DRC-01 Summary Cannot Substitute a Show Cause Notice — Entire Proceedings Void Ab Initio Where SCN Addressed to Wrong Taxpayer: GSTAT Lucknow Bench

The Goods and Services Tax Appellate Tribunal, Lucknow Bench, has allowed an appeal and set aside the entire proceedings as invalid and void ab initio, holding that Form DRC-01, being merely a summary of the show cause notice, cannot substitute the statutory requirement of a proper SCN under Section 73(1) of the CGST/SGST Act. The ruling by Member (Judicial) Narendra Kumar and Member (Technical) Alok Chopra in APL/54/LCK/2026 (Sakhsham Knowledge Services Pvt. Ltd., decided 14.09.2026) is significant as one of the early substantive decisions of the GSTAT on the foundational requirements of adjudication proceedings.

The appellant, an IT services provider, had been issued a DRC-01 on the portal, but the SCN attached with it was addressed to an entirely different taxpayer — M/s Sai Kripa Medical Store bearing a different GSTIN. No separate SCN was ever issued to the appellant. The adjudicating authority proceeded to pass an order-in-original confirming the demand, and the First Appellate Authority upheld the same without addressing the fundamental objection that no valid SCN had been issued. The Tribunal noted with concern that neither authority had even tendered observations on this critical issue.

The Tribunal undertook a detailed analysis of Section 73(1) and Rule 142(1)(a), observing that the use of the word 'shall' in Section 73(1) makes the issuance of a proper SCN a mandatory obligation — not a guideline. A SCN serves three principal purposes: informing the taxpayer of the allegations, specifying the proposed liability, and giving a real opportunity to defend. The DRC-01 merely tabulated figures under 'tax and other dues' without any reasoning, cause, or specifics of the alleged violation. The Tribunal held that had the DRC-01 at least cited arguments and shown cause with factual and evidentiary basis, it might have been treated as a SCN — but a bare tabulation of amounts could not. Relying on the Jharkhand HC's decision in M/s NKAS Services and the Gauhati HC's decision in Construction Catalysers, the Tribunal concluded that absent a valid SCN, all subsequent proceedings were void ab initio. The Tribunal also examined the demand on merits — including the issue of whether GSTR-2A mismatch alone can sustain a demand, finding that the procedure prescribed in Circular No. 183/15/2022-GST had not been followed — but held that the case fell on the threshold issue of a missing SCN itself.

- 2026-juristway.com-2489-GSTAT(Lucknow)-GST  |  GSTAT Lucknow Bench  |  APL/54/LCK/2026  |  14.09.2026