Show Cause Notice requirement: a DRC-01 summary cannot substitute and orders without hearing are vitiated.

A summary in Form GST DRC-01 or an attached tax determination does not satisfy the statutory requirement for a show cause notice under the Act; the formal attributes of a Section 74(1) notice are distinct from a statement or summary, and the attachment cannot be treated as a substitute. Further, an adverse order contemplated without granting an opportunity of hearing violates the mandate of Section 75(4) and principles of natural justice; marking hearing fields as 'NA' while proceeding to an adverse decision nullifies procedural safeguards. Resulting orders lacking a proper SCN and hearing are vitiated; fresh proceedings may be initiated subject to limitation adjustments.

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Issues: (i) Whether show cause notices were issued prior to passing the impugned order under Section 74(9) of the Act? (ii) Whether the determination of tax and the order attached to the summary in Form GST DRC-01/DRC-07 can be treated as the Show Cause Notice and Order respectively? (iii) Whether the impugned orders under Section 74(9) comply with Section 75(4) and the principles of natural justice?

Issue (i): Whether show cause notices were issued prior to passing the impugned order under Section 74(9) of the Act?

Analysis: Section 74 prescribes circumstances and procedural requirements for issuance of a show cause notice and distinguishes between a show cause notice under subsection (1) and a statement under subsection (3). Rule 142(1)(a) requires that a summary in Form GST DRC-01 be served along with the notice issued under Section 74. A summary by itself does not discharge the statutory requirement of issuing a proper and separate show cause notice under Section 74(1).

Conclusion: No valid show cause notice under Section 74(1) preceded the impugned order; the summary alone did not satisfy the statutory requirement.

Issue (ii): Whether the determination of tax and the order attached to the summary in Form GST DRC-01/DRC-07 can be treated as the Show Cause Notice and Order respectively?

Analysis: The statute and rules differentiate between a statement of determination and a show cause notice; prior decisions of High Courts support that a summary or attached tax determination cannot substitute for a proper SCN. The attachment described as a tax determination lacks the formal attributes of an SCN required by Section 74(1) and therefore cannot qualify as the statutory show cause notice.

Conclusion: The attached determination of tax and the summary in DRC-01/DRC-07 do not amount to a valid show cause notice or a lawful substitute therefor.

Issue (iii): Whether the impugned orders under Section 74(9) comply with Section 75(4) and the principles of natural justice?

Analysis: Section 75(4) mandates an opportunity of hearing either on a written request by the person chargeable or when an adverse decision is contemplated. Form GST DRC-01 provides fields for personal hearing details; marking those as "NA" while contemplating adverse orders renders the second limb of Section 75(4) ineffective. A hearing is a statutory safeguard and a requirement of natural justice when an adverse decision is contemplated, and passing an adverse order without granting such an opportunity contravenes the statutory mandate and principles of natural justice.

Conclusion: The impugned orders failed to comply with Section 75(4) and violated principles of natural justice.

Final Conclusion: The impugned order dated 26.11.2025 is set aside for lack of a proper show cause notice and for denial of the mandated opportunity of hearing; respondents are permitted to initiate fresh proceedings under Section 74 subject to the limitation adjustments directed.

Ratio Decidendi: A summary in Form GST DRC-01 or an attached statement of tax determination cannot substitute for a formal show cause notice required under Section 74(1); additionally, Section 75(4) requires that a hearing be granted whenever an adverse decision is contemplated, and failure to provide such hearing vitiates the resulting order.

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