M/S Gyan Metal Company vs. State Of U.P. And Another
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The petitioners, Bharat Varshney and Bhuvan Varshney, sons of the deceased Gyan Prakash, challenged an order dated 24.06.2025 passed under Section 74(9) of the Goods and Services Tax Act, 2017, raising a demand of Rs. 2,32,41,233/-. Gyan Prakash, the proprietor of M/s Gyan Metal Company, died on 26.10.2024. The firm's GST registration was cancelled effective 15.03.2024. Subsequently, a show cause notice dated 11.11.2024 was issued in the name of the deceased Gyan Prakash. Despite the cancellation of registration and the proprietor's death, the proceedings continued in the deceased's name, leading to the impugned demand order. The petitioners argued that these proceedings were void ab initio.
Held
The Court held that the proceedings initiated and concluded against the deceased proprietor, Gyan Prakash, were unsustainable. While Section 93 of the Act deals with the liability of legal representatives for tax, interest, or penalty due from a deceased person, it does not authorize the initiation or determination of tax against a dead person. The Court reasoned that for Section 93 to apply, it is imperative that the legal representative is issued a show cause notice and their response is considered before any determination is made. Since the show cause notice and the determination order were passed against a deceased person without notice to the legal representatives, the impugned order dated 24.06.2025 was quashed and set aside. The respondents were granted liberty to initiate appropriate proceedings in accordance with law.
Key Issues
1. Whether proceedings for determination of tax, interest, or penalty under Section 74 of the Goods and Services Tax Act, 2017, can be initiated and concluded against a deceased person after the cancellation of their GST registration, without issuing a show cause notice to their legal representatives? (Question of law). Petitioner's contention: The proceedings are void ab initio because the show cause notice and subsequent determination were issued in the name of the deceased proprietor, Gyan Prakash, who had already died and whose firm's GST registration was cancelled. The respondents were aware of these facts, rendering the entire process illegal. Respondent's contention: The respondents relied on Section 93 of the Act, arguing that recovery can be made from legal representatives even if the determination occurs after the proprietor's death. They contended that the provisions of Section 93 permit recovery from legal representatives out of the deceased's estate.
Sections Cited
Section 74, Section 93
AI-generated summary — verify with the full judgment below
HIGH COURT OF JUDICATURE AT ALLAHABAD WRIT TAX No. - 4430 of 2025 Court No. - 3 HON'BLE SHEKHAR B. SARAF, J. HON'BLE PRAVEEN KUMAR GIRI, J.
This petition is directed against order dated 24.06.2025 passed under Section 74(9) of the Goods and Services Tax Act, 2017 (for short 'the Act') wherein a demand of Rs.2,32,41,233/- has been raised in the name of Gyan Prakash.
The petitioner Bharat Varshney and Bhuvan Varshney sons of deceased Gyan Prakash has filed the petition inter alia with the submissions that Gyan Prakash had died on 26.10.2024 and on account of his death, the GST registration of the proprietorship firm M/s Gyan Metal Company, which was in the name of deceased Gyan Prakash was cancelled with effect from 15.03.2024 by order dated 08.05.2024. Whereafter a show cause notice dated 11.11.2024 was issued in the name of deceased Gyan Prakash under Section 74 of the Act. However, as the same was uploaded on the portal and the GST registration had already been cancelled which resulted in passing of the order dated 24.06.2025 raising demand against the deceased.
Submissions have been made that once the Department was well aware of the fact that Gyan Prakash, 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 Gyan Prakash, the same are void ab initio and, therefore, the order impugned deserves to be quashed and set aside. Versus Counsel for Petitioner(s) : Shubham Agrawal Counsel for Respondent(s) : C.S.C. M/S Gyan Metal Company .....Petitioner(s) State of U.P. and Another .....Respondent(s)
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.
We have considered the submissions made by counsel for the parties and have perused the material available on record.
Undisputed facts are that the show cause notice, reminders and determination of tax have been made after the death of the proprietor of the firm. Provisions of Section 93 of the Act, insofar as relevant, reads as under:
"
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."
A perusal of the above provision would reveal 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.
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.
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.
Consequently, the writ petition is allowed. The order dated 24.06.2025 (Annexure-1 to the writ petition) is quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law. September 8, 2025 K.K. Maurya (Praveen Kumar Giri,J.) (Shekhar B. Saraf,J.) KAMLESH KUMAR MAURYA High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.