Dipakkumar Nathalal Raichura Vs State of Gujarat & Ors. (Gujarat High Court)
Summary: The Gujarat High Court, in Dipakkumar Nathalal Raichura Vs State of Gujarat & Ors., held that GST proceedings initiated in the name of a deceased sole proprietor were without jurisdiction and consequently quashed the intimation in Form DRC-01A dated 23.06.2025, the show-cause notice dated 27.06.2025 and the demand order in Form DRC-07 dated 15.12.2025. The petitioner was the legal heir of late Shri Nathalal Keshavbhai Raichura, sole proprietor of M/s. Balkrishan Cotspin, who had died on 21.04.2020. The petitioner submitted that the proprietorship business had ceased operations and that applications for cancellation of GST registration had been filed after his father’s death, expressly informing the authorities of the demise and furnishing the death certificate. Following successive applications, the registration was cancelled on 16.04.2022 with retrospective effect from 31.12.2021, and the final return in Form GSTR-10 was filed on 25.04.2022.
Despite being aware of the proprietor’s death, the GST authorities initiated proceedings under Section 74 of the CGST Act, 2017, alleging wrongful availment of input tax credit. An earlier intimation dated 22.09.2023, show-cause notice dated 07.12.2023 and demand order dated 03.04.2024 had already resulted in an appeal filed by the petitioner on 07.06.2024 in his capacity as legal heir. Nevertheless, fresh proceedings concerning the same period and alleged input tax credit were initiated in June 2025, again in the deceased proprietor’s name. The petitioner objected to their continuation and brought the death of his father to the authorities’ attention, but the demand was confirmed on 15.12.2025.
The Division Bench comprising Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed that the authorities had been informed about the death as early as 08.12.2021 through the cancellation application and were also aware that the earlier appeal had been filed by the petitioner as legal heir. Consequently, issuing another intimation, show-cause notice and adjudication order against the deceased person constituted a jurisdictional defect warranting interference. The Court quashed the impugned proceedings but expressly reserved liberty to the authorities to initiate appropriate proceedings against the legal heir as permissible under law. It clarified that no opinion had been expressed on the merits of the alleged input tax credit dispute, and the respective rights and contentions of the parties were left open. The separate prayer relating to the earlier proceedings was not pressed because the statutory appeal remained pending.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
1. At the outset, learned advocate Mr. Hiren Trivedi appearing for the petitioner has fairly pointed out that at this stage, prayer at paragraph no. 25(B) is not pressed, in view of the parallel proceedings since the appeal is pending from the proceedings arising from Section 74 of the Central Goods and Services Tax Act, 2017 (for short ‘CGST Act’). However, he has submitted that all the rights and contentions of the legal heir may be kept open. We agree to the aforesaid proposition, so far as prayer at paragraph no. 25(B) is concerned.
2. Thus, the present writ petition is confined to prayer at paragraph no.25(A), wherein the petitioner has assailed the intimation in Form DRC-01A dated 23.06.2025 and the show-cause notice dated 27.06.2025 and the order in Form DRC-07 dated 15.12.2025.
3. It is the case of the petitioner, that the impugned show-cause notice as well as the order are required to be quashed and set aside as the proceedings under Section 74 of the CGST Act has been initiated against the deceased-father of the petitioner i.e. late Shri Nathalal Keshavbhai Raichura, who passed away on 21.04.2020. The father of the petitioner i.e. Shri Nathalal Raichura was the sole proprietor of M/s. Balkrishan Cotspin and the registered taxable person. It is the case of the petitioner that after demise of the deceased the operation of the proprietorship firm ended in April 2019 and “nil” GST returns were regularly filed. The petitioner, being the legal heir, filed an application in Form GST-REG-16 on 08.12.2021, seeking cancellation of registration on account of closure of business.
4. Pursuant to the aforesaid application the respondent authority issued a notice dated 15.12.2021 seeking clarification on additional documents in respect of cancellation of registration. Thereafter, the application filed by the petitioner came to be rejected on 19.01.2022 by the respondent-authority, which, prompted the petitioner to file a fresh application seeking cancellation of registration on 21.01.2022. However, the same was withdrawn due to technical error on the GST Portal. The petitioner thereafter filed third application on 25.01.2022, praying for cancellation of registration. A detailed reply was also filed on 27.01.2022, manually before the authority specifically mentioning that the sole proprietor was his father, had passed away and that the petitioner had also annexed the death certificate along with supporting documents.
5. On 16.04.2022 the respondent-authority accepted the application for cancellation of the GST registration with retrospective effect from 31.12.2021 without raising any liability or discrepancy. The final return under Form GSTR-10 under Section 45 of the CGST Act was duly filed by the petitioner on 25.04.2022. It appears that after passage of three years from the death of the proprietor on 22.09.2023, the respondent-authority had issued Form DRC-01A dated 22.09.2023 proposing demand under Section 74 of the CGST Act for alleged wrongful availment of input tax credit. A Show-Cause Notice dated 07.12.2023 was also issued against the name of the deceased proprietor. The petitioner under bona fide belief filed a detailed reply on 13.03.2024 demonstrating genuineness of transaction and contesting the demand, though the proceedings were initiated in the name of the deceased. The respondent-authority passed an order under Form DRC-07 dated 03.04.2024, confirming the demand which had resulted in filing an appeal by the petitioner in APL-01 dated 07.06.2024 as a legal heir.
6. Again the respondent-authority passed a fresh intimation under DRC-01A dated 23.06.2025 for the same period and issued alleged input tax credit, once again in the name of the deceased person fresh Show-Cause Notice dated 27.06.2025 also issued by alleging wrongful availment of the input tax credit. The petitioner through his tax consultant filed detailed reply on 07.07.2025 bring on record the death of the proprietor and objecting to continuation of the proceedings. On 15.12.2025 the respondent authorities passed the order under Form DRC-07 dated 15.12.2025 confirming demand. The aforenoted facts are not disputed.
7. Thus, when the fresh intimation in Form DRC-01A was passed on 23.06.2025 alleging wrongful availment of input tax credit, the respondent-authority was already aware about the death of the proprietor. However, the same has been passed and issued in the name of the deceased person. Thus, on the ground of this lack of jurisdiction by the revenue authority to initiate the proceedings against the deceased, the impugned action calls for interference. Though the petitioner having pointed out the fact of death of his father right from 08.12.2021, when he filed application seeking cancellation of registration on closure of business and thereafter also on the issuance of the show-cause notice dated 22.09.2023, when DRC-01 was issued proposing demand under Section 74 of the CGST Act, which culminated into filing an appeal by the petitioner on 07.06.2024, in the capacity of legal heir, the impugned Notice has been issued. Thus, the respondent-authority could have noticed that appeal has been filed by the petitioner being a legal heir, hence, fresh intimation under Form DRC-01A dated 23.06.2025 to the deceased was uncalled for.
8. Under these undisputed facts, since the proceedings are initiated against a deceased proprietor, the impugned intimation in Form DRC-01A dated 23.06.2025 and the show-cause notice dated 27.06.2025 and the order in Form DRC-07 dated 15.12.2025 are hereby quashed and set aside. However, we reserve liberty in favour of the respondent-authority to initiate proceedings as permissible under the law, against the legal heir i.e. the present petitioner- Dipakkumar Nathalal Raichura.
9. We clarify that we have not opined anything on merits of the case. The rights and contentions of the respective parties for initiating the proceedings against the present petitioner is left open. Accordingly, the writ petition stands disposed of.
