GST show cause notice against a dead person cannot be sustained: High Court

This petition is directed against order dated 19.03.2024 passed under Section 125 read with Section 127 of the Goods and Services Tax Act, 2017 wherein a demand of Rs. 50,000.00 has been raised in the name of Harish Chandra Jain.

Mr. Atishay Jain, legal heir of deceased Harish Chandra Jain, who was proprietor of the petitioner’s firm, has filed the petition inter alia with the submissions that Harish Chandra Jain had died on 03.02.2019 and on account of his death, the GST registration of the proprietorship firm M/s. Atishay Traders, which was in the name of deceased Harish Chandra Jain, was cancelled with effect from 31.01.2019 by order dated 21.09.2019.

Whereafter a show cause notice dated 08.10.2023 was issued in the name of deceased Harish Chandra Jain under Section 125 read with Section 127 of the Act, however, as the same were uploaded on the portal and the GST registration had already been cancelled, there was no occasion for the petitioner to have accessed the said portal, the show cause notice remained unanswered, which resulted in passing of the order dated 19.03.2024 raising demand against the deceased.

Submission of Taxpayer

Submission has been made that the Department was well aware of the fact that Harish Chandra Jain, proprietor of the firm has already died and the registration of the firm has already been cancelled, there was no occasion for issuing a show cause notice in the name of the deceased and as the proceedings have been conducted in the name of the deceased Harish Chandra Jain, the same are void ab initio and, therefore, the order impugned deserves to be quashed and set aside.

Argument of GST Department

Learned counsel for the respondents supported the order impugned with the aid of provisions of Section 93 of the Act. Submissions have been made that under the provisions of Section 93, the recovery can be made from the legal representatives even after the determination has been made after the death of the proprietor of the firm.

High Court on Section 93:

A perusal of Section 93 revealed that the same only deals with the liability to pay tax, interest or penalty in a case where the business is continued after the death, by the legal representative or where the business is discontinued.

However, the provision does not deal with the fact as to whether the determination at all can take place against a deceased person and the said provision cannot and does not authorise the determination to be made against a dead person and recovery thereof from the legal representative.

Show Cause Notice should have been issued to Legal Heir and not Deceased

Once the provision deals with the liability of a legal representative on account of death of the proprietor of the firm, it is sine qua non that the legal representative is issued a show cause notice and after seeking response from the legal representative, the determination should take place.

Show Cause Notice Quashed

In view thereof, the determination made in the present case wherein the show cause notice was issued and the determination was made against the dead person without issuing notice to the legal representative, cannot be sustained.