GST Show Cause Notice: What Happens When an SCN or Order Lacks Specificity? Legal Validity of an Unsigned Order

The Hon’ble Delhi High Court has recently passed a judgment in the case of Marg Erp Ltd v. Commissioner of Delhi Goods and Service Tax & Anr. [W.P.(C) 872/2023 dated February 3, 2023] regarding an unsigned order passed by the Revenue Department, which has been set aside by the court. The court held that an unsigned notice or order cannot be considered as an order, and hence cannot be sustained. The court further directed the assessee to submit its reply within two weeks and directed the Revenue Department to pass fresh orders after hearing the assessee.

The case pertains to an Impugned SCN issued by the Revenue Department to Marg Erp Ltd, calling for evidence to support its claims, without any specific allegation mentioned in it. Subsequently, an Impugned Order was issued demanding the payment of INR 49,26,623/- under Section 73 of the CGST Act. Both the Impugned SCN and the Impugned Order were found to be unsigned, which led to the filing of this petition.

The court observed that the purpose of a SCN is to enable the petitioner to respond to the allegations made against it. However, the Impugned SCN in this case was found to be vague and did not spell out the allegation that the petitioner had to address. The court relied on its earlier judgment in Railsys Engineers Private Ltd. & Anr. v. The Additional Commissioner of Central Goods and Services Tax [W.P.(C) 4712/2022 dated July 21, 2022], where it was held that an order without digital signature by the issuing authority will have no effect in the eyes of the law. Hence, the Impugned Order was set aside as it was unsigned and could not be sustained.

The court further relied on the judgment of the Hon’ble Bombay High Court in Ramani Suchit Malushte v. Union of India and Ors. [W.P.(C) 9331/2022 dated September 21, 2022], where it was held that an unsigned notice or order cannot be considered as an order. However, the court clarified that the Impugned SCN need not be set aside as it was confined to the issues mentioned in an earlier notice dated January 1, 2021.

The court allowed the petitioner to submit its reply within two weeks and directed the Revenue Department to pass fresh orders after providing an opportunity of hearing to the petitioner. This judgment is a significant development in tax law and highlights the importance of issuing signed orders and notices in accordance with the law. It also emphasizes the importance of giving specific allegations in the SCN to enable the petitioner to respond to the same. This judgment will have far-reaching implications on future tax cases, as it sets a precedent that unsigned orders or notices will not be considered as orders and will not be sustained

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