M/S Jawahar Lal Agarwal And Brothers vs. State Of U.P. And 2 Others

One Jawahar Lal was the sole proprietor of a proprietorship firm run under the name and style of M/S Jawahar Lal Agarwal and Brothers. The entity was registered under the GST Act. The said Jawahar Lal died on 23.10.2019. Proceedings under the GST Act were taken out against the said proprietorship firm on 29.09.2023 for 2017-18, on 25.12.2023 for 2018-19 and on 13.05.2024 for 2019-20. Admittedly the said proceedings were taken out against a dead person since Jawahar Lal (since deceased) was the sole proprietor and was exclusively incharge for the day to day functioning and the transactions of the proprietorship firm.

The business had shut down after the death of said Jawahar Lal.

By the impugned order the tax liability of the said proprietorship firm has been imposed upon the petitioner. The petitioner is the son and legal heir of the said Jawahar Lal (since deceased). The petitioner was not noticed by the revenue at any point in time regarding the dues of the proprietorship firm.

The petitioner being a legal heir of the deceased Jawahar Lal/petitioner was entitled to opportunity of hearing before any tax liability could be imposed upon him under the GST Act.

The discussion has the benefit of good authorities in point. A Division Bench of this Court while examining with the consequences of the death of a proprietor of a proprietorship firm and proceedings taken out under the GST Act against legal heirs of the said proprietorship firm this Court in Writ Tax No. 2456 of 2024 (M/S Upmanyu Kattha Industries Vs State of U.P. and another) has held:

Undisputed facts are that the petitioner-firm is a proprietorship firm and its proprietor - Shri Shishir Awasthi had died on 25.12.2023, before the issuance of the show cause notice dated 12.02.2024 and the subsequent reminders, which were also issued, apparently, after the effective date of cancellation of the registration in the name of Shishir Awasthi, i.e., 31.01.2024 and in those circumstances, the assessment essentially has been made against a dead person and therefore, the same could not be sustained. However, as the petitioner has succeeded as an heir as well as a proprietor of the said firm and has prayed for being afforded opportunity of hearing in this regard, the order dated 21.09.2024 (Annexure No. 1) passed by respondent No. 2 for assessment year 2020-21 is set aside." The case at hand is covered by the holding of this Court in M/S Upmanyu Kattha Industries.

In the wake of preceding discussion the impugned order dated 23.08.2024 is liable to be set aside and is set aside. The matter is remitted to the assessing authority to proceed afresh after noticing the petitioner as per law under the relevant provisions of U.P. GST Act. The writ petition is allowed. Order Date :- 28.4.2025 Pravin PRAVIN VERMA High Court of Judicature at Allahabad