Allahabad HC Quashes GST Demand Issued Against Deceased Proprietor; Fresh Proceedings Permitted [Read Order]

In a recent ruling, the Allahabad High Court set aside a demand of ₹8.94 lakh raised under Section 73(9) of the Goods and Services Tax Act (GST Act), ruling that tax determination against a deceased person is legally unsustainable and directed appropriate proceedings in accordance with law.

The matter arose when the tax department issued a show cause notice in November 2024 and subsequently passed an order in February 2025 against Parbind Kumar Srivastava, proprietor of M/s P S Engineers, despite his death in November 2020, along with the cancellation of the deceased’sGST registration in March 2021.

His wife, Shalini Srivastava, challenged the order, arguing that proceedings against a dead person were void ab initio.

The petitioner said that once the department was aware of the death and cancellation of registration, notices should have been addressed to the legal representative.

On the other hand, the respondent relied on Section 93 of the GST Act, which allows recovery from legal heirs even after death.

After the submission of both sides, the high court noted that while Section 93 governs the liability of legal representatives, it does not authorize determination against a deceased person. The section quoted as :

"93. Special provisions regarding liability to pay tax, interest or penalty in certain cases: (1) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a person, liable to pay tax, interest or penalty under this Act, dies, then

(a) if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due from such person under this Act; and

(b) if the business carried on by the person is discontinued, whether before or after his death, his legal representative shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such person under this Act, whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death."

The bench of Justice Shekhar B. Saraf and Justice Vivek Saran emphasised that it is essential to issue a show cause notice to the legal representative and seek their response before any determination and held that since the notice and determination were made against the deceased without involving the legal heir, the proceedings were invalid.

Accordingly, the writ petition was allowed, and the order dated 25.02.2025 was quashed, and the department was given liberty to take appropriate proceedings in accordance with law.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates