Smt. Usha Gupta, Wife Of Lt. Sh. Surinder Kumar Gupta (Proprietor Of M/S. S. K. Gupta And Co.) vs. Commissioner Of CGST, Delhi South Commissionerate & Anr.

Facts

The petitioner, Smt. Usha Gupta, widow of the deceased taxpayer Mr. Surender Kumar Gupta, proprietor of M/s S.K. Gupta & Co., filed a writ petition challenging a Show Cause Notice (SCN) dated 01.08.2024. The SCN was issued under Section 74 of the Central Goods and Services Tax Act, 2017, to the deceased proprietor. The petitioner's counsel stated that Mr. Gupta had expired, and the present petition was filed by his widow. The respondents contended that the petitioner was carrying on the business of her deceased husband and, therefore, under Section 93 of the CGST Act, recovery proceedings were permissible against the concern.

Held

The Court held that the impugned Show Cause Notice (SCN) is set aside. The reasoning was based on the settled principle that the identity of a sole proprietorship concern is not distinct from that of its sole proprietor. Since the sole proprietor, Mr. Surender Kumar Gupta, had expired, the SCN issued to him was effectively issued to a non-existent person. The Court referred to Section 93 of the CGST Act, which provides for liability in case of death of a person liable to pay tax. While Section 93(1)(a) states that if the business is continued by a legal representative, they shall be liable, the SCN must be issued to such legal representative or the person carrying on the business, not the deceased taxpayer. The Court also relied on the Madras High Court's decision in Unnikrishnan R & Ors v. Union of India & Ors, which held that an order passed against a dead person is non-est in law. The Court clarified that this order does not preclude the 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 them.

Key Issues

1. Whether a Show Cause Notice issued to a deceased taxpayer, who was the sole proprietor of a concern, is valid in law, considering the identity of the sole proprietorship is inseparable from the sole proprietor? This issue turns on the interpretation of the CGST Act, particularly concerning the issuance of notices to deceased persons and the implications of sole proprietorship. Petitioner's contention: The SCN is invalid as it was issued to a deceased person, rendering it non-est in law. The identity of the sole proprietorship is the same as the sole proprietor, and therefore, a notice to a deceased individual is a nullity. Revenue's contention: The petitioner has continued the business of her deceased husband. In terms of Section 93 of the CGST Act, the respondents are entitled to initiate recovery proceedings from the concern, implying that the business entity can still be subject to proceedings even after the proprietor's death.