Khurshid Bibi And Others vs. The Union Of INDIA Through The Secretary Deptt Of Revenue And Others

Held

The Court held that the show cause notices and subsequent recovery proceedings initiated against the deceased taxpayer, Wali Mohd, and subsequently against his legal heirs (petitioners), were vitiated for non-compliance with the principles of natural justice. The Court found it undisputed that Wali Mohd died on 22.07.2019. Therefore, any statutory notice issued under Section 74 of the J&K GST Act, 2017, after his death, could not have been received by him. The respondents failed to issue the statutory notice to the petitioners, who are the admitted legal heirs, and provide them with an adequate opportunity of being heard before confirming any demand. The Court noted that Section 93 of the Act provides for recovery from legal representatives but requires adherence to due process. Consequently, the entire proceedings from scrutiny to the issuance of the recovery notice were quashed. The respondents were granted liberty to initiate proceedings afresh from the stage of scrutiny, complying with the principles of natural justice.

Facts

The petitioners, legal heirs of the deceased Wali Mohd, challenged show cause notices dated 31.07.2024 and 26.09.2024, and a recovery notice dated 19.08.2024. The notices were issued to their predecessor-in-interest, Wali Mohd, who died on 22.07.2019, prior to the issuance of the impugned notices. The respondents, represented by the State Taxes Officer (STO) and Tehsildar, contended that statutory notices under Section 74 of the J&K GST Act, 2017, were issued for the financial year 2017-18 due to discrepancies between GSTR-1 and GSTR-3B returns. These notices were allegedly sent to the deceased's registered email ID, and upon no response, the demand was confirmed and recovery proceedings initiated against the petitioners.

Key Issues

1. Whether the show cause notices and subsequent recovery proceedings initiated against the deceased taxpayer, Wali Mohd, who had already passed away, are legally sustainable, thereby violating the principles of natural justice concerning his legal heirs (petitioners)? This issue turns on the interpretation and application of principles of natural justice and Section 74 of the J&K GST Act, 2017. Petitioner's Argument: The petitioners argued that the notices were issued to a dead person, rendering them nullities. They contended that as legal heirs, they were not given any opportunity of hearing before the demand was confirmed, thus violating their right to natural justice. They relied on the death certificate of Wali Mohd. Revenue's Argument: The respondents argued that statutory notices under Section 74 of the Act were issued to the assessee, Wali Mohd, on his registered email ID for the financial year 2017-18 due to discrepancies in returns. They claimed that since no reply was received, the demand was confirmed, and recovery proceedings were initiated. They did not explicitly address the issuance of notices to a deceased person or the lack of hearing for the legal heirs, other than stating that notices were sent to the registered email.