Unsigned DRC-07 invalidated as absence of digital signature renders GST demand order void for non-compliance with statutory procedure

Case Summary: Water Tech Engineers v. Assistant Commissioner of CGST, Malkajgiri Division & Ors.
High Court for the State of Telangana, Hyderabad
Writ Petition No. 21072 of 2024
Date of Judgment: 22 April 2025
Category: Demand and Recovery / Validity of Unsigned GST Orders
Relevant Sections: Sections 74(9), 122(2)(b), 50(3) of the CGST Act 2017; Rule 26(3) and Rule 142(5) of the CGST Rules; Section 3 of the Information Technology Act, 2000.

Facts (Para 1–3)

Water Tech Engineers challenged the Order-in-Original No. 24/2024-GST dated 29-03-2024 passed by the Assistant Commissioner, CGST Malkajgiri Division, demanding ₹ 51,04,778 under Section 74(9) along with interest under Section 50(3) and equal penalty under Section 122(2)(b). The grievance was that the DRC-07 uploaded on the portal on 26-04-2024 was unsigned—neither physically nor digitally authenticated—in violation of Rule 26(3) and Rule 142(5) of the CGST Rules read with Section 3 of the Information Technology Act. The petitioner asserted that such unsigned communication lacked legal sanctity and violated Articles 14, 19 and 300-A of the Constitution.

Questions Before the Court (Para 3–5)

The core issue was whether a GST demand order (DRC-07) without a valid digital signature could be sustained in law, particularly when the statute and rules prescribe that orders issued electronically must be digitally signed by the proper officer.

Court’s Observations (Para 6–8)

The Bench noted that the issue stood squarely covered by the earlier decision in W.P. No. 21101 of 2024 & Batch (decided on 28-02-2025), which held that if law requires an act to be done in a particular manner, it must be done in that manner or not at all (referring to Baru Ram v. Prasanni, AIR 1959 SC 93, and State of UP v. Singhara Singh, (1964) 4 SCR 485). The Court reaffirmed that unsigned DRC-01 or DRC-07 are void ab initio, regardless of administrative justifications. The “brief note” relied upon by the Department to explain the absence of signature could not override statutory requirements.

Judgment (Para 9–10)

Following its own precedent in the aforesaid batch, the Court set aside the impugned demand order and DRC-07, granting liberty to the Revenue to re-issue the demand after complying with the law. The writ petition was disposed of without costs, and pending miscellaneous petitions were closed.

Case References and Verdicts

Between Fine Lines

For taxpayers and officers alike, the judgment underscores that every GST order issued electronically must bear a valid digital signature. Any unsigned DRC—no matter how well-intentioned—lacks legal force and can be struck down. Compliance with Rule 26(3) and Rule 142(5) is not a procedural formality but a substantive safeguard ensuring authenticity and accountability in tax administration.

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