The Shulhan Aruch (Siman 36) records the Halacha that seven letters in a Sefer Torah must have Tagin (crowns) adorning their top. Those letters are known by the acronym of "ShATNeZ GeS"-the Shin, Ayin, Tet, Nun, Zayin, Gimmel and Sadi. Maran writes clearly that if the Sofer omitted the Tagin, The Sefer is kosher, although not Mehudar. Rambam and Rabbenu Hannanael are the basis for this position. However, the Bayit Hadash (Rav Yoel Sirkes, 1561-1640) rules that it is Pasul (invalid). Therefore, the Hida (Rav Haim Yosef David Azulai, 1724-1807, Jerusalem) writes in L’david Emmet, that one should, of course, prefer to take out a the Sefer that has Tagin. Similarly, one should make an effort to wear Tefilin written with Tagin.
The question is whether a Beracha may be recited on a Sefer Torah without Tagin. Ordinarily, we would apply the principle, "Safek Berachot L’kula"-not to recite a Beracha in a case of doubt, since there is a disagreement between Poskim, and according to the Bayit Hadash a Beracha may not be recited, since it is not a valid Sefer Torah. Nevertheless, Hacham Ovadia (as cited in Halacha Berura) rules that a Beracha may be recited and this is not a case of "Safek Berachot." He explains that the disagreement is not directly concerning the recitation of the Beracha. Rather, the Poskim argue whether the Sefer Torah itself is kosher; that is the focus of the doubt. Once Maran rules that it is kosher, automatically a Beracha may be recited. Moreover, the fact that Maran did not explicitly state to omit the Beracha indicates that it may be recited.
SUMMARY
Although a Sefer Torah and Tefilin with Tagin are preferable, they are also valid without them and a Beracha may be recited upon them.
