GST Recovery Against Company for Deceased Proprietor’s Dues Quashed: Karnataka HC

BKR Services Private Limited Vs State of Karnataka (Karnataka High Court)

Summary: The Karnataka High Court considered the grievances of BKR Services Private Limited and the second and third petitioners concerning GST recovery notices, adjudication orders and summaries issued under the CGST/KGST Act, 2017. The first petitioner, a Private Limited Company, challenged Recovery Notices in Form GST DRC-13 issued for recovery of amounts arising from Adjudication Orders under Section 73, contending that it was distinct from Swamy Security Agencies, a proprietary concern of deceased Mr. Rudraswamy B K, who died on 25.05.2023. The second and third petitioners, who are the son and wife of the deceased, challenged the Adjudication Orders and corresponding summaries in Form GST DRC-07 and relied upon Section 93 of the CGST/KGST Act. The Court noted that the first petitioner was undisputedly different and distinct from the proprietary concern constituted by the deceased and held that the Recovery Notices in Form GST DRC-13 could not have been issued against the first petitioner. Accordingly, the Recovery Notices dated 04.07.2026 at Annexures K and K1 were quashed. As regards the second and third petitioners, the Court observed that the Adjudication Orders did not examine whether the proceedings could be sustained under Section 93(1)(a) or Section 93(1)(b) of the CGST/KGST Act. The Court also left open the contention concerning two separate Show Cause Notices for the same tax period, April 2021 to March 2022, on different issues, granting the petitioners an opportunity to file a detailed response. The Adjudication Orders dated 22.12.2015 and the corresponding summaries at Annexures G, G1, H and H1 were quashed and the proceedings were restored with liberty to the second and third petitioners to file replies to the corresponding Show Cause Notices, leaving all grounds open for consideration based on those responses. The petitioners were directed to file their responses with the third respondent, along with a certified copy of the Order, by 14.08.2026.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

The first petitioner is a Private Limited Company, and the second an d the third petitioners are the son and wife of late Mr. Rudraswamy B K, who died on 25.05.2023. The first petitioner’s grievance is with the Recover y Notices issued in Form GST DRC – 13 for recovery of the amount under the Adjudication Orders passed under Section 73 of theCentral Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017 [for short, ‘ the CGST/KGST Act], and the second and the third petitioners’ grievance is with these Adjudication Orders and the Summary of such order in Form GST DRC-07. The details of these Adjudication Orders/ Summary of Orders and th e Recovery Notices are as follows.

2. Mr. Chidananda Urs B G, the learned counsel for the petitioners, submits that the third respondent could not have issued Recovery Notices in Form GST DRC-13 [Annexure K and K1] to attach the first petitioner’s bank account because this petitioner is a distinct and a different Swamy Security Agencies [ a proprietary concern of the deceased Mr. Rudraswamy B K]; and in elaboration, the learned counsel submits the following.

• The first petitioner cannot be fastened with the liability of M/s. B. K. R. Swamy Security Agencies.
• The law does not permit recovery from the first petitioner which is unrelated to the estate of the deceased.
• The proceedings for any GST dues, interest, or penalty could only be against the legal heirs of the concerned Registered Taxable Person [RTP].

3. Mr. Chidananda Urs B G invites this Court’s attention to the provisions of Section 93 of the CGST/KGST Act as regards the second and third petitioners’ grievance with the Adjudication Orders  submits that this Court may consider that two separate Show Cause Notices are issued for two different issues for the same tax period [ April 2021 to March 2022], and that it would be open to these two petitioners to demonstrate that they have not continued the business and that there is no estate that can support the demand.

4. Mr. K. Hema Kumar, a learned Additional Government Advocate who accepts notice for the first to fourth respondents, is heard for disposal of the petition. This Court must observe that it remains undisputed that the first petitioner is different and distinct from the proprietary concern constituted by the deceased Mr. Rudraswamy B K, and therefore, the impugned Recovery Notices in Form GST DRC-13 could not have been is sued against the first petitioner. Therefore, there must be intervention with these notices on

5. As regards the second and the third petitioners’ grievance, it is brought to this Court’s notice that upon the demise of Mr. Rudraswamy B K, his family members have reported his demise vide letter dated 28.06.2023, an d that when served with Show Cause Notices, they have replied stating that neither the second petitioner nor the third petitioner could be treated as the legal heirs for the purposes of the proceedings under the CGST/KGST Act because the third petitioner is a home maker who is not keeping well and the second petitioner is working in a private sector while also stating that many other legal aspects will have to be examined.

6. It is seen from the impugned Adjudication Orders that whether th e proceedings could be sustained because of Section 93(1)(a) or 93(1)(b) of the CGST/KGST Act is not examined and this gives a reason for interference on consider material circumstances. On the other contention on behalf of the second and third petitioners that two notices for the same tax period, though on different issues, could not have been issued, this Court must opine that this aspect must be left open to be considered with an opportunity to these petitioners to file a detailed response. In the light of the afore, the following.

ORDER

The petition is allowed on the following terms:

[A] The third respondent’s Recovery Notices dated 04.07.2026 [ Annexures – K and K1] addressed to the fifth respondent in GST DRC-13 are quashed.

[B] The impugned Adjudication Orders dated 22.12.2015 and the Summary thereof [Annexures – G, G1, H and H1  are also quashed restoring both the proceedings with liber ty to the second and third petitioners to file a reply to the corresponding Show Cause Notices leaving open all grounds to be considered based on such response.

[C] The second and th e third petitioners shall, along with a certified copy of this Order, file a response as now permitted with the third respondent by 14.08.2026.