M/S Shiv Dularey Gupta Thru. Legal Representative Suresh Kumar vs. State Of U.P. Thru. Prin. Secy. Institutional Finance Lko. And Another

Held

The Court noted that the petitioner had a statutory remedy of appeal under Section 107 of the GST Act and directed the petitioner to approach the Appellate Authority. However, the Court expressed strong disapproval of the practice of issuing notices under Section 73 of the Act without mentioning the date, time, and place of personal hearing, stating that the law on this matter had been settled by the High Court and departmental circulars. As a consequence of this observed deficiency in the departmental process, the Court directed Sri Umashankar Tiwari, Commercial Tax Officer, Ayodhya Sector-4, Ayodhya (B), Ayodhya, U.P., to undergo three months of training and not be assigned any adjudicatory role during that period. The Court did not decide the merits of the case concerning the validity of the Section 73 proceedings or the tax liability, leaving these to be decided by the Appellate Authority.

Facts

The petitioner, M/S Shiv Dularey Gupta, a sole proprietorship firm, challenges an order dated August 24, 2024, passed by the respondent No. 2 under Section 73 of the CGST Act. The firm's sole proprietor, Shiv Dularey Gupta, died on April 28, 2021. The petitioner received a notice under Section 61 on March 29, 2024, followed by a notice under Section 73(1) on May 15, 2024, which the petitioner claims they could not access. The Section 73(1) notice allegedly did not specify the place, time, or date for a personal hearing. The impugned order imposed a tax liability, interest, and penalty of Rs. 8,18,130/-. The petitioner contends that the firm ceased to exist upon the proprietor's death, rendering it unable to access departmental notices. The respondent argues that the firm continued to operate, with the proprietor's son, Suresh Kumar, uploading returns until November 11, 2025, without informing the department of the death.

Key Issues

1. Whether the impugned order dated August 24, 2024, passed under Section 73 of the CGST Act is liable to be quashed on the ground that the notice issued did not specify the place, time, or date for a personal hearing, thereby violating principles of natural justice? 2. Whether the proceedings under Section 73 of the CGST Act are vitiated due to the death of the sole proprietor prior to the issuance of the notices and adjudication, and if the legal representative was not afforded proper opportunity of hearing? Petitioner's Arguments: The petitioner argued that the notice under Section 73(1) did not mention the place, time, or date of personal hearing, rendering the subsequent adjudication order invalid. They also contended that the firm ceased to exist after the sole proprietor's death on April 28, 2021, and therefore, no one was available to access departmental notices. They sought a direction for a personal hearing to be granted to the legal representative. Revenue's Arguments: The revenue contended that the proprietorship firm continued to operate after the sole proprietor's death, with his son, Suresh Kumar, accessing the department's portal and uploading returns until November 11, 2025, without informing the department of the proprietor's demise. They argued that Suresh Kumar had full notice of the orders passed and that a statutory remedy of appeal under Section 107 was available.