Late Sri Balasettyhalli Munegowda Chandregowda vs. The Principal Commissioner Of Central Tax
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Cause title — parties, addresses and appearances
ORDER NO.22/2022 DATE OF PASSING 26.04.2022 AND DATE OF ISSUE 03.05.2022 TO THE EXTENT HELD AGAINST THE PETITIONER HEREIN MARKED AS ANNEXURE-A.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: B M Location: High Court of Karnataka HC-KAR NC: 2025:KHC:51789 CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
In this petition, petitioner seeks for the following reliefs:- “i) Issue a writ of Certiorari quashing the Order in Original passed by the Respondent vide Order No.22/2022 date of passing 26.04.2022 and date of issue 03.05.2022 to the extent held against the petitioner herein marked as Annexure-A. ii) And pass such other orders as this Hon’ble Court deems fit and proper in the interest of justice and equity.”
Heard learned counsel for the petitioner and learned counsel for the respondent and perused the material on record.
A perusal of the material on record will indicate that the petitioner, Sri. Balasettyhalli Munegowda Chandregowda had expired on 11.09.2018 and the present petition is being preferred by his legal representative Sri. B.M. Venkataramana Gowda, who is the brother of said Balasettyhalli Munegowda Chandregowda. The respondent, without conducting a pre-SCN consultation as mandated by the CGEC, as to whether the petitioner is liable for service tax or not, issued a show-cause notice dated 23.04.2021 HC-KAR NC: 2025:KHC:51789 vide Annexure-C. Thereafter, the authorised representative of the said B.M. Venkataramana Gowda appeared via video conferencing on 02.03.2022 and submitted that the petitioner was exempt from levy of Service Tax vide Mega Exemption Notification No.25/2012 dated 20.06.2012 and also requested the respondent for some more time to furnish reply to the show-cause notice, since the noticee already expired on 11.09.2018. The said submission was recorded by the respondent vide Annexure-D dated 02.03.2022. Thereafter, Sri.B.M. Venkataramana Gowda, the legal representative of the dead petitioner furnished replies dated 02.03.2022, 26.03.2022 and 30.03.2022 vide Annexures-E, F and G and without considering the said submission, the respondent passed the impugned order at Annexure-A on 26.04.2022 against dead person, Sri. Balasettyhalli Munegowda Chandregowda. It is the specific contention of the petitioner that having regard to the aforesaid proceedings initiated against his deceased brother, without bringing the petitioner on record as his legal representative, the impugned proceedings and order against the deceased Sri. Balashettyhalli Munegowda Chandregowda are null, non est and void ab initio and the same deserves to be set aside. HC-KAR NC: 2025:KHC:51789
Per contra, learned counsel for the respondent does not dispute that Sri. Balasettyhalli Munegowda Chandregowda expired on 11.09.2018 and submits that appropriate orders may be passed by this Court in the present petition in the light of the decision of the Delhi High Court in the case of Usha Gupta Vs. Commissioner of CGST - W.P.(C).No.11634/2024 and C.M. Appl.No.48366/2024, dated 23.09.2024 and in the light of the - W.P.(MD) No.12464/2024 and W.M.P.(MD)Nos.11068, 11073 & 11079 of 2024, dated 12.06.2024. 5. In the case of Usha Gupta (supra), the Delhi High Court held as under:
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It is settled law that the identity of the sole proprietorship concern is not different from that of a sole proprietor. In the present case, a sole proprietor of the concern – M/s S.K. Gupta & Co. – Mr Swrender Kumar Gupta, has since expired and therefore, it is relevant in fact, that the impugned SCN has been issued to a non-existent person.
Section 93 of the CGST Act is relevant and same reads as under:- HC-KAR NC: 2025:KHC:51789 “Section 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. (2) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a taxable person, liable to pay tax, interest or penalty under this Act, is a Hindu Undivided Family or an association of persons and the property of the Hindu Undivided Family or the association of persons is HC-KAR NC: 2025:KHC:51789 partitioned amongst the various members or groups of members, then, each member or group of members shall, jointly and severally, be liable to pay the tax, interest or penalty due from the taxable person under this Act up to the time of the partition whether such tax, penalty or interest has been determined before partition but has remained unpaid or is determined after the partition. (3) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a taxable person, liable to pay tax, interest or penalty under this Act, is a firm, and the firm is dissolved, then, every person who was a partner shall, jointly and severally, be liable to pay the tax, interest or penalty due from the firm under this Act up to the time of dissolution whether such tax, interest or penalty has been determined before the dissolution, but has remained unpaid or is determined after dissolution. (4) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a taxable person liable to pay tax, interest or penalty under this Act,-- (a) is the guardian of a ward on whose behalf the business is carried on by the guardian; or (b) is a trustee who carries on the business under a trust for a beneficiary, then, if the guardianship or trust is terminated, the ward or the beneficiary shall be liable to pay the tax, interest or penalty HC-KAR NC: 2025:KHC:51789 due from the taxable person upto the time of the termination of the guardianship or trust, whether such tax, interest or penalty has been determined before the termination of guardianship or trust but has remained unpaid or is determined thereafter.”
Undeniably, in a case where the person is liable to pay tax, interest and/or penalty, has expired and the business is carried on by the taxpayer’s legal representative or any other person after his demise, the said legal representative or such other person is liable to pay the due, interest or penalty as payable by the deceased taxpayer. However, the show cause notice for recovery of any such amount is required to be issued to the legal representative or such other person, who is carrying on the business of the deceased taxpayer.
In the present case, impugned SCN has not been issued to the legal representative of the deceased taxpayer but to the deceased taxpayer.
In Unnikrishnan R & Ors v. Union of India & Ors : 2024 (7) TMI 606 the Madras High Court has held as under:- “10. The order that has been passed against the dead person is non-est in law. If the petitioner is carrying on the business of the deceased person, then, the remedy is available to the Department to proceed against the petitioner under Section 93 of the TNGST Act, 2017. It appears to be that the petitioner is not carrying on the business of the deceased person.”
In view of the above, the impugned SCN is set aside. It is clarified that, this order will not preclude the HC-KAR NC: 2025:KHC:51789 respondents from issuing a notice to the legal representative or any other person, if it is found that the business of the deceased taxpayer is being carried on by the deceased taxpayer’s legal representative or such other person."
In the case of Unnikrishnan R. (supra), the Madras High Court held as under:
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There is no dispute that the dealer Mr.Radhakrishnan Pillai has died on 11.10.2017 and that the petitioner is one of his legal heirs/legal representatives along with his mother R.Sujatha aged about 62 years, his sister Sreelekshmi aged about 33 years and his grand-mother Nalinakshi Amma aged about 84 years.
The order that has been passed against the dead person is nonest in law. If the petitioner is carrying on the business of the deceased person, then, the remedy is available to the Department to proceed against the petitioner under Section 93 of the TNGST Act, 2017. It appears to be that the petitioner is not carrying on the business of the deceased person.
Be that as it may, since the impugned order has been passed against the dead person, the impugned order is quashed by directing the respondents to issue a common notice to the petitioner representing the interest of the other legal heirs/legal representatives of the deceased dealer Mr.Radhakrishnan Pillai, within a period of 30 days from the date of receipt of a copy of this order and thereafter proceed in the manner known to law, in case the petitioner is carrying HC-KAR NC: 2025:KHC:51789 on the business of the deceased dealer Mr.Radhakrishnan Pillai."
As can be seen from the aforesaid judgments, any proceedings/order against the petitioner's dead brother, would be rendered nullity, non est and void ab initio and the entire proceedings including the impugned order deserve to be quashed, reserving liberty in favour of the respondent to take appropriate steps in accordance with law.
In the result, I pass the following: ORDER (i) The petition is allowed. (ii) The impugned order dated 26.04.2022, issued on 03.05.2022 at Annexure-A passed by the respondent, is hereby quashed. (iii) Liberty is reserved in favour of the respondent to take appropriate steps and proceed further, in accordance with law. (S.R.KRISHNA KUMAR) JUDGE
BMC: List No.: 2 Sl No.: 22
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.