DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court

The Gauhati High Court has reiterated that a summary show cause notice issued in Form GST DRC-01 cannot substitute the mandatory show cause notice required under Section 73 of the Assam Goods and Services Tax (AGST) Act, 2017. The bench of Justice Manish Choudhury has observed that non-issuance of a proper and prior Show Cause Notice, as prescribed under sub-section of Section 73 of AGST Act, 2017 and issuance of only a Summary of Show Cause Notice cannot be said to be in compliance with sub-section of Section 73 and sub-rule and Rule 142 of the AGST Rules. A Summary of Show Cause Notice is held to be not a substitute of a Show Cause Notice, prescribed by the provisions of sub-section of Section 73, AGST Act to set the proceeding in motion. The petitioners challenged a summary order dated April 30, 2024 issued under Section 73 of the AGST Act. The petitioner, a proprietorship concern engaged as a government contractor with an annual turnover below ₹1 crore, contended that no proper show cause notice under Section 73(1) had ever been issued before the tax demand order was passed. Instead, the authorities had only issued a summary show cause notice in Form GST DRC-01. The petitioner further submitted that after the demand proceedings, the authorities proceeded to issue a notice for cancellation of GST registration on the ground of unpaid liabilities and also suspended the registration with effect from January 8, 2026. The challenge before the Court was therefore not limited merely to the demand order but also extended to the subsequent consequences flowing from the allegedly defective proceedings. Justice Manish Choudhury examined the statutory framework under Section 73 of the AGST Act and Rule 142 of the AGST Rules. The Court noted that Section 73 expressly requires issuance of a show cause notice by the proper officer where tax is alleged to have remained unpaid, short paid, wrongly refunded, or where input tax credit is wrongly availed or utilised. Rule 142 separately contemplates issuance of a summary of such notice in Form GST DRC-01. Thus, the statutory scheme treats the show cause notice and its summary as distinct requirements. The Court relied heavily on its earlier common judgment dated September 26, 2024 rendered in a batch of writ petitions dealing with similar issues. In that judgment, the High Court had examined whether DRC-01 summaries could be treated as valid show cause notices and had concluded that the summary notice mechanism cannot replace the substantive requirement of a notice under Section 73(1). Highlighting the legal position, the Court observed that the summary of a show cause notice merely serves as an electronic summary and does not itself initiate proceedings under Section 73. The judgment emphasized that the proper officer is under a statutory obligation to issue an independent show cause notice and such notice cannot be bypassed by relying only on DRC-01 documentation. The High Court also noted that the show cause notice, statement under Section 73(3), and order under Section 73(9) all have to be issued by the “proper officer” in the prescribed manner and require due authentication. Since tax proceedings carry serious civil consequences, strict compliance with procedural safeguards becomes essential. Applying these principles to the present case, the Court found that both sides were in agreement that no proper and prior show cause notice had been issued and only a DRC-01 summary had been served upon the petitioner. Since the mandatory statutory requirement had not been complied with, the demand order dated April 30, 2024 was held to be legally unsustainable. Accordingly, the High Court quashed the impugned order and declared all consequential actions taken pursuant to it as infirm. The Court held that the defective initiation of proceedings vitiated the entire process and therefore the subsequent actions, including those arising from the demand proceedings, could not survive. At the same time, the Court granted liberty to the tax authorities to initiate fresh proceedings in accordance with law. The authorities were permitted to commence de novo proceedings provided they strictly comply with Section 73 and other ancillary legal requirements. The Court also directed exclusion of the period beginning from issuance of the summary show cause notice while computing limitations for passing a fresh order. Case Details Case Title: Ms Riyan Enterprises And Anr Versus The State Of Assam Citation: JURISHOUR-1294-HC-2026(GAU) Case No.: WP(C)/2258/2026 Date: 13.05.2026 Counsel For Petitioner: Dikshita Das, Mr. M Uddin, Mr. N N Jha Counsel For Respondent: SC, Finance Click Here To Read Order Read More: Pan Masala Unit Booked for Alleged Rs. 29.12 Crore Health Security Cess Evasion; Meerut Court Sends Accused to Judicial Custody

DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court

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