M/S New Goyal Beej Bhandar vs. Assistant Commissioner Sector - 2 State Tax Bulandshahar And Another
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The petitioner, M/s New Goyal Beej Bhandar, is challenging an order dated December 26, 2023, passed under Section 73(9) of the Goods and Services Tax Act, 2017, raising a demand of Rs. 3,40,370.00. The petitioner's proprietor, Vinod Kumar, died on April 30, 2020. A show cause notice dated November 24, 2022, was issued in the name of the petitioner firm under Section 73 of the Act and uploaded on the GST portal. As the proprietor had passed away, the notice remained unanswered, leading to the impugned order. The petitioner contends that proceedings initiated against a deceased person are void ab initio.
Held
The Court held that while Section 93 of the Goods and Services Tax Act, 2017, deals with the liability of legal representatives to pay tax, interest, or penalty due from a deceased person, it does not authorize the determination of such liabilities against a deceased person. The provision pertains to the continuation or discontinuation of business by legal representatives and their liability out of the deceased's estate. The Court found that for the provisions of Section 93 to be invoked, it is essential that the legal representative is issued a show cause notice and their response is sought before any determination is made. Since the show cause notice and the subsequent determination were made against a dead person without issuing notice to the legal representative, the determination cannot be sustained. Consequently, the impugned order was quashed and set aside.
Key Issues
1. Whether the determination of tax, interest, or penalty under Section 73 of the Goods and Services Tax Act, 2017, can be made against a deceased person without issuing a show cause notice to their legal representative? The petitioner argued that since the proprietor of the firm had died before the issuance of the show cause notice and the subsequent order, the proceedings initiated by the department are void ab initio and the impugned order is unsustainable. They contended that there was no occasion to issue a notice in the name of the firm after the proprietor's death. The respondent supported the impugned order by relying on Section 93 of the Act, arguing that recovery can be made from legal representatives even after the determination of tax has been made after the death of the proprietor. They submitted that Section 93 provides for the liability of legal representatives.
Sections Cited
Section 73, Section 93
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:87673-DB Chief Justice's Court Case :- WRIT TAX No. - 2487 of 2025 Petitioner :- M/S New Goyal Beej Bhandar Respondent :- Assistant Commissioner Sector - 2 State Tax Bulandshahar and another Counsel for Petitioner :- Nitin Kumar Kesarwani, Suyash Agarwal Counsel for Respondent :- C.S.C., Ankur Agarwal (SC) Hon'ble Arun Bhansali,Chief Justice Hon'ble Kshitij Shailendra,J.
This petition is directed against order dated 26.12.2023 passed under Section 73(9) of the Goods and Services Tax Act, 2017 (for short 'the Act') wherein a demand of Rs.3,40,370.00 has been raised in the name of petitioner.
Mr. Vikas Goel, son of late Vinod Kumar, has filed the present petition inter alia with the submissions that his father Vinod Kumar was the proprietor of petitioner firm and had died on 30.04.2020 and show cause notice dated 24.11.2022 was issued in the name of the petitioner firm under Section 73 of the Act, which was uploaded on 'Additional Notices and Orders' Tab of the portal and thus, the show cause notice remained unanswered, which resulted in passing of the order dated 26.12.2023 raising demand against the petitioner firm.
Submissions have been made that once the proprietor of the petitioner firm had already died, there was no occasion for issuing a show cause notice in the name of the petitioner firm and the proceedings initiated by the department 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 and determination of tax have been made after the death of the proprietor of the petitioner 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 26.12.2023 (Annexure-1 to the writ petition) is quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law. Order Date :- 23.5.2025 RK/SL (Kshitij Shailendra, J) (Arun Bhansali, CJ) RAJESH KUMAR 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.