Order passed against deceased person is nullity: Kerala High Court

Benoy Abraham, Legal Heir of Late Santhamma T. Vs. State Tax Officer (Kerala High Court)

Summary: In the case of Benoy Abraham v. State Tax Officer, the Kerala High Court ruled that an order issued against a deceased individual is null and void. The petitioner, Mr. Benoy Abraham, was a legal heir of the late Mrs. Santhamma T, a registered dealer who passed away on June 8, 2021, prior to the issuance of a show-cause notice. Despite being aware of her death, the tax authority issued an order demanding payment in her name. The court highlighted that while Section 93 of the Central Goods and Services Tax Act, 2017 allows for proceedings to continue against legal heirs, it does not permit proceedings to be finalized against a deceased person. Therefore, the court quashed the impugned order, affirming it lacked legal validity. The tax authority was instructed to issue notices to the petitioner, who holds power of attorney for the other legal heirs, thereby allowing them to represent the deceased in future proceedings. The ruling emphasizes the need for tax authorities to adhere to legal protocols concerning deceased individuals and their estates while outlining the proper procedures for addressing tax liabilities in such cases.

The Hon’ble Kerala High Court in the case of Benoy Abraham v. State Tax Officer [Writ Petition (C) No. 10362 of 2024 dated July 09, 2024] allowed the writ petition and quashed the held that order passed against deceased person is nullity. The Section 93 of the Central Goods and Services Tax Act, 2017(“the CGST Act”) permits continuance of proceedings against legal heirs but does not authorize culmination of proceedings against deceased person. Tax authorities directed to continue proceedings against legal heirs by issuing notice to Assessee who holds power of attorney for other legal heirs.

Facts:

Mr. Benoy Abrahan (“the Petitioner”) was one the legal heirs of late Mrs. Santhamma T (“the Deceased”), who was a registered dealer under the CGST Act and was expired on June 08, 2021 even before the issuance of the show cause notice and this fact had been brought to the notice of the State Tax Officer (“the Respondent”) vide reply dated June 06, 2023.

The death certificate of the Deceased had also been produced and despite being aware of the death of the Deceased an Order (“the Impugned Order”) was passed in the name of late Santhamma T. The Petitioner stated that an Order was passed against a deceased person, the order is a nullity and is liable to be set aside.

Hence, aggrieved by the Impugned Order, the Petitioner filed the present writ petition.

Issue:

Whether order passed in the name of deceased GST dealer is valid?

Held:

The Hon’ble Kerala High Court in Benoy Abraham v. State Tax Officer [Writ Petition (C) No. 10362 of 2024 held as under:

• Observed that, the Impugned Order seems to be issued against a deceased person and hence it is a nullity. It may be true that the provisions of Section 93 of the CGST Acts permits the continuance of proceedings against the legal heirs of a deceased person, in case where the business has been discontinued. However, the said provision does not authorize the continuance and culmination of proceedings against a deceased person. Therefore, Impugned Order is a nullity as rightly contended by the learned counsel appearing for the Petitioner.
• Held that, the present writ petition is allowed and the Impugned Order is quashed. The Respondent was permitted to continue with the proceedings against the legal heirs of late the Deceased. Since the Petitioner, who was one of the legal heirs of the Deceased also holds Power Attorney for the other legal heirs, the Respondent may issue notices to the Petitioner for completion of proceedings. Such notice to the Petitioner will be deemed to be proper notice to the other legal heirs as well.

Our Comments:

Section 93 of the CGST Act governs “Special provisions regarding liability to pay tax, interest or penalty in certain cases”. Section 93(1) of the CGST Act stated that 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.

The Hon’ble Madras High Court in the case of Rekha. S, Kavitha. S, Sudha. Ganesh v, the Assistant Commissioner (ST) , Chennai Madras High Court granted relief to the legal heirs of the Deceased by setting aside the GST Assessment Order issued against the Deceased on the ground that the Order came to be passed against the dead person, which is non-est in law.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The petitioner is one the legal heirs of late Santhamma T, who was a registered dealer under the CGST/SGST Act. Certain proceedings were initiated against the aforesaid Santhamma T. and Ext.P3 order has been passed demanding the payment of certain amounts. It is a case of the petitioner that, Santhamma T. expired on 08.06.2021 even before the issuance of the show cause notice and this fact had been brought to the notice of the respondent through Ext.P2 reply dated 06.06.2023. It is submitted that, the death certificate of Santhamma T. had also been produced along with Ext.P2. It is also submitted that, despite being aware of the death of Santhamma T., Ext.P3 order has been passed by the respondent in the name of late Santhamma T. It is a case of the learned counsel for the petitioner that since Ext.P3 order was passed against a deceased person, the order is a nullity and is liable to be set aside.

2. The learned Government Pleader submits that going by the provisions of Section 93 of the CGST/SGST Act, the assessment against a deceased person can be continued either against the legal heirs or other person, who may continue with the business or where the business is discontinued against the legal heirs of the deceased dealer. It is submitted that the facts of the present case, the liability determined against the deceased dealer through Ext.P3 will have to be paid by the legal heirs, as it is the case of the petitioner that the business has been discontinued. It is further submitted that the proceedings have to culminated in some manner and the proceedings are therefore, to be continued against the legal heirs of the deceased dealer. It is also submitted that Ext.P3 can only be seen as a proceeding against the legal heirs of the deceased dealer and if the petitioner is aggrieved by Ext.P3, he ought to have availed alternative remedies.

3. Learned counsel appearing for the petitioner, in reply, would submit that the petitioner herein is one of the legal heirs of late Santhamma T. and the Power of Attorney Holder of other legal heirs, whose names are mentioned in Ext.P4 Legal Heirship Certificate. The learned counsel submitted that the Power of Attorney given by the other legal heirs of late Santhamma T. in favour of the petitioner is also on record as Ext.P5. It is further submitted that the proceedings may therefore, be completed afresh by issuing notice to the petitioner as the petitioner is competent to represent the other legal heirs of late Santhamma T. also.

4. Having heard the learned counsel appearing for the petitioner and the learned Senior Government Pleader, I am of the view that since Ext.P3 seems to be issued against a deceased person, the said order is a nullity. It may be true that the provisions of Section 93 of the CGST/SGST Acts permit the continuance of proceedings against the legal heirs of a deceased person, in a case where the business has been discontinued. However, the said provision does not authorize the continuance and culmination of proceedings against a deceased person. Therefore, Ext.P3 order is a nullity as rightly contended by the learned counsel appearing for the petitioner.

Accordingly, this writ petition is allowed and Ext.P3 is quashed. The respondent is permitted to continue with the proceedings against the legal heirs of late Santhamma T. Since the petitioner, who is one of the legal heirs of late Santhamma T. also holds Power Attorney for the other legal heirs, the respondent may issue notices to the petitioner for completion of proceedings. Such notice to the petitioner will be deemed to be proper notice to the other legal heirs as well. The petitioner shall appear before the respondent at 11.00 A.M on 25.07.2024 and thereafter, the proceedings shall be completed as aforesaid, within a period of three months from the date of receipt of a certified copy of this judgment. It will be open to the petitioner to file supplementary replies/objections to the notices, that may have been issued by the respondent.

*******

(Author can be reached at [email protected])