Clipped from: https://taxguru.in/corporate-law/gst-proceedings-deceased-person-void-allahabad-hc.html
Satendra Kumar Vs State of U.P. And 2 Others (Allahabad High Court)
Allahabad High Court has set aside a show-cause notice and a subsequent ex parte assessment order issued under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, against a deceased proprietor of a firm. The court ruled that initiating proceedings directly against a person who is no longer alive is legally untenable, reinforcing the principle that tax authorities must proceed against the legal representatives in such circumstances.
The case, filed by Satendra Kumar against the State of U.P. and others, challenged a show-cause notice dated September 12, 2022, and an ex parte order dated March 10, 2023, issued by the Deputy Commissioner, State Tax. These proceedings related to tax periods from May 2018 to September 2018.
According to the petitioner, his father, Mr. Surendra Kumar, was the proprietor of S.K. Industry. Mr. Surendra Kumar passed away on February 17, 2021. Following his death, his wife applied for the cancellation of the firm’s GST registration, which was subsequently cancelled on July 29, 2022.
Despite being notified of the death and the cancellation of registration, the tax authorities issued the contested show-cause notice and the subsequent ex parte order against the deceased proprietor. The petitioner highlighted that both the notice and the order were merely uploaded on the GST portal and were therefore not known to the legal heirs of the deceased businessman. The petitioner’s mother, the wife of the deceased, also passed away subsequently, leaving the petitioner, the son, to challenge the impugned proceedings.
The core of the petitioner’s argument was that the initiation of proceedings against a deceased individual was fundamentally flawed in law.
In support of this contention, the petitioner’s counsel relied heavily on a recent Division Bench judgment of the Allahabad High Court itself, presided over by the Chief Justice, in the matter of Amit Kumar Sethia (Deceased) vs. State of U.P. and another, Writ Tax No.917 of 2025. This judgment, decided on April 2, 2025, dealt with a similar scenario where tax determination was made after the death of a firm’s proprietor.
The relevant portion of Section 93 of the GST Act, which addresses the liability to pay tax, interest, or penalty in cases of death, was examined in the Amit Kumar Sethia judgment. Section 93(1) stipulates that where a person liable to pay tax dies, their legal representative shall be liable. If the business is continued, the legal representative is liable for dues under the Act. If the business is discontinued, the legal representative is liable to pay out of the deceased’s estate to the extent the estate can meet the charge, for dues determined before or after death.
However, the Division Bench in the Amit Kumar Sethia case crucialy interpreted this provision, stating that while Section 93 deals with the liability of a legal representative, it “does not deal with the fact as to whether the determination at all can take place against a deceased person.” The judgment emphasized that Section 93 “cannot and does not authorise the determination to be made against a dead person and recovery thereof from the legal representative.”
The precedent set in Amit Kumar Sethia established that for a valid determination of tax, interest, or penalty following the death of a proprietor, it is a prerequisite (“sine qua non”) that the show-cause notice must be issued to the legal representative. The determination should only take place after seeking and considering the response from the legal representative.
Based on this settled legal principle derived from the Amit Kumar Sethia judgment, the Allahabad High Court in the present case of Satendra Kumar held that proceedings cannot be initiated against a person who is deceased. The court clarified that while liability might fall upon the legal heirs or the deceased’s estate, the procedural step of initiating action through a show-cause notice and subsequent determination must be directed towards the legal representative.
The court observed that the authorities in this instance had failed to proceed in the proper manner by initiating the action against the legal representative or the heirs of the deceased proprietor. This failure rendered the entire proceedings, commencing from the stage of the show-cause notice, bad in law.
Following the principles laid down in the Amit Kumar Sethia judgment, the High Court concluded that both the show-cause notice dated September 12, 2022, and the impugned order dated March 10, 2023, passed under Section 74 of the Act, could not be sustained.
Accordingly, the court quashed and set aside both the show-cause notice and the ex parte order. However, the court granted liberty to the respondent authorities to initiate fresh proceedings against the petitioner (as the legal representative) in accordance with the law, if they deemed it appropriate.
The writ petition was allowed with these observations. There was no order as to costs. The ruling underscores the importance of adhering to proper legal procedure, particularly concerning the issuance of notices to the correct party, in tax administration matters, especially when dealing with the affairs of a deceased taxpayer.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel appearing on behalf of the parties.
2. In the present writ petition, the following prayers have been made by the petitioner:-
“i) issue a writ, order or direction in the nature of certiorari quashing impugned show cause notice dated 12.09.2022, passed by respondent no.3, u/s 74 of the Act Annexure No.8.)
ii) issue a writ, order or direction in the nature of certiorari quashing the impugned order dated 10.03.2023, passed u/s 74 of the CGST/UPGST Act by respondent no.3 for the tax period May, 2018 to September, 2018 (Annexure No.9).
iii). issue any other suitable writ, order or direction which the Hon’ble Court may deem fit and proper under the facts and circumstances of the case.”
3. Facts reveals that the petitioner is son of Mr. Surendra Kumar who was the proprietor of the S.K. Industry. Mr. Surendra Kumar died on February 17, 2021. Subsequent to his death, wife of Mr. Surendra Kumar made an application before the Proper Officer for cancellation of the registration which was cancelled on July 29, 2022. In spite of having knowledge of the same, the authorities issued a show cause notice dated September 12, 2022, and thereafter, passed an ex parte order dated March 10, 2023, under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the Act’).
4. It is clear from the facts that the show cause notice and order both were uploaded on the portal and the same, was accordingly, not known to the legal heirs of the proprietor of the firm. The wife of Mr. Surendra Kumar has also expired and the writ petitioner, who is the son of Mr. Surendra Kumar, has filed this writ petition challenging the show cause notice and order on the ground that the same were passed against a person who was deceased. Furthermore, since information had been provided to the authorities with regard to death of the deceased person, the very initiation of the show cause notice was bad in law.
5. Learned counsel appearing on behalf of the petitioner has relied upon a Division Bench judgment of this Court presided over by Hon’ble The Chief Justice in the matter of Amit Kumar Sethia (Deceased) vs. State of U.P. and another, Writ Tax No.917 of 2025 (decided on April 2, 2025 [Neutral Citation No. – 2025:AHC:45317-DB]) in support of his case. The relevant paragraphs of the said judgments are provided below:-
“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 17.11.2023 (Annexure-1 to the writ petition) is quashed and set aside. The respondents would be free to take appropriate proceedings in accordance with law.”
6. In light of the above settled principle of law, it is inherent that proceedings cannot be initiated against a person who is deceased. Thus, proceedings cannot be initiated against the legal heirs of the deceased or against the estate of the deceased. However, it was open to the authorities to proceed in proper manner against the legal representative/heirs of the deceased proprietor and having failed to do so, the entire proceedings initiated from the stage of show cause notice is bad in law.
7. Following the principles laid in the judgement of Amit Kumar Sethia (Deceased) (supra), we are of the view that the entire show cause notice and the impugned order passed under Section 74 of the Act cannot sustain. Accordingly, the show cause notice dated September 12, 2022 and impugned order dated March 10, 2023 are quashed and set aside with liberty to the respondent authorities to proceed against the petitioner in accordance with law, if so advised.
8. With the above observations, the writ petition is allowed.
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