M/S GST Metals vs. Deputy Commissioner Of Commercial Tax

Facts

The petitioner, M/s. GST Metals, represented by its proprietrix Najmunni S.A., is the widow and legal heir of the deceased proprietor, Ibrahim Sab, who passed away on July 28, 2022. The respondent, Deputy Commissioner of Commercial Tax (Audit), initiated proceedings and issued a Show Cause Notice under Section 73(1) of the KGST/CGST Act, 2017, dated September 29, 2023, followed by an Adjudication Order dated December 7, 2023. These proceedings were directed against the company previously run by the deceased. The petitioner contends that these proceedings and orders are illegal, void, and non est as they were passed against a deceased individual and a company run by him, citing various High Court judgments.

Held

The Court held that the impugned proceedings, including the Show Cause Notice and the Adjudication Order, are illegal, void, invalid, non est, and void ab initio. The reasoning was based on the fact that the original assessee, Mr. Ibrahim Sahib, had expired on July 28, 2022. The Court found that issuing proceedings and orders against the company previously run by the deceased, after his demise, was contrary to established legal principles. The Court relied on the judgments cited by the petitioner, including a recent judgment of the Apex Court (though not specifically named in the provided text, it is referenced as 'recent judgment of the Apex Court referred to supra'). The ratio decidendi is that tax proceedings cannot be initiated or continued against a deceased individual or a business entity operated solely by a deceased individual without proper legal substitution or adherence to succession laws. The Court allowed the petition, quashed the Show Cause Notice and the Adjudication Order, and reserved liberty for the respondents to initiate appropriate action in accordance with law.

Key Issues

1. Whether the Show Cause Notice issued under Section 73(1) of the KGST/CGST Act, 2017, and the subsequent Adjudication Order passed under Section 73(9) of the KGST/CGST Act, 2017, are illegal, void, and non est ab initio, considering the original proprietor of M/s. GST Metals, Mr. Ibrahim Sab, expired on July 28, 2022, prior to the issuance of these notices and orders. Petitioner's contention: The petitioner argued that the impugned proceedings and orders are illegal, void, invalid, non est, and void ab initio because they were issued against a deceased individual and the company he operated. The petitioner relied on judgments from the Karnataka High Court (Sri. Late Someshwar Rao Chilukuri vs. Income Tax Officer), Bombay High Court (Mrs. Vanitha Gopal Shetty vs. Assistant Commissioner of Income-tax, Sumit Balkrishna Gupta vs. Assistant Commissioner of Income-tax), and Madhya Pradesh High Court (Urmila Saxena vs. Central Board of Direct Taxes). Revenue's contention: The respondent revenue submitted that there is no merit in the petition and that the same is liable to be dismissed.