Anil Kumar (since deceased) through his LRs Vs State of Punjab and others (Punjab and Haryana High Court)
Summary: The Punjab and Haryana High Court considered a writ petition challenging GST proceedings initiated against late Anil Kumar, sole proprietor of M/s Gauri Shankar Trading Company. The petitioner was aggrieved by the show cause notice dated December 19, 2023, issued in Form GST DRC-01 under Section 73 of the CGST Act, 2017 in relation to financial year 2018-2019, pursuant to alleged discrepancies in the return and a liability of Rs.9,32,513/-. The petitioner also challenged the final order dated April 22, 2024, in Form GST DRC-07, passed under Section 73(9) of the PGST Act, 2017, whereby Rs.9,59,678/- was sought to be recovered from M/s Gauri Shankar Trading Company on account of an alleged excess claim of Input Tax Credit (ITC).
The petitioner submitted that Anil Kumar had died on May 10, 2020, and therefore the show cause notice having been issued against a deceased person, together with the consequential proceedings, was null and void. It was further submitted that, following his death, his heirs had applied for cancellation of the GST registration on September 28, 2020. The registration was subsequently cancelled by order dated April 15, 2021, with effect from June 30, 2020. According to the petitioner, despite the authorities being aware of the cancellation, recovery proceedings were initiated against a person who was no longer alive.
The petitioner, however, fairly acknowledged that liability of legal representatives in appropriate circumstances could arise under Section 93(1)(b) of the CGST Act/corresponding PGST provision. The principal grievance was that the legal representatives had been completely deprived of an opportunity to participate in the proceedings and place their defence on record. The petitioner also contended that the demand was barred by limitation under Section 73(10), which prescribes the period within which an order under Section 73(9) is to be issued. The petitioner submitted that, for the relevant financial year, the due date for furnishing the annual return was December 31, 2020.
Upon notice of motion, the respondents appeared before the Court. Learned Deputy Advocate General, Punjab, on instructions from the concerned State Tax Officer, submitted that, in the circumstances, the impugned show cause notice(s) and consequential order dated April 22, 2024 were indefensible. It was therefore considered expedient that the matter be remitted to the competent authority for passing fresh orders in accordance with law. The respondents accordingly submitted that the impugned show cause notice(s) and consequential orders be deemed to have been withdrawn/recalled.
The petitioner’s counsel agreed that the petition could be disposed of in terms of the statement made on behalf of the State.
In view of the position placed before it and the statements of counsel for the parties, the High Court disposed of the petition. The Court expressed the expectation that the competent authority would revisit the matter in right earnest and pass a comprehensive order assigning reasons in support of its decision.
The Court expressly clarified that its order did not constitute any expression of opinion on the merits of the case of either party. The competent authority was directed to examine the concerns and grievances raised by the petitioner strictly in accordance with law. Thus, the Court disposed of the proceedings by permitting fresh consideration rather than adjudicating the underlying dispute concerning the alleged excess ITC claim or the limitation objection on merits.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
The petitioner is aggrieved by the impugned show cause notice dated December 19, 2023 (Form GST DRC-01), issued under Section 73 of CGST Act, 2017, by respondent No.2, in relation to the financial year 2018 – 2019, for certain discrepancies were noticed in the return filed by late Anil Kumar, resulting in the imposition of a liability of Rs.9,32,513/-. And also assails the final order dated April 22, 2024 (Form GST DRC-07), passed by respondent No.3, under Section 73(9) of PGST Act, 2017, whereby Rs.9,59,678/- are sought to be recovered from M/s Gauri Shankar Trading Company on account of an excess claim of Input Tax Credit (ITC).
Learned counsel for the petitioner submits that late Anil Kumar happened to be the sole proprietor of M/s Gauri Shankar Trading Company, who unfortunately passed away on May 10, 2020. Therefore, she submits that the impugned show cause notice (P-5), having been issued against the deceased person, and all consequential proceedings, are null and void. Not just that, she submits that upon the demise of Anil Kumar, an application for the cancellation of the GST registration was moved by his heirs on September 28, 2020. And, vide order dated April 15, 2021, the authorities cancelled the registration with effect from June 30, 2020. It is submitted that despite the authorities being aware of the cancellation of the GST registration, recovery proceedings were initiated against a dead person. However, she fairly submits that although recovery against the LRs of the deceased (Anil Kumar) under Section 93(1)(b) of PGST Act, 2017, can be caused, but the petitioner, in the present case, were completely deprived of their right to participate in the impugned proceedings and set out their defence. Even otherwise, it is urged that the impugned demand is time-barred in terms of Section 73(10) of the Act, as an order under Section 73(9) can only be passed within 3 years from the due date for furnishing the annual return for the relevant financial years, which in this case is December 31, 2020.
Notice of motion.
Served with an advance copy of the petition, Ms. Neha Sonawane, learned Deputy Advocate General, Punjab, is present in Court on behalf of the respondent(s). And, on instructions from Mr. Karanbir Singh Mansa, STO, she submits that in the given situation, the impugned show cause notice(s) and the consequential order dated April 22, 2024, being indefensible, it would be expedient if the matter is remitted to the competent authority to pass fresh orders in accordance with law. Accordingly, she submits that the impugned show cause notice(s) and the consequential orders be deemed to have been withdrawn/re-called.
That being so, learned counsel for the petitioner submits that let the petition be disposed of in terms of the statement made by learned Deputy Advocate General, Punjab.
In the wake of the position sketched out above, as also the statements of learned counsel for the parties, the petition is accordingly disposed of. This Court is sanguine that the competent authority shall re-visit the matter in issue in the right earnest, and pass a comprehensive order assigning reasons in support thereof.
However, it is made clear that this order shall not constitute any expression of opinion on the merits of the case of either party, for, as indicated above, the competent authority shall examine the concerns/grievances of the petitioner, strictly in accordance with law.
