The court clarifies the discretionary nature of pre-consultation notices under Rule 142(1A) and reaffirms the validity of electronically signed orders.

1. This hearing has been done through hybrid mode.

2. The present petition has been filed by the Petitioner seeking setting aside of the impugned Show Cause Notice dated 21st November, 2024 issued by the Department of Trade & Taxes, Government of N.C.T. of Delhi (hereinafter, ‘impugned SCN’) and the consequent impugned order dated 23rd February, 2025 passed by the Office of Sales Tax Officer Class II (hereinafter, ‘impugned order’). The demand raised in the impugned order relates to the financial year 2020-21.

3. The said demand has been raised in the following terms:

4. The background of the present case is that the impugned SCN was issued to the Petitioner on 21st November, 2024. The said SCN was issued on various grounds, including:

(i) Reconciliation of GSTR-01 with GSTR-09;

(ii) Excess input tax credit (ITC) claimed on account of non-reconciliation of information;

(iii) ITC to be reversed on non-business transactions & exempt supplies;

(iv) ITC claimed from cancelled dealers, return defaulters & non tax payers.

5. No reply to the impugned SCN was filed by the Petitioner, thus leading to the impugned demand raised on 23rd February, 2025.

6. The Petitioner, in this petition, has sought setting aside of the impugned SCN as also the impugned order. Additionally, challenge has also been raised Section 16 (2)(c) of the Central Goods and Service Tax Act, 2017 .

7. The contentions raised by the Petitioner are three-fold:

(i) That the impugned SCN and the impugned order are not duly signed either physically or digitally;

(ii) That the pre-consultation notice under Rule 142 (1A) of the CGST Rules, 2017, has not been issued by the Department;

(iii) That the challenge to Section 16 (2)(c) of the CGST Act, 2017, is pending consideration before this Court in a batch of matters.

8. Ld. Counsel for the Petitioner has relied upon various judgments of this Court to argue that the non-appending of the signatures on the impugned SCN and the impugned order would go to the root of the matter.

9. Ld. Counsel for the CGST Department, on the other hand, made the following submissions on all the three aspects:

? Firstly, insofar as the issue of signatures is concerned, the Department now uses digital keys to upload the orders on the GST Portal and without the digital key of the concerned officer, in addition to the name and designation of the officer, the orders as well as the SCNs cannot be uploaded. Since the digital key is mandatorily required to upload both the SCN and the orders, it cannot be held that there is any technical discrepancy in the signatures.

? Secondly, it is argued by Mr. Batra, ld. Counsel that the Rule 142 (1A) of the CGST Rules, 2017, earlier required a mandatory pre-SCN to be issued, however, the amendment in the Rule 142 (1A) came into effect on 15th October, 2020, wherein the issuance of the pre-SCN consultation notice was made discretionary. It is conceded that the earlier language of the said Rule had made the said pre-SCN notice mandatory as was also highlighted by this Court in W.P.(C) 5407/2020 titled Gulati Enterprises v. Central Board of Indirect Taxes & Customs & Ors. However, post-amendment, the same is not mandatory anymore.

? Lastly, insofar Section 16 (2)(c) of the CGST Act, 2017 is concerned, the challenge to the same has already been raised and is pending consideration before this Court.

10. Further, upon direction of the Court, Mr. Sumit K. Batra, ld. Counsel for the Department has handed over a short note, explaining the process followed by the proper officers while issuing any order or show cause notice. The said process, as explained on behalf of the Departme