M/S Durga Traders vs. State Of Uttar Pradeh And Another
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The petitioner, M/s Durga Traders, represented by Meenakshi Chaudhari, wife of the deceased proprietor Vinay Kumar Chaudhary, challenges an ex-parte order dated 31.08.2024. This order, passed under Section 73(9) of the GST Act, 2017, raised a demand of Rs. 2,28,596.00. The petitioner's husband died on 25.07.2020. A show cause notice dated 21.05.2024 was issued in the name of the deceased proprietor. The petitioner contends that as the notice was uploaded on the portal, she could not access it, leading to the unanswered notice and the subsequent ex-parte order against the deceased. The respondents argued that Section 93 of the Act allows recovery from legal representatives even after the proprietor's death.
Held
The Court held that the determination made against the deceased proprietor, without issuing a show cause notice to the legal representative, cannot be sustained. While Section 93 of the GST Act, 2017, deals with the liability of legal representatives for tax, interest, or penalty due from a deceased person, it does not authorize the determination to be made against a dead person. The Court reasoned that for the provision dealing with the liability of a legal representative to be effective, it is essential that the legal representative is issued a show cause notice and the determination takes place after seeking their response. Therefore, the ex-parte order passed against the deceased without notice to the legal representative was quashed and set aside. The respondents were granted the liberty to take appropriate proceedings in accordance with the law.
Key Issues
1. Whether a determination of tax, interest, or penalty under the Goods and Services Tax Act, 2017, can be made against a deceased person when the show cause notice was issued in their name after their death, without issuing notice to the legal representative? (Section 73 and Section 93 of the GST Act, 2017). Petitioner's arguments: The petitioner argued that the determination was made against a deceased person without proper notice to the legal representative, rendering the order unsustainable. They emphasized that the show cause notice was issued in the name of the deceased, and as it was uploaded on the portal, the legal representative had no opportunity to respond. Respondent's arguments: The respondents contended that under Section 93 of the GST Act, 2017, recovery can be made from legal representatives even after the determination has been made after the death of the proprietor.
Sections Cited
Section 73, Section 93
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Neutral Citation No. - 2025:AHC:67520-DB Chief Justice's Court Case :- WRIT TAX No. - 1813 of 2025 Petitioner :- M/s Durga Traders Respondent :- State of Uttar Pradeh and another Counsel for Petitioner :- Pranjal Shukla, Gauransh Mishra Counsel for Respondent :- C.S.C., Ankur Agarwal (S.C.) Hon'ble Arun Bhansali,Chief Justice Hon'ble Vikas Budhwar,J.
This petition is directed against ex-parte order dated 31.08.2024 passed under Section 73(9) of the Goods and Services Tax Act, 2017 (for short 'the Act') wherein a demand of Rs. 2,28,596.00 has been raised in the name of Vinay Kumar Chaudhary.
The petitioner Meenakshi Chaudhari, wife of deceased Vinay Kumar Chaudhary, the proprietor of the petitioner firm, claiming herself to be his legal representative (Annexure-8), has filed the petition inter alia with the submissions that Vinay Kumar Chaudhary had died on 25.07.2020. A show cause notice dated 21.05.2024 was issued in the name of deceased Vinay Kumar Chaudhary under Section 73 of the Act, however, as the same were uploaded on the portal, 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 08.08.2024 raising demand against the deceased, which order deserves to be 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 31.08.2024 (Annexure-4 to the writ petition) is quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law. Order Date :- 30.4.2025 P.Sri./Rajesh (Vikas Budhwar, J) (Arun Bhansali, CJ) PUNEET SRIVASTAVA 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.