M/S Saloni Chemicals And Another vs. State Of Uttar Pradesh And 2 Others
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The petitioner, Alpana Mishra, wife of the deceased Diwakar Mishra, challenged an order dated March 18, 2024, passed under Section 73(9) of the GST Act, 2017, raising a demand of Rs. 21,49,585.60. Diwakar Mishra, proprietor of M/s Saloni Chemicals, died on July 12, 2021. His GST registration was cancelled effective April 30, 2022. A show cause notice dated November 16, 2023, was issued in the name of the deceased Diwakar Mishra, followed by reminders. As the GST registration was cancelled and notices were uploaded on the portal, the petitioner could not access them. Consequently, the show cause notice remained unanswered, leading to the impugned demand order against the deceased.
Held
The Court held that the impugned order dated March 18, 2024, passed under Section 73(9) of the GST Act, 2017, is unsustainable and liable to be quashed. The Court found that 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 determination of such liability against a deceased person. The Court reasoned that for the provisions of Section 93 to be invoked, it is imperative that the legal representative is issued a show cause notice and their response is considered before any determination is made. Issuing a show cause notice and making a determination against a dead person without notifying the legal representative renders the proceedings invalid. Therefore, the determination made against the deceased Diwakar Mishra without issuing notice to his legal representative, Alpana Mishra, could not be sustained. The writ petition was allowed, and the impugned order was quashed. The respondents were granted liberty to initiate appropriate proceedings in accordance with the law.
Key Issues
1. Whether the impugned order dated March 18, 2024, passed under Section 73(9) of the GST Act, 2017, raising a demand against a deceased person, is void ab initio and liable to be quashed. The petitioner argued that the proceedings conducted in the name of the deceased Diwakar Mishra, after his death and cancellation of the firm's GST registration, were fundamentally flawed and therefore void. They contended that the department was aware of the death and cancellation, yet proceeded against the deceased, rendering the entire process invalid. The respondents supported the order by relying on Section 93 of the GST Act, 2017, arguing that recovery can be made from legal representatives even if the determination occurs after the proprietor's death. They implied that the provisions for recovery from legal heirs supersede the procedural requirement of issuing notice to the deceased.
Sections Cited
Section 73, Section 73(9), Section 93
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:131888-DB Court No. - 3 Case :- WRIT TAX No. - 3618 of 2025 Petitioner :- M/S Saloni Chemicals And Another Respondent :- State Of Uttar Pradesh And 2 Others Counsel for Petitioner :- Abhishek Bhushan Counsel for Respondent :- C.S.C.,Parv Agarwal Hon'ble Shekhar B. Saraf,J. Hon'ble Praveen Kumar Giri,J.
Heard Sri Abhishek Bhushan, learned counsel appearing on behalf of the petitioners and Sri Parv Agarwal, learned counsel appearing on behalf of the respondents.
This petition is directed against order dated 18.3.2024 passed under Section 73(9) of the Goods and Services Tax Act, 2017 (for short 'the Act') wherein a demand of Rs. 21,49,585.60 has been raised in the name of Diwakar Mishra.
The petitioner Alpana Mishra, wife of deceased Diwakar Mishra has filed the petition inter alia with the submissions that Diwakar Mishra had died on 12.7.2021 and on account of his death, the GST registration of the proprietorship firm M/s Saloni Chemicals, which was in the name of deceased Diwakar Mishra, was cancelled with effect from 304.4.2022 by order dated 5.7.2022. Whereafter a show cause notice dated 16.11.2023 was issued in the name of deceased Diwakar Mishra under Section 73 of the Act, followed by reminders dated 12.1.2024 and 19.2.2024, 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 18.3.2024 raising demand against the deceased.
Submissions have been made that once the Department was well aware of the fact that Diwakar Mishra, 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 Diwakar Mishra, the same are void ab initio and, therefore, the order impugned deserves to be quashed and set aside.
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 18.3.2024 (Annexure-10 to the writ petition) is quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law. Order Date :- 5.8.2025 Dev (Praveen Kumar Giri J.) (Shekhar B. Saraf, J.) DEV PRAKASH 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.