2025 (3) TMI 111 - HC - GST

Legality validity and propriety of the show-cause notices and final orders which admittedly do not contain physical or digital signatures of the Proper Officer - HELD THAT - There is no head on between Sections 73/74 of the GST Act and DRC-01 and DRC-07 and hence we find no merit in the contention of Sri Swaroop Oorilla that since Sections 73/74 of the GST Act are silent about the requirement of digital/physical signature any such requirement in DRC-01 and DRC-07 can be ignored. This is trite that Rules are introduced to translate the scheme of the Act into reality. When there is no difference or head on between the Sections and the Rules/Forms the Rules supplement the Sections and do not supplant it. In this view of the matter it is constrained to hold that once there exists a specific column earmarked for the signature the said requirement becomes a statutory requirement. For this reason the argument that taxation statute must be strictly interpreted based on the judgment of Supreme Court in Dilip Kumar Co 2018 (7) TMI 1826 - SUPREME COURT (LB) is of no assistance to the respondents. Instead it supports the contention of the petitioners. A careful reading of sub-section (1) of Section 160 of the GST Act makes it clear that the assessment re-assessment adjudication review revision appeal rectification notice summons and other proceedings will not become invalid for any mistake defect or omission if in substance and same is in conformity with and according to the intent purpose and requirement of this Act or any existing law. As noticed above the requirement of the GST Rules read with Forms is to put the signature on DRC-01 and DRC-07 at specified place. Thus sub-section (1) does not help the respondents in any way. A minute reading of this Rule makes it clear like noonday that the Rule mandates and makes it imperative for the Proper Officer to serve the notice/order in the prescribed Forms. At the cost of repetition the requirement of the Form is to provide signature name designation jurisdiction and address - in every sub-rule of Rule 142 of the GST Rules the law makers have used the word shall for issuance of Statutory Forms which makes the issuance of Forms in prescribed form as mandatory. Since prescribed Forms as per Rule 142 need signature such requirement must be held to be mandatory. In absence of signature notice/order cannot be held to be a valid notice/order. As analyzed in view of judgment of Supreme Court in M/s. M.M. Rubber and Company 1991 (9) TMI 71 - SUPREME COURT and Kailasho Devi Burman 1996 (2) TMI 2 - SUPREME COURT such notices/orders issued without signatures are held to be invalid the same will not get immunity in the teeth of sub-sections (1) and (2) of Section 160 of the GST Act. Chapter-II of the IT Act deals with digital signature and electronic signature. The authentification of electronic records is based on fulfillment of requirement of Sections 3 and 5 and we find substance in the argument of Sri Karan Talwar that apart from GST Act GST Rules and Statutory Forms prescribed thereunder and Sections 3 of the IT Act make it obligatory for the Proper Officer to put his signature. Section 3A of the IT Act on which Sri Swaroop Oorilla placed reliance does not insulate the notice/order if it does not contain signature of Proper Officer. From the view point of comity also it is inclined to interpret the provisions of the GST Act GST Rules and Statutory Forms prescribed thereunder in the same manner different High Courts have considered it. More-so when Revenue could not make out any exception based on aspects of per incuriam sub silentio obiter dicta or concession etc. The scheme of the GST Act Rules and Statutory Forms prescribed thereunder considred and judgment the impugned show cause notices and the orders which are not pregnant with the signature of the Proper Officer cannot sustain judicial scrutiny. Conclusion - The absence of a signature renders the notices/orders invalid. Petition allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The primary legal issue considered was whether the absence of physical or digital signatures on show-cause notices and final orders issued under the GST Act and Rules invalidates these documents. The court examined the necessity of signatures for authentication of such documents and the implications of unsigned notices/orders under the GST legal framework.

ISSUE-WISE DETAILED ANALYSIS

1. Requirement of Signature on Notices/Orders

Relevant Legal Framework and Precedents: The court examined the provisions of the GST Act, particularly Sections 73 and 74 concerning 'Demands and Recovery', and the GST Rules, including Rule 142 and statutory Forms DRC-01 and DRC-07, which require the signature of the Proper Officer. The court also considered precedents from other High Courts and the Supreme Court, including judgments in M/s. M.M. Rubber and Company and Kailasho Devi Burman, which emphasized the necessity of signatures for the validity of legal documents.

Court's Interpretation and Reasoning: The court concluded that the absence of a signature renders the notices/orders invalid. It reasoned that statutory forms under the GST Rules explicitly require signatures, and this requirement is a statutory mandate, not a mere procedural formality. The court rejected the argument that unsigned documents could be considered valid under Section 160 of the GST Act, which protects proceedings from being invalidated due to technical defects, as the absence of a signature was deemed a substantive defect.

Key Evidence and Findings: The court noted that statutory Forms DRC-01 and DRC-07 require the signature, name, designation, jurisdiction, and address of the Proper Officer, indicating a clear statutory requirement for authentication.

Application of Law to Facts: The court applied the statutory requirements to the facts, determining that the unsigned notices/orders did not meet the legal standards for validity under the GST framework.

Treatment of Competing Arguments: The court addressed the respondents' reliance on Section 160 and the advisory from the GST Network, dismissing these arguments by emphasizing the statutory nature of the signature requirement and the lack of statutory backing for the advisory.

Conclusions: The court concluded that the unsigned notices/orders were invalid and could not withstand judicial scrutiny.

2. Impact of Section 160 of the GST Act

Relevant Legal Framework and Precedents: Section 160 was analyzed to determine whether it could validate unsigned notices/orders. The court referenced the statutory requirement for signatures and the Supreme Court's emphasis on strict adherence to statutory mandates in fiscal statutes.

Court's Interpretation and Reasoning: The court interpreted Section 160 as not applicable to substantive defects like the absence of a signature, which affects the validity of the notices/orders fundamentally.

Key Evidence and Findings: The court found that the statutory requirement for signatures in the GST Rules and Forms could not be overridden by Section 160.

Application of Law to Facts: The court determined that Section 160 did not protect the unsigned notices/orders from invalidation.

Treatment of Competing Arguments: The court dismissed the argument that Section 160 could validate the documents, emphasizing the distinction between technical and substantive defects.

Conclusions: The court held that Section 160 did not apply to the substantive defect of unsigned notices/orders, affirming their invalidity.

SIGNIFICANT HOLDINGS

The court established that the absence of a signature on show-cause notices and final orders under the GST framework constitutes a substantive defect, rendering such documents invalid. The court emphasized the statutory requirement for signatures in the relevant GST Rules and Forms, and concluded that unsigned documents lack the necessary legal authenticity.

Verbatim Quotes of Crucial Legal Reasoning:

"A notice or final order can become legal or bear authenticity on its forehead only when it is physically/digitally signed by the Proper Officer."

"In absence of signature, notice/order cannot be held to be a valid notice/order."

The court's final determination was to set aside the impugned notices and orders, allowing the respondents to issue fresh notices/orders in compliance with the statutory requirements, without expressing any opinion on the merits of the case. The court also clarified that the limitation period would not be a barrier for reissuing the notices/orders.