Case Law Details
Rajvanti Devi Vs State of U.P. (Allahabad High Court)
The petition challenged an order dated 28.02.2025 passed under Section 73 of the Goods and Services Tax Act, 2017, by which a demand of ₹6,43,569.58 was raised in the name of Virendra Kumar Maurya. The petition was filed by Rajvanti Devi, the wife of the deceased proprietor. She submitted that Virendra Kumar Maurya had died on 20.05.2021, but a show cause notice dated 30.11.2024 was subsequently issued in his name under Section 73 of the Act. As the notice was uploaded on the GST portal, the petitioner had no occasion to access the portal, resulting in the show cause notice remaining unanswered. Consequently, the authorities passed the order dated 28.02.2025 raising the demand against the deceased person.
The petitioner argued that the department was aware that the proprietor had already died and that the firm’s registration had been cancelled. Despite this knowledge, the proceedings continued in the name of the deceased, culminating in the impugned order. It was contended that since the proceedings were conducted against a deceased person, they were void ab initio and the order deserved to be quashed.
Counsel for the respondents defended the impugned order by relying on Section 93 of the Goods and Services Tax Act, 2017. It was submitted that under this provision, recovery of tax dues can be made from the legal representatives even if the determination of tax occurs after the death of the proprietor.
The court considered the submissions and examined the material on record. It noted that the facts were undisputed: the show cause notice, reminders, and determination of tax had all been issued after the death of the proprietor. The court then examined the provisions of Section 93 of the Act, which deal with liability to pay tax, interest, or penalty when a person liable under the Act dies. Under Section 93, if the business of the deceased continues through a legal representative or another person, such representative becomes liable to pay the tax dues. If the business is discontinued, the legal representative remains liable to pay the dues out of the estate of the deceased to the extent that the estate can meet the liability, irrespective of whether the tax was determined before or after the death.
However, the court observed that Section 93 only addresses the liability of legal representatives for payment of tax, interest, or penalty. The provision does not address whether tax determination proceedings themselves can be conducted against a deceased person. The court held that Section 93 neither authorises nor contemplates determination of tax liability against a dead person followed by recovery from the legal representative.
The court further stated that when the statute recognises the liability of legal representatives after the death of the proprietor, it becomes necessary that the legal representative be issued a show cause notice. Only after giving the legal representative an opportunity to respond can the determination of tax liability take place.
In the present case, the show cause notice was issued in the name of the deceased person and no notice was served upon the legal representative. As a result, the determination of tax liability was made against a dead person without providing any opportunity to the legal representative to respond. The court held that such determination could not be sustained in law.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. This petition is directed against order dated 28.02.2025 passed under Section 73 of the Goods and Services Tax Act, 2017 (for short ‘the Act’) wherein a demand of Rs.6,43,569.58/- has been raised in the name of Virendra Kumar Maurya.
2. The petitioner Rajvanti Devi, wife of deceased Virendra Kumar Maurya has filed the petition inter alia with the submissions that Virendra Kumar Maurya had died on 20.05.2021. Whereafter a show cause notice dated 30.11.2024 was issued in the name of deceased Virendra Kumar Maurya under Section 73 of the Act. However, as the same was uploaded on the portal, there was no occasion for the petitioner to have accessed the said portal, the show cause notice remained unanswered which resulted in passing of the order dated 28.02.2025 raising demand against the deceased.
3. Submissions have been made that once the Department was well aware of the fact that the proprietor of the firm has already died and the registration of the firm has already been cancelled, there was no occasion for passing the order in the name of the deceased and as the proceedings have been conducted in the name of the deceased, the same are void ab initio and, therefore, the order impugned deserves to be quashed and set aside.
4. Learned counsel for the respondents supported the order impugned with the aid of provisions of Section 93 of the Act. Submissions have been made that under the provisions of Section 93, the recovery can be made from the legal representatives even after the determination has been made after the death of the proprietor of the firm.
5. We have considered the submissions made by counsel for the parties and have perused the material available on record.
6. Undisputed facts are that the show cause notice, reminders and determination of tax have been made after the death of the proprietor of the firm. Provisions of Section 93 of the Act, insofar as relevant, reads as under:
“93. Special provisions regarding liability to pay tax, interest or penalty in certain cases:
(1) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a person, liable to pay tax, interest or penalty under this Act, dies, then –
(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; and
(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,
whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death.”
7. A perusal of the above provision would reveal that the same only deals with the liability to pay tax, interest or penalty in a case where the business is continued after the death, by the legal representative or where the business is discontinued, however, the provision does not deal with the fact as to whether the determination at all can take place against a deceased person and the said provision cannot and does not authorise the determination to be made against a dead person and recovery thereof from the legal representative.
8. Once the provision deals with the liability of a legal representative on account of death of the proprietor of the firm, it is sine qua non that the legal representative is issued a show cause notice and after seeking response from the legal representative, the determination should take place.
9. In view thereof, the determination made in the present case wherein the show cause notice was issued and the determination was made against the dead person without issuing notice to the legal representative, cannot be sustained.
10. Consequently, the writ petition is allowed. The order dated 28.02.2025 (Annexure-1 to the writ petition) is quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law.
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