T.Nigil Vs Commissioner of GST & Central Excise (Appeals) (Madras High Court)
Summary: The Madurai Bench of the Madras High Court considered a writ petition challenging an appellate order dated 30.10.2023, by which an order-in-original dated 02.01.2023 had been affirmed. The principal grievance was that the entire adjudication proceeding, beginning with the show cause notice dated 28.03.2022, had been undertaken in the name of the petitioner’s father even though he had died on 19.05.2021. The fact of his death had also been brought to the notice of the respondent authorities.
The petitioner contended that an assessment or adjudication made in the name of a dead person was a nullity. The appellate authority had rejected the objection by relying upon Section 93(1) of the Central Goods and Services Tax Act, 2017.
The High Court examined Section 93(1), which deals with liability to pay tax, interest or penalty where a person liable to pay such amounts dies. Clause (a) applies where the business carried on by the deceased is continued after his death by his legal representative or another person, while clause (b) applies where the business is discontinued and makes the legal representative liable out of the estate of the deceased, to the extent that the estate is capable of meeting the charge.
The Court held that Section 93 does not dispense with the requirement that an assessment must be made in the name of an existing person or entity. It observed that no assessment can be made in the name of a dead person under the GST Act. Where the original assessee is dead, it may be necessary to make the assessment in the name of the legal heirs. Since the respondent authority had already been informed of the death, proceeding to pass the adjudication order in the name of the deceased vitiated the entire proceeding.
The Court characterised the defect as substantive and held that participation in the assessment proceedings by the legal representative could not cure it. Thus, the subsequent participation of a legal heir did not validate proceedings that had continued against the deceased person.
The Court relied upon its earlier decision in R.Unnikrishnan Vs. Union of India, reported in 2024 (21) CENTAX 47 (Mad.), where an order passed against a deceased person had been treated as non-est in law. In that case, the Court had directed the respondents to issue a common notice to the legal heirs/legal representatives and thereafter proceed in accordance with law where the petitioner was carrying on the business of the deceased dealer.
Following the same approach, the respondents in the present case sought liberty to issue a common notice to the legal heirs of the deceased T.Tamil Raj within thirty days from receipt of the order and thereafter proceed in accordance with law. The High Court recorded the submission and set aside the impugned order.
The writ petition was accordingly disposed of by granting liberty to the respondents to issue common notice to the legal heirs of the deceased T.Tamil Raj within thirty days from receipt of a copy of the order and thereafter proceed in the manner known to law. No order as to costs was made, and the connected miscellaneous petition was closed.
Cases Discussed
- R.Unnikrishnan Vs. Union of India, 2024 (21) CENTAX 47 (Mad.)
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present writ petition has been filed challenging the order in appeal No.13 of 2023, dated 30.10.2023, whereby, the order in original, dated 02.01.2023 was affirmed.
2. The limited ground of challenge is that the entire adjudication / assessment proceeding commencing with issuance of show cause notice, dated 28.03.2022 has been made in the name of the petitioner’s father, who had died on 19.05.2021. The death of the petitioner’s father was also brought to the notice of the respondent. However, the respondent proceeded to pass the impugned order of adjudication in the name of the dead person. It was submitted that any assessment made in the name of a dead person is a nullity. Though specific grounds have been raised before the appellate authority as to the impermissibility of making assessment in the name of a non-existing entity/person, the same stood rejected by placing reliance on Section 93(1) of the Central Goods and Service Tax Act, 2017, which reads as under:
“Section 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.”
3. A reading of Section 93 would show that Clause (a) only provides that if a business carried on by the person is continued by the legal representative or any other person after his death, such legal representative or other person, who continues, shall be liable to pay tax, interest or penalty, while Clause (b) provides that 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. The above provision does not appear to dispense with the need / requirement to make the assessment in the name of an existing person / entity. No assessment can be made in the name of a dead person under the GST Act. Under the GST Act, in the case of original assessee being a dead person it may be necessary to make the assessment in the name of the legal heirs. The assessment in the name of the dead person more so when the factum of his death has already been informed by the respondent authority, vitiates the entire proceeding. The above defect is a substantive defect. Participation in the assessment proceeding by the legal representative cannot cure the above defect.
4. In this regard, reliance was sought to be placed on a judgment of this Court in the case of R.Unnikrishnan Vs. Union of India reported in 2024 (21) CENTAX 47 (Mad.), wherein, while considering an identical issue, it was held as under:
“9. There is no dispute that the dealer Mr.Radhakrishnan Pillai has died on 11.10.2017 and that the petitioner is one of his legal heirs/legal representatives along with his mother R.Sujatha aged about 62 years, his sister Sreelekshmi aged about 33 years and his grand-mother Nalinakshi Amma aged about 84 years.
10. The order that has been passed against the dead person is non-est in law. If the petitioner is carrying on the business of the deceased person, then, the remedy is available to the Department to proceed against the petitioner under Section 93 of the TNGST Act, 2017. It appears to be that the petitioner is not carrying on the business of the deceased person.
11. Be that as it may, since the impugned order has been passed against the dead person, the impugned order is quashed by directing the respondents to issue a common notice to the petitioner representing the interest of the other legal heirs/legal representatives of the deceased dealer Mr.Radhakrishnan Pillai, within a period of 30 days from the date of receipt of a copy of this order and thereafter proceed in the manner known to law, in case the petitioner is carrying on the business of the deceased dealer Mr.Radhakrishnan Pillai.”
5. At this juncture, it was submitted by the learned Senior Standing Counsel for the respondents they may be granted liberty to issue common notice to the legal heirs of the deceased T.Tamil Raj, within a period of thirty (30) days from the date of receipt of a copy of this order and thereafter, proceed in the manner known to law.
6. Recording the same, the impugned order is set aside. The writ petition stands disposed of by granting liberty to the respondents to issue common notice to the legal heirs of the deceased T.Tamil Raj, within a period of thirty (30) days from the date of receipt of a copy of this order and thereafter, proceed in the manner known to law. There shall be no order as to costs. Consequently, connected Miscellaneous Petition stands closed.
