing the order within three years from the due date of the annual return,
Section 73(2) mandates that the SCN must be issued at least three months
before the deadline. Furthermore, a combined reading of subsections (1) to (4)
Page No.# 7/13

of Section 73 shows that the legislature has made a clear distinction between a
Show Cause Notice and a Statement. Even if a Statement is issued under
Section 73(3), a separate and proper SCN is still required.

11. It may be noted that in Section 73, there is no mention of issuance of a
Summary of Show Cause Notice. The requirement of issuance of a Summary of
the Show Cause Notice is seen in Rule 142 of the Rules of 2017 which reads as
follows:-

“142. Notice and order for demand of amounts payable under the Act.-

(1) The proper officer shall serve, along with the

(a) notice issued under section 52 or section 73 or section 74 or section
76
or section 122 or section 123 or section 124 or section 125 or section
127 or section 129 or section 130, a summary thereof electronically in
FORM GST DRC01,

(b) statement under sub-section (3) of section 73 or sub-section (3) of
section 74, a summary thereof electronically in FORM GST DRC-02,
specifying therein the details of the amount payable.”

12. From a perusal of the above quoted Rule, it would show that in addition
to the Show Cause Notice to be issued under Section 73 (1) and the Statement
of determination of tax under Section 73 (3), there is an additional requirement
of issuance of a Summary of the Show Cause Notice in GST DRC-01 and the
Summary of the Statement in GST DRC-02. The natural corollary from the above
analysis is that the issuance of the Show Cause Notice and the Statement of
determination of tax by the Proper Officer are mandatory requirement in
addition to the Summary of Show Cause Notice in GST DRC-01 and Summary of
the Statement in GST DRC-02.

Page No.# 8/13

13. The Division Bench of the Hon’ble Jharkhand High Court in Nkas Services
Pvt. Ltd.
(supra) held that a summary in GST DRC-01 cannot replace a proper
SCN.
Similarly, in LC Infra Projects Pvt. Ltd. (supra), the Honble Karnataka
High Court emphasized that issuing a proper SCN is essential before the
recovery of interest or penalty under the Act.

14. In light of these decisions, the Court holds that merely attaching a tax
determination order to the summary in DRC-01 does not amount to valid
initiation under Section 73. The summary is only supplementary to a full SCN.
Thus, the impugned orders, having been passed without a proper SCN, are in
violation of Section 73 and Rule 142(1)(a).

15. This brings this Court to the issue as to whether the determination of tax
as well as the order attached to the Summary to the Show Cause Notice in GST
DRC-01 and the Summary of the Order in GST DRC-07 can be said to be the
Show Case Notice and Order respectively.

16. Earlier, the Court clarified that a Statement under Section 73(3) cannot
substitute a SCN under Section 73(1). Therefore, the respondent’s claim that
the statement attached to the Summary in GST DRC-01 constitutes a valid SCN
is misconceived and contrary to law. Moreover, the submission made on behalf
of the petitioner finds force that the attachments to both DRC-01 and DRC-07
summaries lack legal value, as they bear no authentication by the Proper Officer,
violating Rule 26(3). In this connection, reliance may be put on the judgments
in M/s Silver Oak Villas LLP (supra) and A.V. Bhanoji Row (supra) which
emphasize the necessity of proper authentication for such documents to be
valid.

17. Rule 26 (3) of the Rules of 2017 reads as follows:

Page No.# 9/13

“26.

(3) All notices, certificates and orders under the provisions of this Chapter
shall be issued electronically by the proper officer or any other officer
authorized to issue such notices or certificates or orders, through digital
signature certificate [or through E-signature as specified under the
provisions of the Information Technology Act, 2000 (21 of 2000) or
verified by any other mode of signature or verification as notified by the
Board in this behalf.]”

18. Rule 26(3) of the CGST Rules, 2017 lays down the manner of
authentication for notices, certificates, and orders, stating they must be
electronically issued by the Proper Officer or an authorized officer, using a digital
signature, e-signature as specified under the provisions of the Information
Technology Act, 2000
or any other Board-notified mode. However, it is important
to note that Rule 26 falls under Chapter III, which relates to Registration, not
Demand and Recovery, which is governed by Chapter XVIII. Therefore, the
direct applicability of Rule 26(3) to documents issued under Section 7 (falling
within Demand and Recovery) may be limited unless specifically extended or
adopted by the relevant provisions or judicial interpretation.

19. The question arises whether Rule 26(3), though located under Chapter III
(Registration), can apply to Chapter XVII (Demand and Recovery). In the case
of M/s Silver Oak Villas LLP, (supra) it was held that Rule 26(3) applies even
to Chapter XVIII, requiring authentication through digital or e-signature for all
notices and orders and this view was endorsed in the case of A.V. Bhanoji
Row (supra). It was laid down that signatures cannot be dispensed with, and
Sections 160 and 169 (which deal with procedural lapses) cannot cure an
unsigned notice or order. The said view is also supported in the case of Railsys
Page No.# 10/13

Engineers Pvt. Ltd. V. Additional Commissioner of Central Goods and
Services Tax (Appeals-II
) reported in (2023) 112 GSTR 143, wherein it
has been stated that at least digital signatures must be affixed on SCN and
Orders. Section 73 mandates that the Proper Officer must issue the SCN, the
Statement under Section 73(3), and the final Order under Section 73(9). As per
Section 2(91), a Proper Officer is the Commissioner or someone entrusted by
him. Therefore, unless these documents are duly authenticated by the Proper
Officer, they fail to meet the statutory requirements and are rendered invalid
and unenforceable. Section 73 of the Act requires that notices and order be
issued by the Proper Officer but it does not prescribe the mode of
authentication outside Chapter III of the Rules. Since no specific rule under
Chapter XVIII (relating to Demand and Recovery) governs authentication, a
regulatory gap exists. Given the critical importance of authentication by the
Proper Officer, the Court held that, until proper rules or notifications are issued
by the Board to address this gap, Rule 26(3), which requires digital or e-
signature, must be applied by default. This ensures that any notice, statement
or order issued under the Act maintains its legal validity and enforceability.

20. On the question of whether the impugned orders under Section 73(9)
conform to Section 75(4) of the State Act and is according to the principles of
natural justice, the Court observed that the Summary of the Show Cause Notice
did not mention any date of hearing, leaving the relevant column blank. The
petitioner was merely asked to submit a reply, without being offered a cleared
opportunity for personal hearing.

21. Section 75(4) of both the Central and State GST Acts mandates that an
opportunity of hearing must be granted when a written request is made by the
person chargeable with tax or penalty, or when any adverse decision is
Page No.# 11/13

contemplated against such person. This provision serves as a safeguard for
assessees, ensuring procedural fairness.

22. The Division Bench of the Hon’ble Chhattisgarh High Court in the case of
Mahindra & Mahindra Ltd. (supra) reinforced this by holding that where a
statute mandates a hearing, it must be granted, and failure to do so renders the
provision ineffective and violative of natural justice. Accordingly, the Court held
that non-compliance with Section 75(4) in the present case violates both
statutory requirements and principles of natural justice, thereby vitiating the
impugned order.

23. In this case, FORM GST DRC-01 attached to the writ petition includes
fields for the reply submission date, date and time of personal hearing, and
venue. However, in the Summary of the SCN, only the reply date was filled,
while the rest were marked as “NA”. The Proper Officer may have presumed that
a personal hearing was only necessary if the notice explicitly requested it in
their reply. However, the Court clarified the even when no reply is filed, the
second limb of the Section 75(4) still applies, i.e., if an adverse decision is
contemplated, a hearing must be granted.

24. Failing to provide such a hearing renders the second part of Section 75(4)
meaningless, and thus, passing an adverse order without a hearing in such
circumstances violated both the statutory mandate and the principles of natural
justice.

25. This Court, upon detailed analysis, hold that the Summary of the SCN
issued in FORM GST DRC-01 does not substitute the proper SCN required under
Section 73(1) of both the Central and State GST Acts. A formal and duly
authenticated SCN is mandatorily required to initiate proceedings under Section
Page No.# 12/13

73. The Statement of tax determination under Section 73(3), which is attached
to the summary in the present case cannot be treated as a valid SCN.
Therefore, initiating proceedings solely based on such a statement is not in
conformity with law.

26. It is further clarified that the SCN, the Statement, and the final Order
under Section 73(9) must be issued and passed only by the Proper Officer, as
defined under Section 2(91) of the Act, these documents must be properly
authenticated in accordance with Rule 26(3) of the CGST Rules, 2017. The
summaries issued in GST DRC-01, DRC-02, and DRC-07 are merely
supplementary and cannot override or replace the requirement of issuing proper
and authenticated primary documents.

27. This Court also notes that the impugned order contravenes Section 75(4)
of the Act which mandates that the impugned order contravenes Section 75(4)
of the Act, which mandates that a reasonable opportunity of hearing must be
provided either when an adverse decision is contemplated or when a written
request is made by the assessee. In the present case, although the DRC-01
summary specifies the date for filing a reply, it leaves the fields regarding the
date and time of personal hearing as “NA”. In a situation where no reply is
submitted, the Proper Officer cannot proceed to pass an adverse order without
granting an opportunity of hearing, as doing so would render the safeguards
under Section 75(4) ineffective and violate principles of natural justice.

28. Accordingly, the impugned order dated 19.12.2023 is interfered with and
set aside. However, as it appears that the respondents have proceeded under
the mistaken impression that attaching the determination of tax to the summary
constitutes a valid Show Cause Notice, the Court grants them liberty to initiate
de novo proceedings under Section 73, if considered appropriate. To enable this,
Page No.# 13/13

the Court directs that the period between the issuance of the Summary of the
Show Cause Notice and the date when a certified copy of this judgment is
served upon the Proper Officer be excluded from the computation of the
limitation period under Section 73(10) of the Act.

29. Writ petition accordingly stands allowed in the manner indicated above.

30. No order as to cost.

JUDGE

Comparing Assistant



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