Paresh Kumar Agarwal And 3 Others vs. State Of U.P. And Another
Original PDF →Facts
The petitioners, legal heirs of the deceased Neelesh Kumar Agarwal, challenged an order dated 26.04.2024 passed under Section 73(9) of the Goods and Services Tax Act, 2017, raising a demand of Rs. 3,31,346/-. Neelesh Kumar Agarwal, proprietor of M/s. Mahalaxmi Trading Company, died on 05.08.2018, and his GST registration was cancelled effective 31.03.2018. A show cause notice dated 29.01.2024 was issued in the name of the deceased. The petitioners argued that as the notice was uploaded to a portal they could not access due to the cancelled registration and the proprietor's death, it remained unanswered, leading to the impugned order. They contended that proceedings against a deceased person without notice to legal representatives are void ab initio.
Held
The Court held that while Section 93 of the Goods and Services Tax Act, 2017, provides for the liability of legal representatives to pay tax, interest, or penalty due from a deceased person, it does not authorize the determination of such liability against a deceased person. The Court found that the undisputed facts were that the show cause notice, reminders, and tax determination were made after the death of the proprietor. The Court reasoned that Section 93 deals with the liability of legal representatives but does not permit the initiation of proceedings or determination against a dead person. For the provisions concerning the liability of legal representatives to apply, it is essential that the legal representatives are issued a show cause notice and their response is sought before any determination is made. Therefore, the determination made against the deceased without issuing notice to the legal representatives could not be sustained. The Court quashed the impugned order and the show cause notice, allowing the respondents to take appropriate proceedings in accordance with the law.
Key Issues
1. Whether 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 proprietor of a firm without issuing a show cause notice to his legal representatives, when the firm's GST registration has been cancelled. Petitioner's arguments: The petitioners contended that the show cause notice dated 29.01.2024 and the subsequent order dated 26.04.2024 were void ab initio because they were issued in the name of the deceased Neelesh Kumar Agarwal, who had died on 05.08.2018, and whose firm's GST registration was cancelled effective 31.03.2018. They argued that the department was aware of the death and cancellation, and therefore, issuing notices to a deceased person was improper. They asserted that the proceedings should have been initiated against the legal representatives. Respondent's arguments: The respondents 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 liability following the death of the proprietor.
Sections Cited
Section 73, Section 93
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:73424-DB Chief Justice's Court Case :- WRIT TAX No. - 1920 of 2025 Petitioner :- Paresh Kumar Agarwal and 3 others Respondent :- State of U.P. and another Counsel for Petitioner :- Aditya Pandey Counsel for Respondent :- C.S.C., Ankur Agarwal (S.C.) Hon'ble Arun Bhansali,Chief Justice Hon'ble Kshitij Shailendra,J.
This petition is directed against order dated 26.04.2024 passed under Section 73(9) of the Goods and Services Tax Act, 2017 (for short 'the Act') wherein a demand of Rs. 3,31,346/- has been raised in the name of Neelesh Kumar Agarwal.
The petitioners, who are son, wife and daughters of deceased Neelesh Kumar Agarwal has filed the petition inter alia with the submissions that Neelesh Kumar Agarwal had died on 05.08.2018 and on account of his death, the GST registration of the proprietorship firm M/s. Mahalaxmi Trading Company, which was in the name of deceased Neelesh Kumar Agarwal, was cancelled with effect from 31.03.2018. Whereafter a show cause notice dated 29.01.2024 was issued in the name of deceased Neelesh Kumar Agarwal under Section 73 of the Act, 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 26.04.2024 raising demand against the deceased.
Submissions have been made that once the Department was well aware of the fact that Neelesh Kumar Agarwal, 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 Neelesh Kumar Agarwal 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 26.04.2024 (Annexure-1 to the writ petition) and notice dated 29.01.2024 are quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law. Order Date :- 7.5.2025 RK/Jyotsana (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.