Summary: Following the introduction of GST, several states issued scrutiny notices and show-cause notices electronically for FY 2017–18 onward, many of which lacked the mandatory digital signature required under Rule 26(3) of the CGST Rules, 2017. These unsigned notices—often issued at the last moment under Section 73—were challenged across High Courts for being void ab initio. Courts in Telangana, Andhra Pradesh, and others consistently held that unsigned SCNs and assessment orders are invalid, ruling that a signature is an essential legal requirement that cannot be cured under Section 160 or Section 169 of the CGST Act. These judgments emphasized that authentication is fundamental, and an unsigned document has no legal force. The department argues that such defects are curable and should not jeopardize revenue, relying on Section 160. The matter is now before the Supreme Court through an admitted SLP, which must decide whether lack of digital signature—a crucial element affecting legality and limitation—can ever be treated as a curable defect.
Background
After the rollout of the Goods and Services Tax (GST), various states outsourced the issuance of scrutiny notices and Show Cause Notices (SCN) through electronic systems for the financial years 2017-18, 2018-19, and subsequent years.
However, the major issue with these communications was that they did not bear the digital signature of the officer authorized to issue such notices under Rule 26(3) of the CGST Rules, 2017. These notices were often issued in haste, usually on the last date prescribed under Section 73 of the CGST Act, 2017, without proper scrutiny of their legality
The Present Dispute: Validity of Notices Without Digital Signature
The notices/SCNs not bearing the digital signatures of the issuing officers were challenged in various High Courts. Petitioners sought to declare these notices as void ab initio (void from the beginning) due to this lapse.
Here are the key judicial pronouncements on this matter:
The challenge was the validity of the show cause notice and unsigned assessment order, whether digitally or physically, required under Rule 26(3) of the CGST Rules, 2017.
The Court held that both the SCN and the impugned order were not sustainable and deserved to be set aside.
The High Court rejected the department’s view regarding the validity of the order under Section 160 of the CGST Act, 2017 (which provides relief for mistakes, defects, or omissions).
The Court clearly stated that signature cannot be dispensed with, and the provisions of Section 160 and Section 169 do not come to the rescue of the department.
GST – Validity of unsigned order. Revenue relied on Section 160 of the CGST Act, 2017 to contend that no assessment/re-assessment order shall be invalid merely by reason of any mistake, defect, or omission.
The impugned order was set aside on the ground that it did not contain the signatures.
GST – Unsigned Order. The validity of an assessment order that was not signed either digitally or physically as required under Rule 26 of the CGST Rules, 2017, was challenged.
The Court held that since the impugned order is an unsigned document, it loses its efficacy in light of the requirement of Rule 26(3) of the CGST Rules, 2017.
The SCN and the impugned order were both declared not sustainable and accordingly quashed. The Court reserved the right of the respondents to take appropriate steps strictly in accordance with the law. The writ petition was allowed.
Various other High Courts, including those of Mumbai, Delhi, Jharkhand, and Gauhati, decided the issue on similar lines, holding that there was a violation of Rule 26(3) of the CGST Rules, 2017.
View of the Department
The department’s view is that Section 160(1) protects the assessment order, as it states:
“No assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings done, accepted, made, issued, initiated, or purported to have been done, accepted, made, issued, initiated in pursuance of any of the provisions of this Act shall be invalid or deemed to be invalid merely by reason of any mistake, defect or omission therein, if such assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings are in substance and effect in conformity with or according to the intents, purposes and requirements of this Act or any existing law.”
The department is further taking a plea that these mistakes are curable, and therefore, substantial revenue cannot be lost on this ground alone.
Present Status
A Special Leave Petition (SLP) has been admitted in the matter of M/s Silver Oak Villas LLP, and notice has been issued. However, no stay has been granted on the High Court order. The issue remains open for both sides until it is finally decided by the Hon’ble Supreme Court.
There is a crucial issue before the Hon’ble supreme court whether unauthenticated document can be cured where signature and timing are crucial factor in document to examine legality and limitation of the document.
Author Bio
