Arvind Treaders vs. State Of Uttar Pradeh And Another
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The petitioner, Neelam Agarwal, wife of the deceased Arvind Agarwal, filed a writ petition challenging an order dated 19.7.2024 passed under Section 73(9) of the GST Act, 2017, raising a demand of Rs. 2,94,649/-. Arvind Agarwal, proprietor of M/s. Arvind Traders Company, died on 28.5.2021. The firm's GST registration was cancelled effective 16.5.2021. A show cause notice dated 16.5.2024 and a reminder dated 9.7.2024 were issued in the name of the deceased Arvind Agarwal. As these were uploaded on the portal and the registration was cancelled, the petitioner could not access them, resulting in an ex-parte order against the deceased. The petitioner argued that proceedings against a deceased person without notice to the legal representative are void ab initio.
Held
The Court held that while Section 93 of the GST 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 initiation or continuation of determination proceedings against a deceased person. The Court found that Section 93 deals with the liability of legal representatives in cases where the business is continued or discontinued, but it does not permit the tax authorities to make a determination against a dead person. The Court reasoned that for proceedings to be valid against a deceased proprietor, the legal representative must be issued a show cause notice and given an opportunity to respond. Since the show cause notice and determination were made against the deceased without issuing notice to the legal representative, the proceedings were unsustainable. The Court quashed the show cause notice and the impugned order, 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 GST Act, 2017, can be initiated and concluded against a deceased proprietor of a firm without issuing a show cause notice to their legal representative, particularly when the business has been discontinued and the GST registration cancelled. Petitioner's Arguments: The petitioner contended that the show cause notice and subsequent order were issued in the name of the deceased proprietor, Arvind Agarwal, after his death and after the cancellation of the firm's GST registration. They argued that such proceedings are void ab initio as they were conducted against a dead person without involving the legal representative. The petitioner relied on the principle that legal proceedings must be conducted against living individuals or their legal representatives. Respondent's Arguments: The respondent supported the impugned order by invoking Section 93 of the GST Act, 2017. They argued that under Section 93, recovery can be made from the legal representatives even if the determination of tax liability occurs after 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:60220-DB Court No. - 40 Case :- WRIT TAX No. - 1760 of 2025 Petitioner :- Arvind Treaders Respondent :- State Of Uttar Pradeh And Another Counsel for Petitioner :- Utkarsh Malviya Counsel for Respondent :- C.S.C. Hon'ble Shekhar B. Saraf,J. Hon'ble Dr. Yogendra Kumar Srivastava,J.
This petition is directed against order dated 19.7.2024 passed under Section 73 (9) of the Goods and Services Tax Act, 2017 (for short 'the Act') wherein a demand of Rs.2,94,649/- has been raised in the name of Arvind Agarwal.
The petitioner Neelam Agarwal, wife of deceased Arvind Agarwal has filed the petition inter alia with the submissions that Arvind Agarwal had died on 28.5.2021 and on account of his death, the GST registration of the proprietorship firm M/s. Arvind Traders Company, which was in the name of deceased Arvind Agarwal, was cancelled with effect from 16.5.2021 by order dated 24.6.2022. Whereafter a show cause notice dated 16.5.2024 was issued in the name of deceased Arvind Agarwal under Section 73 of the Act, followed by reminder dated 9.7.2024, 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 19.7.2024 raising demand against the deceased.
Submissions have been made that once the Department was well aware of the fact that Arvind 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 Arvind 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 19.7.2024 (Annexure-1 to the writ petition) and show cause notice dated 16.5.2024 (Annexure-2 to the writ petition) are quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law. Order Date :- 22.4.2025 RKK/- (Dr Y K Srivastava, J) (Shekhar B Saraf, J) RAJ KUMAR KANNAUJIA 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.