Vijayan Sahadevan (Deceased) vs. The Commissioner Of Kerala State GST, Thiruvananthapuram

Facts

The appeal was filed by the legal heir of the deceased appellant, Vijayan Sahadevan, against an order passed by the Commissioner of Kerala State GST. The deceased appellant passed away on September 5, 2024, while the appeal period was still open. The last GSTR-3B was filed in May 2023, after which no returns were filed and the GSTIN was cancelled. The core of the dispute revolves around the continuation of proceedings against a deceased person without proper notice to the legal heir and the eligibility for Input Tax Credit (ITC) under Section 16(5) of the CGST Act for belatedly filed returns pertaining to FY 2017-18. The amount of ITC in dispute is Rs. 1,72,430/-, and interest levied under Section 50(1) is Rs. 1,87,350/-.

Held

The Court held that proceedings cannot be conducted against a deceased person without issuing notice to the legal heir under Section 93 of the CGST/KGST Act. It was emphasized that Section 93(1)(b) makes the legal representative liable to pay out of the deceased's estate, but this requires an inquiry into the existence of such an estate and notice to the legal heir, which was not done. The Court cited several High Court judgments supporting the principle that proceedings against a deceased person are void without proper notice to the legal representative. On the merits, the Court found that the deceased appellant was eligible for the ITC claimed for FY 2017-18, as the returns were filed well before the prescribed date of November 30, 2021, as per the retrospectively inserted Section 16(5). However, the Court noted that Section 16(5) does not provide relief against the separate demand of interest under Section 50(1) for delayed payment of admitted cash tax liability. Since the entire proceedings were set aside due to the lack of notice to the legal heir, the issue of interest did not survive for consideration. The impugned order was set aside, and the appeals were allowed with consequential relief.

Key Issues

1. Whether proceedings can continue against a deceased person without notice to the legal heir under Section 93 of the CGST/KGST Act? 2. Whether assessment proceedings against a deceased proprietor are valid without issuing notice to the legal representative? 3. Whether the deceased appellant is eligible for ITC in light of Section 16(5) of the CGST/KGST Act? 4. Whether Section 16(5) provides relief against interest levied under Section 50(1) for belated filing of returns? Petitioner's Arguments: - Proceedings cannot continue against a deceased person without proper notice to the legal heir as per Section 93. - No inquiry was made regarding the inherited estate of the deceased. - The deceased appellant is eligible for ITC under Section 16(5) as returns were filed before the prescribed due date. Respondent's Arguments: - The respondent did not explicitly argue on the merits of the case regarding the deceased status or the ITC eligibility, but rather focused on the procedural aspects and the applicability of Section 16(5) subject to reverification.