Court Quashes Demand of Over Rs. 3 Lakh Against M/s Mayur Timber for Lack of Proper Authentication and Denial of Personal Hearing; Directs Fresh Proceedings Compliant with Natural Justice
In a significant ruling delivered on August 11, 2026, the Rajasthan High Court (Jaipur Bench) has quashed a show cause notice and consequent adjudication order issued under the Central Goods and Services Tax (CGST) Act, 2017 against M/s Mayur Timber. The writ petition challenged a GST demand totaling Rs. 3,13,894, along with interest and penalty, imposed on the petitioner for allegedly wrongfully availing Input Tax Credit (ITC) without actual receipt of goods.
The Court observed that the show cause notice dated June 13, 2024, and the order dated October 15, 2024, were neither digitally signed nor physically signed, rendering them invalid under Rule 26(3) of the CGST Rules, 2017. The rule mandates that all notices, certificates, and orders issued under the GST Chapter must be electronically authenticated with a digital signature certificate, e-signature, or other notified modes of verification. The absence of such authentication, the Court held, goes to the root of the authority to proceed and cannot be treated as a mere procedural irregularity.
The petitioner had contended that the show cause notice and order were uploaded on the GST portal under the "Additional Notices and Orders" tab rather than the usual "View Notices and Orders" tab and were not physically served. Consequently, the petitioner remained unaware of the proceedings until the bank attached its account pursuant to a recovery notice issued on August 20, 2025. The Court noted that this lack of proper communication and service violated the principles of natural justice, particularly under Section 75(4) of the CGST Act, which guarantees the right to a personal hearing before an adverse order is passed.
Rejecting the respondent's argument that system-generated reference numbers and electronic portal uploading suffice for authentication, the Court emphasized the distinct and mandatory nature of the digital or physical signature requirement. The digital signature serves three critical objectives: authenticating the document's origin from the proper officer, fixing accountability, and acting as a safeguard against arbitrariness.
Further, the Court held that the existence of an alternative remedy under Section 107 of the CGST Act does not preclude the exercise of writ jurisdiction when there is a violation of natural justice such as denial of opportunity to be heard. The Court therefore set aside the impugned show cause notice, the consequential order, and the bank attachment notice. However, the respondents were granted liberty to initiate fresh proceedings by issuing a properly authenticated show cause notice and providing the petitioner with an effective opportunity of hearing.
This judgment reinforces the legal sanctity of digital authentication in the GST regime and underscores the judiciary's commitment to ensuring transparency, accountability, and adherence to fundamental principles of natural justice in tax adjudication.
Bottom Line:
Under the CGST Act, 2017, a show-cause notice and an adjudication order must be digitally or physically signed as mandated by Rule 26(3) of the CGST Rules, 2017. Unsigned notices/orders are invalid and violate the principles of natural justice.
Statutory provision(s):
Central Goods and Services Tax Act, 2017 - Section 74, Section 75(4), Section 75(7), Section 79(1)(c), Section 107, Section 169(1)(d);
CGST Rules, 2017 - Information Technology Act, 2000.
M/s Mayur Timber v. State of Rajasthan, (Rajasthan)(DB)(Jaipur Bench) : Law Finder Doc Id # 2971282
