SCN in DRC-01 Format Invalid—Order under Section 73 Quashed

Case Title: Maverick Technologies v. State of Assam
Court Name: Gauhati High Court
Petition Number: WP(C)/712/2025
Relevant Section: Section 73(1), 73(9), Rule 142(1)(a) of AGST Act/CGST Act
Category of Dispute: Demand—Procedural Validity of SCN
Date of Judgment: 18-02-2025
Relevant Provisions: Section 73, 75(4) of CGST/AGST Act, Rule 142(1), Rule 26(3) of CGST Rules

Facts of the Case

[Para 2-3] The petitioner, a partnership firm engaged in supplying and commissioning scientific equipment, was registered under AGST with GSTIN: 18AAJFM5983H1ZQ. The firm challenged the order dated 21.08.2024 issued under Section 73 by the Assistant Commissioner, Jorhat, on the ground that no Show Cause Notice (SCN) as mandated under Section 73(1) was issued. Instead, only a Summary of SCN in Form GST DRC-01 was served, accompanied by an attachment detailing tax determination under Section 73(3).

Questions in Consideration

[Para 7]

1. Whether an SCN was issued prior to the impugned order under Section 73(9)?

2. Whether the Summary in DRC-01 and attached tax determination under Section 73(3) amounts to a valid SCN?

3. Whether the impugned order is compliant with Section 75(4) and principles of natural justice?

Observations of the Court

[Para 6-12]

• (Para 8[A]) The Court reiterated from a previous judgment (W.P.(C) No. 3912/2024) that Summary in DRC-01 is not a substitute for a statutory SCN under Section 73(1).

• (Para 8[B]) The attachment to DRC-01 was merely a Statement under Section 73(3), not an SCN, and hence not sufficient to initiate proceedings.

• (Para 8[C]) All actions (SCN, statement, and order) under Section 73 must be taken by the Proper Officer and authenticated per Rule 26(3).

• (Para 8[D]) There was also no opportunity of hearing, thus violating Section 75(4).

• (Para 10-12) As a proper SCN was absent, the entire proceeding and order were found invalid and quashed.

Judgment of the Court

[Para 12-15]

• The impugned Order dated 21.08.2024 was quashed for non-compliance with Section 73(1) and Rule 142(1)(a).

• Liberty was granted to the department to initiate de novo proceedings following proper procedure.

• Time from issuance of invalid DRC-01 to receipt of this judgment’s copy is excluded from the limitation period under Section 73(10).

• Petitioner may raise all legal grounds if fresh proceedings are initiated.

Between Fine Lines

1. A Summary of SCN in DRC-01 is not a substitute for the statutory SCN under Section 73(1).

2. Issuance of proper SCN is a condition precedent to initiate valid proceedings.

3. Orders passed without complying with Section 75(4) (opportunity of hearing) are void.

4. The High Court allows re-initiation of proceedings with a valid SCN.

5. Proper Officer’s authentication and compliance with Rule 26(3) is mandatory for validity.

Summary of Referred Cases

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