Swarn Cosmetics (India) Vs Union of India & Ors. (Delhi High Court)
The Delhi High Court delivered its judgment in a petition filed by Swarn Cosmetics (India) challenging a Show Cause Notice (SCN) dated 21st November, 2024 and the consequent order dated 23rd February, 2025 issued by the Department of Trade & Taxes, Government of N.C.T. of Delhi. The impugned order raised a demand for the financial year 2020-21. The SCN alleged multiple discrepancies, including non-reconciliation of GSTR-01 with GSTR-09, excess Input Tax Credit (ITC) claimed due to non-reconciliation, ITC claimed on non-business transactions and exempt supplies, and ITC claimed from cancelled dealers, defaulters, and non-taxpayers. The Petitioner did not respond to the SCN, leading to the issuance of the demand.
The petitioner challenged the SCN and the order on three grounds: (i) the documents were not signed physically or digitally, (ii) the pre-consultation notice under Rule 142(1A) of the CGST Rules, 2017 was not issued, and (iii) Section 16(2)(c) of the CGST Act, 2017 was under judicial scrutiny in other pending matters. Counsel for the petitioner argued that the absence of signatures invalidated the documents, relying on prior judgments emphasizing the importance of signatures.
The CGST Department countered that all SCNs and orders are authenticated using the officer’s digital key, which includes the officer’s credentials such as name, designation, and jurisdiction. Digital authentication is mandatory to upload SCNs or orders on the GST portal, and the system generates these documents only after proper validation of the officer’s digital key and an OTP verification. Hence, the Department contended that the lack of visible signatures on the PDF documents did not amount to any technical flaw, and the orders and notices are authentic and legally valid unless the digital key is misused.
