Delhi HC invalidates SCN issued to Deceased Taxpayer, Citing non-issuance to Legal Representative u/s 93 of CGST Act [Read Order]

The Delhi High Court has invalidated a Show Cause Notice ( SCN ) issued to a deceased taxpayer under the Central Goods and Services Tax ( CGST ) Act, 2017. The court ruled that the SCN, addressed to the late Mr. Surender Kumar Gupta, a sole proprietor, was legally untenable because it was not served on the legal representative or the person continuing the business after his death, as mandated by Section 93 of the CGST Act.

The writ petition was filed by Smt. Usha Gupta, widow of the late Mr. Surender Kumar Gupta, who was the proprietor of M/s S.K. Gupta & Co. The impugned SCN was issued under Section 74 of the CGST Act, seeking to recover dues related to the deceased taxpayer’s business.

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The petitioner, represented by Mr. Jitin Singhal, challenged the notice on the grounds that it was addressed to her late husband, rendering it invalid under the law.

The respondent revenue, Commissioner of CGST, Delhi South Commissionerate and another, represented by Mr. Shubham Tyagi and Ms Navruti Ojha contended that since the petitioner was continuing the business of her late husband, the tax liabilities under Section 93 of the CGST Act could be pursued against her.

Section 93 of the CGST Act, 2017 stipulates that in cases where a business is continued by the legal representative of a deceased person, the representative becomes liable for any outstanding taxes, interest or penalties due from the deceased.

However, the court held that while the liability may exist, the procedural requirement of serving the SCN to the legal representative had not been fulfilled in this case. The bench noted that the identity of a sole proprietorship is inseparable from its proprietor, and upon the death of Mr. Surender Kumar Gupta, the entity ceased to exist in its original form.

The court relied on the principles established in previous cases, including the Madras High Court ruling in Unnikrishnan R & Ors v. Union of India & Ors, wherein it was held that any order or notice issued against a deceased person is null and void.

The division bench of the Delhi High Court comprising Justice Vibhu Bakhru and Justice Sachin Datta stressed that once a taxpayer dies, any tax recovery action must be directed to the legal heir or the person continuing the business.

The bench further clarified that the impugned SCN was legally unsustainable because it was addressed to a non-existent person. However, the court also pointed out that the ruling does not preclude the tax authorities from reissuing the SCN to the appropriate legal representative if they are found to be carrying on the business of the deceased taxpayer.

In result, the Delhi High Court set aside the SCN issued to the deceased Mr. Surender Kumar Gupta, allowing the petition filed by his wife, Smt. Usha Gupta. The bench disposed of the case with the clarification that the tax authorities could issue a fresh notice to the legal representative or any other person continuing the business, as per the provisions of Section 93 of the CGST Act.

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The judgment highlighted the legal requirement that tax authorities must follow the proper procedure when issuing notices in cases involving deceased or non-existent taxpayers. It stressed the importance of serving notices on legal heirs or successors, ensuring compliance with the provisions of Section 93 of the CGST Act.

To Read the full text of the Order CLICK HERE

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