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Quashes GST Notice to Deceased Proprietor, Orders Fresh Notice to
A Notice to the Deceased: A in Law
The , in a significant ruling on , held that GST authorities cannot issue a or determine tax liability against a deceased person. Justice Smita Das De quashed a issued under , against Late Haradhan Pan, who died in , along with the consequential and . The court directed the department to issue a fresh notice to the deceased's in their own names.
The Case: A Widow's Challenge
The petitioner, Gita Rani Pan, wife of the deceased proprietor Haradhan Pan, challenged the legality of proceedings initiated against her husband after his death. Following Haradhan Pan's demise on , Gita Rani obtained a fresh GST registration in her own name for the same trade, declaring commencement of business from . She also applied for cancellation of the registration standing in the deceased's name, which was cancelled effective .
Despite these developments, the GST authorities issued a on , under Section 74 of the in the name of Late Haradhan Pan. Gita Rani responded to the notice on two occasions, but the department proceeded to pass the on , raising a demand of Rs. 38,44,674 along with interest and penalty.
Petitioner's Argument: Proceedings Against a Dead Person Are Void
The petitioner argued that the and subsequent order were since they were issued against a deceased person. The definition of "person" under does not include a dead person. Relying on the 's decision in , the petitioner contended that any action or proceeding initiated in the name of a dead person is a . Unlike the , which contains under Section 159 for assessment after death, the lacks such provisions for determining tax liability of a deceased person in the name of the deceased.
Department's Defense: Are Liable Under Section 93
The GST authorities countered that the petitioner failed to intimate the death within the prescribed time. They relied on , which makes liable to pay tax, interest, and penalty due from the deceased out of the estate inherited. They also cited Section 29(3), which states that cancellation of registration does not extinguish tax liabilities for any period prior to cancellation. The department argued that even where tax liability is determined after death, it can be recovered from to the extent of the deceased's estate.
Court's Analysis: Distinguishing Charging Provision from Machinery Provision
The court drew a critical distinction between
and
. While
creates a statutory liability upon
to pay tax due from the deceased, it does not prescribe the machinery for determining that liability. The machinery for tax determination remains under
, which require issuance of a
to the person liable. The court held that
"determination of taxes cannot take place against a dead person"
and that the department cannot issue a notice to a deceased and then direct
to respond to the same.
Relying on and Shabina Abraham , the court emphasized that a must be issued to the legal representative, seeking their response, before determining tax. The court noted that Section 93(1)(b) makes it a that the notice be issued to the legal representative.
Key Observations
The court made several pivotal observations:
"It clearly envisages from the plain reading of the that the liability of a legal representative on account of death of the proprietor, it is a that the must be issued to the legal representative, after seeking his response, to determine tax."
"The machinery remains Section 73, 74, which requires issuance of to person liable. Therefore, correct machinery is to issue to , in his own name describing him as of deceased and to determine the liability."
"Section 93 provision does not provide machinery to assess dead person. Department must issue notice to legal representative."
The Verdict: Quashed and Remanded with Directions
Justice Smita Das De quashed the dated , the dated , and the dated . The court directed the respondent authority to issue a fresh to the of the deceased—Gita Rani Pan, Barun Pan, and Kakoli Manna—within three weeks. The are to file their replies within three weeks of receiving the notice, after which the authority must grant a personal hearing and pass a reasoned order within six weeks. The court clarified that the liability of the is limited to the extent of the deceased's estate under .
The writ petition was disposed of without examining the merits of the underlying tax demand, leaving the fresh proceedings to take their course in accordance with law.
