Show Cause Notice under Section 73 and GST DRC 01: court quashes order for lack of valid notice, allows fresh proceedings

Issuance of a summary in Form GST DRC-01 does not substitute the statutory requirement to issue a Show Cause Notice and a distinct Statement of determination under Section 73; those documents and any order under the same provision must be issued and authenticated by the Proper Officer as mandated and afford the taxpayer a personal hearing under Section 75(4). The impugned order was quashed for failure to comply with these requirements; the court permitted initiation of de novo proceedings, excluded the period from issuance of the summary notice to service of certified judgment for limitation reckoning, and directed defreezing of bank accounts.

---

---

Issues: Whether the Summary of the Show Cause Notice in Form GST DRC-01 and the attached statement/determination can substitute for a Show Cause Notice issued under Section 73 of the Central Goods and Services Tax Act, 2017; whether attachments and orders lacking authentication of the Proper Officer and without providing opportunity of hearing under Section 75(4) are valid.

Analysis: Section 73(1) requires that a Show Cause Notice be issued when tax is not paid/short paid/erroneously refunded or input tax wrongly availed/utilised (for reasons other than fraud or willful misstatement). Section 73(3) provides for the statement of determination of tax and Section 73(9) for passing the order after considering representations. Rule 142(1)(a) of the Central Goods and Services Tax Rules, 2017 requires issuance of an electronic summary in FORM GST DRC-01 in addition to the notice under Section 73. Rule 26(3) prescribes authentication of notices, certificates and orders through digital signature or e-signature. Section 75(4) mandates opportunity of hearing when requested in writing or when an adverse decision is contemplated. The summary form and an attached statement of determination do not contain the particulars and mandate of a Show Cause Notice under Section 73(1) and therefore cannot substitute for issuance of a proper Show Cause Notice. Authentication by the Proper Officer is required and absence of authenticated signature renders the notice/statement/order ineffective. Where the statutory right to hearing exists and is invoked in the prescribed form, an adverse order cannot be passed without affording hearing.

Conclusion: The Summary in FORM GST DRC-01 and the attached statement/determination do not substitute for the Show Cause Notice required under Section 73(1) of the Central Goods and Services Tax Act, 2017. Notices, statements and orders in proceedings under Section 73 must be authenticated in the manner required and an opportunity of hearing under Section 75(4) must be afforded; failure to comply renders the impugned order invalid.

---