Arundhuty Ghosh daughter of Late Bharat Lal Vs State of Bihar (Patna High Court)
Summary: The Patna High Court considered a writ petition filed by Arundhuty Ghosh, daughter and legal heir of Late Bharat Lal, the proprietor of M/s Ghosh Engineering, challenging proceedings initiated against the deceased proprietor under GST. Bharat Lal, who was the registered proprietor of the firm bearing GSTIN No. 10ABQPL3094A3ZZ, had died on 18.04.2021. The petitioner sought quashing of the notice dated 30.01.2026 and the order dated 09.04.2024 by which tax and penalty amounting to Rs. 61,61,722/- had been imposed against Late Bharat Lal for the period 2018-19.
The petitioner contended that after the proprietor’s death, proceedings could not legally be initiated or continued against him and that an order passed against a dead person was a nullity and void ab initio. It was further submitted that the business activities had come to an end after the proprietor’s death and that the petitioner had subsequently applied for cancellation of GST registration on 06.04.2023, which was allowed by the Joint Commissioner of State Tax by letter dated 27.04.2023. The State, however, submitted that the business had continued after the proprietor’s death, relying upon the return filed for March 2023 in which the petitioner had admitted turnover of Rs. 21,38,710/-. The State also referred to Rule 20 of the GST Rules and contended that the cancellation application had not been filed within 30 days of the proprietor’s death and had instead been made on the ground of discontinuation of business.
The State further relied upon Section 93 of the GST Act, which contains special provisions regarding liability to pay tax, interest or penalty in certain cases following the death of a taxable person. The Court recorded that Section 93(1) distinguishes between continuation of business after death and discontinuance of business, with the legal representative or other person continuing the business being liable in the former situation and the legal representative being liable out of the deceased’s estate, to the extent that the estate is capable of meeting the charge, in the latter situation.
On the facts, the Court found that Bharat Lal had died on 18.04.2021, that the business had continued and a return had been filed for March 2023 by the legal heir, and that the assessment order for 2018-19 had thereafter been passed on 09.04.2024 imposing liability upon Late Bharat Lal. The material defect identified by the Court was that the assessment authority had passed the order against the deceased registered person without issuing notice to his legal heirs. Consequently, the Court set aside the assessment order dated 09.04.2024 and remanded the matter to the adjudicating authority.
The authority was directed to issue notice to all three legal representatives/heirs of Bharat Lal by speed post or another valid mode such as e-mail, SMS or fax, provide reasonable time for filing show cause, grant an opportunity of personal hearing and thereafter pass a reasoned fresh assessment order within a maximum period of three months. The writ application was accordingly disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
1. Heard the parties.
2. The petitioner is legal heir of the sole proprietor of the registered firm, namely M/s Ghosh Engineering having GSTIN No. 10ABQPL3094A3ZZ. The petitioner is the daughter of the proprietor, namely Bharat Lal, of registered firm M/s Ghosh Engineering, has filed the present writ application for quashing the notice dated 30.01.2026 along with order dated 09.04.2024 passed by the Respondent No. 3/Deputy Commissioner of State Tax, West Circle, Patna, whereby tax and penalty amounting to Rs. 61,61,722/- has been imposed against Late Bharat Lal, proprietor of M/s Ghosh Engineering.
3. Learned counsel for the petitioner submits that the tax and penalty imposed is for the period 2018-19 and since the petitioner is the legal heir of the original proprietor of M/s Ghosh Engineering, who had already expired on 18.04.2021, as such, no proceedings could legally be initiated and continued against a dead person. It has further been submitted that the impugned order imposing tax liability has been passed against the dead person after his death on 18.04.2021, and any order passed against the dead person is a nullity in the eyes of law and is void ab initio.
4. After death of the proprietor, the business activities came to an end, and thereafter, the petitioner applied for cancellation of GST registration on 06.04.2023 before the competent authority, and the Joint Commissioner of State Tax has issued a letter dated 27.04.2023 allowing the cancellation of registration. After cancellation of registration, the respondent/authorities initiated assessment proceeding in the name of deceased person and passed the impugned order. It has also been submitted that the proprietor, Late Bharatlal, is having three daughters namely Vishakha Ghosh (eldest sister of the petitioner), W/o Subhasish Sarkar who is resident of Mahajati Nagar, Block 5 near Joga Nanda Ashram Dumdum, North 24, Parganas West Bengal-700081, Shubhra Ghosh (second eldest sister) and Petitioner/Arundhuti Ghosh (youngest) who are resident of Mohalla- Gorialtoli, Station Road, Patna- 800001.
5. On the other hand, learned counsel for the State argued that the return was filed for the period 2018-19 by the taxpayer. The legal heir continued with the business without substitution of name of the proprietor after his death, which would be evident from the return filed for the month of March 2023, wherein, the petitioner had admitted a turnover of Rs. 21,38,710/-. It has further been submitted that in case of death of taxpayer, cancellation application must be filed within 30 days of the death, as per Rule 20 of GST Rules but petitioner filed application for cancellation of registration on 06.04.2023, not on the ground of death of the proprietor, but on the ground of discontinuation of business. The request of the petitioner for discontinuation of business was accepted on 06.04.2023 itself.
6. Learned counsel placed the provisions of Section 93 of the GST Act for the proposition that after the death of the registered person, the legal representative or legal heir shall be liable to pay tax.
7. After hearing learned counsel for the parties and going through the materials available on record, it appears that the registered person died on 18.04.2021. After his death, the business continued and return was filed for the month of March 2023 by the legal heir. The assessment order was passed by the adjudicating authority for the period 2018-19 on 09.04.2024, and the tax liability of Rs. 61,61,722/- has been imposed upon the registered person Late Bharat Lal.
8. Section 93 of the GST Act talks about a special provision regarding liability to pay tax, interest or penalty in certain cases by the legal representative out of estate of the deceased. The provisions of Section 93(1) of the GST Act is quoted below for ready reference:-
(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.
(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.
9. In the present case, the assessment has been done in 2024 for the financial year 2018-19, whereas the registered person had already died on 18.04.2021 and the assessing authority without issuing notice to the legal heirs of Late Bharat Lal, has passed the order of assessment. Accordingly, the order of assessment dated 09.04.2024 is set aside, and the matter is remanded back to the adjudicating authority with liberty to pass a fresh assessment order after giving notice to all the three legal representatives/heirs, of the deceased, of Bharat Lal (registered person) by speed post, giving reasonable time to file their show cause and after giving them opportunity of personal hearing, the adjudicating authority shall pass a reasoned order within a maximum period of three months. The details of legal heirs have been provided by the learned counsel for the petitioner during the course of argument, and the adjudicating authority shall issue notice in physical mode through speed post or any other valid mode of sending notice viz. E-mail / Sms / Fax etc. to all the legal heirs of the deceased, including the petitioner.
10. With the aforesaid directions and observations, the present writ application is disposed.
