The Goods and Services Tax Appellate Tribunal (GSTAT), Coimbatore Bench, has held that an appeal involving the issue of whether a summary in FORM GST DRC-01 issued under Rule 142(1) of the CGST Rules, 2017 can substitute the independent show cause notice mandated under Section 74(1) of the CGST Act, 2017 involves a “Question of Law” under Section 109(8) of the CGST Act.
The bench of Praveen Kumar Jain (Judicial Member) and M. Mathew Jolly (Technical Member) directed that the appeal be heard by a Division Bench comprising one Judicial Member and one Technical Member.
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The appeal arose before the Tribunal in the context of proceedings under Section 74 of the CGST Act, 2017. The immediate issue before the Division Bench was not the merits of the underlying tax dispute, but whether the appeal involved a question of law for purposes of determining the appropriate constitution of the Bench under Section 109(8).
The matter had been placed before the Division Bench pursuant to an Office Order dated 14 May 2026 to determine whether a Question of Law was involved. If no question of law was involved and the appeal fell within the prescribed monetary limits, it could be heard by a Single Member. In other cases, Section 109(8) requires the matter to be heard by one Judicial Member and one Technical Member.
The appeal was initially listed on 20 August 2026. The authorised representative of the appellant submitted that the matter involved a question of law, whereas the State contended that the dispute was purely factual and sought time to file its objections. The matter was thereafter listed again on 10 September 2026.
The State filed written submissions before the GSTAT on 8 September 2026, contending that the appeal did not involve a question of law.
According to the Revenue, a question of law involves an ambiguity, dispute or interpretation concerning the application of a legal provision or statute to the facts of a case. It argued that the dispute before the Tribunal essentially concerned establishing what had actually happened on the basis of evidence and therefore constituted a question of fact.
The State further submitted that the appellant’s prayer did not challenge the interpretation of legislative text, constitutional validity or legal consequences involving a question of law. It also relied upon judicial precedents to support its position.
The appellant disputed the Revenue’s approach and argued that the authorities relied upon by the State primarily dealt with the expression “substantial question of law.”
The appellant pointed out that Section 109(8) of the CGST Act does not use the expression “substantial question of law”. Instead, Parliament has used the words “any question of law.”
According to the appellant, this distinction was material because Section 109(8) provides that an appeal within the prescribed monetary limit and which does not involve any question of law may be heard by a Single Member, whereas all other appeals are to be heard by a Judicial Member and a Technical Member together.
The central issue identified by the appellant concerned the statutory notice contemplated under Section 74(1) of the CGST Act.
The appellant submitted that no notice under Section 74(1) had been served and that the only document supplied was a summary of the notice in FORM GST DRC-01, issued under Rule 142(1) of the CGST Rules.
The appellant contended that the statutory notice under Section 74(1) and the summary in FORM GST DRC-01 are two separate requirements. According to the appellant, DRC-01 is required to accompany the notice and cannot itself be treated as the statutory notice.
It was further submitted that the Revenue had been unable to produce the actual Section 74(1) notice and had produced only the DRC-01 summary.
This contention formed the foundation of the legal issue before the GSTAT.
The Tribunal noted that the CGST Act, 2017 does not specifically define the expression “Question of Law.”
For determining the issue, the Bench relied upon the decision of the Karnataka High Court in M/s. Atria Convergence Technologies Ltd. v. Deputy Commissioner of Commercial Tax, reported at 2025 (2) TMI 883.
The Tribunal noted the principle emerging from that decision that a question is ordinarily a question of law when its answer is to be found by reference to a statute. This can also include situations where interpretation of statutory provisions has a bearing upon the outcome of the proceedings.
The GSTAT accordingly observed that a Question of Law encompasses an issue requiring interpretation of legal principles, statutory provisions or precedent.
The Bench further held that where interpretation of a legal principle, statute or precedent is involved, a Question of Law arises and the matter is required to be decided by a Division Bench comprising a Judicial Member and a Technical Member.
After examining the pleadings, the GSTAT identified the precise question arising in the appeal.
The Tribunal recorded that the question was whether the proper notice under Section 74(1) had been issued by the Revenue when only a summary in FORM DRC-01 had been produced.
More specifically, the Tribunal framed the legal issue as whether a summary in FORM GST DRC-01 issued under Rule 142(1) can substitute the independent show cause notice required under Section 74(1) of the CGST Act.
The Bench also considered whether issuance of FORM DRC-01 by itself could be treated as compliance with the statutory requirement of issuing a notice under Section 74(1).
The State had relied upon several judicial decisions concerning the distinction between questions of fact, questions of law and substantial questions of law.
Among the authorities referred to were decisions of the Madras High Court, Supreme Court and Madhya Pradesh High Court.
The Tribunal recorded the Revenue’s reliance on Rimmalapudi Subba Rao v. Noony Veeraju, where the Madras High Court had discussed when a question could constitute a substantial question of law.
The State also relied upon the Supreme Court decision in Sir Chunilal V. Mehta & Sons Ltd. v. Century Spinning & Manufacturing Co. Ltd., and Hero Vinoth v. Seshammal, concerning the distinction between questions of fact and law.
The GSTAT, however, found that those authorities did not answer the specific issue arising in the present appeal.
After considering the rival submissions and the cited precedents, the Tribunal held that the Revenue’s submission that no question of law was involved was not sustainable.
The Bench specifically distinguished the authorities relied upon by the State and found that the present dispute required determination of a statutory interpretation issue.
The Tribunal ultimately held that the question whether FORM DRC-01 can substitute the independent show cause notice contemplated under Section 74(1) is itself a Question of Law.
The Bench recorded that the appellant’s contention regarding the existence of a Question of Law was sustainable.
Consequently, the GSTAT held that the appeal involves a Question of Law within the meaning of Section 109(8) of the CGST Act, 2017.
The Tribunal directed that the appeal be heard together by: One Judicial Member; and One Technical Member.
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