GST Assessment on a Deceased Person is Void Ab Initio: Allahabad HC [Read Order]
The court meticulously examined Section 93 and noted that the provision only addresses the liability of the legal representative to pay tax, whether the business is continued or discontinued after the owner's death.
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The Allahabad High Court has delivered that any tax determination made against a person who is already deceased is invalid from its inception. The court clarified that while legal heirs are liable for the tax dues of a deceased individual, the assessment proceedings cannot be initiated or concluded in the name of the dead person. It is a fundamental requirement that any show-cause...
The Allahabad High Court has delivered that any tax determination made against a person who is already deceased is invalid from its inception. The court clarified that while legal heirs are liable for the tax dues of a deceased individual, the assessment proceedings cannot be initiated or concluded in the name of the dead person. It is a fundamental requirement that any show-cause notice must be issued to the legal representative, providing them an opportunity to be heard before any liability is fixed.
The ruling came in a writ petition filed by Samban Pharma, represented by the son of its late proprietor, Satish Kumar Shukla, challenging an order from the Deputy Commissioner of the GST department. The department had raised a demand of ₹18,09,116.65 against the firm. The petitioner brought to the court's attention that the proprietor, Mr. Shukla, had passed away on March 18, 2023. However, the department subsequently issued a show-cause notice in the name of the deceased proprietor on December 28, 2023, which ultimately led to the final demand order on April 17, 2024.
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The core argument from the petitioner was that since the proprietor had already died, the entire proceeding was void ab initio, or legally void from the beginning. It was submitted that the show-cause notice was merely uploaded to the 'Additional Notices and Orders' tab on the GST portal, and therefore remained unanswered, leading to the one-sided order against the firm. In response, the tax department’s counsel supported the order by invoking Section 93 of the CGST Act, 2017. They contended that this section allows for the recovery of determined tax from the legal representatives even if the determination was made after the proprietor's death.
The court meticulously examined Section 93 of the Goods and Services Tax Act and noted that the provision only addresses the liability of the legal representative to pay tax, whether the business is continued or discontinued after the owner's death.
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However, the bench pointed out that the section "cannot and does not authorise the determination to be made against a dead person". The court stressed that before fixing any liability on the legal heir, it is a sine qua non-an essential condition-that the legal representative must be issued a proper show-cause notice and their response must be considered.
The division bench, comprising Justice Shekhar B. Saraf and Justice Praveen Kumar Giri, observed that since the notice was issued and the determination was made against a dead person without bringing the legal representative into the proceedings, the order could not be sustained in the eyes of the law.
While quashing the order, the court granted the respondents the freedom to initiate appropriate proceedings afresh, but strictly in accordance with the procedure established by law.
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