2025 (11) TMI 242 - HC - GST

Unsigned-looking GST portal notices via officer digital key are authentic; challenge needs proof of digital-key misuse; s.107 CGST appeal allowed

M/s. Swarn Cosmetics (India) Versus Union of India & Ors.

HC held that unsigned-looking SCNs and orders are authentic where uploaded via the GST portal using the officer's digital key and bearing the officer's ... Seeking to set aside the impugned SCN and the consequent impugned order - pre-consultation notice u/r 142 (1A) of the CGST Rules, 2017, has not been issued - challenge to Section 16 (2)(c) of the CGST Act, 2017, is pending consideration before this Court in a batch of matters - Reconciliation of GSTR-01 with GSTR-09 - Excess input tax credit (ITC) claimed on account of non-reconciliation of information - ITC to be reversed on non-business transactions & exempt supplies - ITC claimed from cancelled dealers, return defaulters & non tax payers. HELD THAT:- The note filed on behalf of the Department clearly states that even though the PDF documents downloaded from the GST portal may not show a physical signature impression, but it is generated only after a thorough authentication of the proper officer. This Court is of the view that the argument raised by the Petitioner with respect to the impugned order and SCN being unsigned is untenable. Thus, insofar as the issue of signatures on the impugned order and impugned SCN is concerned, since the SCNs and orders are now uploaded through the GST portal only through the digital key of the concerned officer, as also because the orders and SCNs bear the name of the officer and the designation of the officer, the authenticity and genuinity of the order cannot be disputed, unless there is a misuse of the digital key. This Court is of the view that the Petitioner ought to avail of its appellate remedy under Section 107 of the CGST Act, 2017, to file an appeal against the impugned order - If the said appeal is filed by the Petitioner by 30th November, 2025, it shall not be dismissed on the ground of limitation and shall be adjudicated on merits. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether a show cause notice and order issued/uploaded via the GST common portal without a physical signature impression are invalid for want of signature. 2. Whether non-issuance of a pre-consultation notice under Rule 142(1A) of the CGST Rules, 2017 (post-amendment) vitiates a subsequently issued show cause notice and order. 3. Whether a taxpayer challenging Section 16(2)(c) of the CGST Act, 2017 can refrain from pursuing the statutory appellate remedy pending judicial determination of that provision in other proceedings. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of notices/orders issued via GST portal without physical signature impression Legal framework: Rule 26(3) of the CGST Rules, 2017 mandates electronic issuance of notices, certificates and orders via the common portal; the portal requires authentication using a Digital Key/Signature and system-generated OTP tied to the proper officer. Precedent treatment: The Court considered earlier authority addressing signatures but treated the present procedural regime as determinative rather than any prior insistence on physical impressions. Interpretation and reasoning: The Court accepted the Department's documented process showing that upload and authentication require the proper officer's Digital Key/Signature and OTP, and that documents generated and stored on the portal contain the officer's credentials (name, designation, jurisdiction). The absence of a physical signature impression on the PDF export does not demonstrate lack of authentication because the digital key constitutes the mandatory authentication mechanism. The authenticity and genuineness of portal-issued SCNs/orders cannot be disputed unless affirmative misuse of the digital key is shown. Ratio vs. Obiter: Ratio - portal-generated documents authenticated by the required digital mechanisms satisfy the signature/authentication requirement under the statutory scheme; absence of a physical signature impression on downloaded PDFs does not invalidate the notice/order. Obiter - remarks noting potential challenge if misuse of digital key is demonstrated. Conclusion: The challenge to the impugned SCN and order on the ground that they lack physical signatures is untenable; such documents are validly authenticated when issued through the prescribed digital process. Issue 2 - Effect of non-issuance of pre-consultation notice under Rule 142(1A) Legal framework: Rule 142(1A) of the CGST Rules, 2017 (as amended with effect from 15 October 2020) provides that the proper officer 'may' (discretionary) communicate details in Part A of FORM GST DRC-01A before service of notice under Section 73(1) or 74(1); earlier language had been mandatory but was subsequently amended. Precedent treatment: The Court acknowledged earlier decisions which treated the pre-consultation notice as mandatory under the prior language of Rule 142(1A), but held that the amendment changing the provision to discretionary alters the requirement. Interpretation and reasoning: Given the express amended language making issuance of the pre-consultation notice discretionary, failure to issue such a notice cannot, by itself, vitiate an otherwise valid show cause notice or order. The Court relied on the textual change and the Department's concession regarding the amendment to conclude that non-issuance is not a ground for setting aside. Ratio vs. Obiter: Ratio - under the post-amendment Rule 142(1A), non-issuance of a pre-consultation notice is not a fatal procedural infirmity that would invalidate a subsequent SCN/order. Obiter - contextual reference to prior mandatory regime and earlier cases. Conclusion: The impugned SCN and order cannot be set aside solely on the ground that a pre-consultation SCN under Rule 142(1A) was not issued. Issue 3 - Obligation to pursue statutory appeal pending adjudication of Section 16(2)(c) Legal framework: Section 107 of the CGST Act, 2017 provides the statutory appellate remedy against orders passed under the Act; Section 16(2)(c) prescribes conditions for entitlement to input tax credit, including limitations relating to cancelled dealers. Precedent treatment: The Court noted that the constitutional/legal challenge to Section 16(2)(c) is pending adjudication in other proceedings before the same Court; prior determinations in those proceedings may be binding on appellate authorities in later appeals. Interpretation and reasoning: The Court held that the existence of a pending challenge to Section 16(2)(c) does not excuse the taxpayer from instituting the statutory appeal under Section 107. The proper remedy is to file the appeal within the statutory time-frame (or as permitted), and the appellate forum will be bound by the outcome of the pending proceedings to the extent applicable. To avoid prejudice, the Court directed that if the appeal is filed by a specified date it shall not be dismissed on limitation grounds and must be adjudicated on merits. The Court further limited the binding effect of the pending challenge's eventual outcome to the specific issue of demand qua cancelled dealers in relation to Section 16(2)(c). Ratio vs. Obiter: Ratio - a taxpayer must avail itself of the appellate remedy under Section 107 despite a pending broader challenge to Section 16(2)(c); where an appeal is filed within the specified extended period, limitation will not be a ground for dismissal and the appeal must be decided on merits. Obiter - delineation that the appellate authority will be bound by the decision on the pending challenge only insofar as it relates to demands against cancelled dealers. Conclusion: The petitioner's remedy is to file the statutory appeal; the Court granted limited indulgence on limitation if the appeal is filed by the stated date and directed adjudication on merits, with the appellate authority bound by the pending decision on Section 16(2)(c) only in respect of demands qua cancelled dealers. Ancillary and Procedural Conclusions The Court dismissed the objections to the impugned SCN/order grounded solely on absence of physical signatures and non-issuance of pre-consultation notice post-amendment; directed the petitioner to file the statutory appeal by the stipulated date with protection against dismissal on limitation; and confined the binding effect of the pending constitutional/legal challenge to Section 16(2)(c) to the specific category of cancelled dealers in related appeals.