Single Show-Cause Notice Without Proper Digital Signatures and Composite GST Assessment: Andhra Pradesh HC Sets Aside Orders and Remands Matter to Authority [Read Order]

The High Court of Andhra Pradesh, set aside a single show-cause notice and composite Goods and Service Tax ( GST ) assessment issued without proper digital signatures and remanded the matter to the authority.

Sahiti Agencies,petitioner-assessee, was registered under the Goods and Services Tax Act, 2017. She received a show cause notice in Form GST DRC-01 under Section 74 for the period from July 2017 to March 2023, proposing an additional tax of Rs. 43,07,332.

After holding a personal hearing, the first respondent issued an order-in-original dated January 9, 2025, along with six summaries in Form GST DRC-07 dated January 17, 2025. The petitioner challenged these orders through the present writ petition.

The petitioner raised two principal grounds. First, the show cause notice and five summaries of orders lacked the physical or digital signatures of the first respondent, and did not include a valid digital signature certificate. She contended that, as per the judgments in Kushalbhai Ratanbhai Rohit & Ors. vs. State of Gujarat, M/s. S.R.K. Enterprises vs. AC Beemli Circle & Ors., and A.V. Bhanoji Row vs. Assistant Commissioner (ST) & Ors., these orders were invalid and inoperative.

Second, the petitioner argued that issuing a single show cause notice and a composite order of assessment for six assessment years from 2017-18 to 2022-23 was not permissible under the GST Act.

Additionally, the petitioner claimed that pre-show cause notices required under Rule 142(1A) of the GST Rules in Form GST DRC-01A had not been issued. As a result, assessments up to 2020-21 were vitiated, making the entire assessment unsustainable. The Court did not address other issues at this stage, as these grounds were sufficient for the present.

The petitioner argued that the five summaries of orders and the show-cause notice were invalid because they lacked physical or digital signatures, and therefore the entire proceedings should be set aside. The Court noted that it had previously held that notices or proceedings required the signature of the issuing authority, or they would be deemed not served. However, it had not earlier considered the situation where a registered person responded to defective notices.

The Court observed that when a registered person received defective notices but acted upon them, they could not later claim the proceedings were invalid. Only where the registered person did not act on the notices could it be argued that the proceedings were invalid.

The petitioner relied on Rule 26(3) of the GST Rules, which had been interpreted to render unsigned notices and orders invalid. The Court clarified that Rule 26(3) applied only to registration-related proceedings under Chapter 3, and was not relevant to assessment notices.

The appropriate provision for service of assessment notices and orders was Rule 142, which required electronic service of notices and summaries under Sections 73 and 74 of the GST Act. Failure to serve notices electronically could invalidate the proceedings unless the registered person responded.

In the present case, the petitioner contended that the forms did not contain digital signatures. The show-cause notice in Form GST DRC-01 and the summary in Form GST DRC-07 indicated signatures of the issuing authority in printed formats. The petitioner argued that these did not certify digital signatures.

After examining the matter with the assistance of the Central GST authorities, the Court held that electronic notices and summaries required digital signatures, which generated an RFN (Reference Number) as proof. The summaries in the present case contained such indications. Therefore, the Court rejected the petitioner’s contention regarding the absence of signatures.

The petitioner argued that issuing a single show-cause notice and a composite assessment order for multiple years was improper. A Division Bench had earlier held that separate notices, orders, and summaries were required for each tax period. Therefore, the composite order dated January 9, 2025, covering 2017-18 to 2022-23, was set aside.

The petitioner also noted that the show-cause notice dated August 1, 2024, did not refer to any prior notice under Section 142(1A). As a result, assessments for periods before 2021, conducted without such notices, were invalid, in line with a previous Division Bench judgment in M/s. New Morning Star Travels vs. State of Andhra Pradesh & Ors.

Justice R.Raghunandan Rao and Justice T.C.D Sekhar,for these reasons, the Court allowed the writ petition, set aside the impugned order and summaries of orders, and remanded the cases to the first respondent for fresh orders after giving the petitioner a proper hearing.

The period from the date of this Order until receipt was excluded for limitation purposes. No costs were ordered, and pending miscellaneous applications were closed.

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