Samban Pharma vs. Deputy Commissioner And Another
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The petitioner, Samban Pharma, is challenging an order dated 02.12.2023 passed under Section 73(9) of the Goods and Services Tax Act, 2017, which raised a demand of Rs. 27,33,816.10. The petitioner's proprietor, Satish Kumar Shukla, died on 18.03.2023. A show cause notice was issued on 25.09.2023 under Section 73 of the Act, addressed to the petitioner firm. This notice was uploaded on the 'Additional Notices and Orders' tab of the GST portal and remained unanswered. Consequently, the impugned order was passed without a response. The petitioner argues that since the proprietor was deceased, the proceedings initiated against the firm are void ab initio.
Held
The Court held that the determination of tax, interest, or penalty against a deceased person without issuing a show cause notice to their legal representative is unsustainable. While Section 93 of the Act deals with the liability of legal representatives to pay tax, interest, or penalty where the business is continued or discontinued after the proprietor's death, it does not authorize determination against a deceased person. The Court reasoned that for the provisions concerning the liability of a legal representative to apply, 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 determination were made against the dead proprietor without notice to the legal representative, the impugned order could not be sustained. The Court quashed the order dated 02.12.2023 and allowed the respondents to take appropriate proceedings in accordance with law.
Key Issues
1. Whether the proceedings for determination of tax, interest, or penalty under Section 73 of the Goods and Services Tax Act, 2017, can be initiated and concluded against a deceased person without issuing a show cause notice to their legal representative? The petitioner contended that the show cause notice was issued in the name of the petitioner firm after its proprietor had died. Therefore, the proceedings initiated by the department are void ab initio and the impugned order deserves to be quashed. The petitioner relied on the fact that the proprietor's death preceded the issuance of the show cause notice. The respondent supported the order, relying on Section 93 of the Act. The respondent argued that under Section 93, recovery can be made from legal representatives even if the determination is made after the proprietor's death. The respondent's contention was that the Act provides for liability of legal representatives.
Sections Cited
Section 73, Section 93
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Neutral Citation No. - 2025:AHC:80337-DB Chief Justice's Court Case :- WRIT TAX No. - 2256 of 2025 Petitioner :- Samban Pharma Respondent :- Deputy Commissioner And Another Counsel for Petitioner :- Amit Biswas,Nitin Kumar Kesarwani,Shubhanjali Gupta Counsel for Respondent :- Ankur Agarwal, S.C. Hon'ble Arun Bhansali,Chief Justice Hon'ble Kshitij Shailendra,J.
This petition is directed against order dated 02.12.2023 passed under Section 73(9) of the Goods and Services Tax Act, 2017 ('Act') wherein a demand of Rs. 27,33,816.10 has been raised in the name of petitioner.
Mr. Siddharth Shukla, son of late Satish Kumar Shukla, has filed the present petition inter alia with the submissions that his father Satish Kumar Shukla was proprietor of petitioner firm and had died on 18.03.2023 and show cause notice dated 25.09.2023 was issued in the name of 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 02.12.2023 raising demand against the petitioner firm.
Submission has 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 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, 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 02.12.2023 (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 :- 15.5.2025 nd (Kshitij Shailendra, J) (Arun Bhansali, CJ) NISITH DEY 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.