Allahabad High Court Quashes GST Order Issued Against Deceased Proprietor

 

A significant ruling by the Allahabad High Court has clarified an important legal principle under the Goods and Services Tax (GST) law — tax proceedings cannot be conducted against a deceased person.

Background of the Case

In the case of P S Engineers vs State of U.P. and Another, a GST demand of ₹8,94,776 was raised through an order dated 25.02.2025 under Section 73(9) of the GST Act, 2017. The demand was issued in the name of Parbind Kumar Srivastava, the proprietor of the firm.

However, the proprietor had passed away on 25.11.2020, and the GST registration of the proprietorship firm had already been cancelled with effect from 31.03.2021 through an order dated 12.07.2021.

Despite this, the GST department issued a show cause notice dated 30.11.2024 under Section 73 in the name of the deceased proprietor. Since the GST registration had already been cancelled, the legal representative could not access the GST portal to view or respond to the notice. As a result, the notice remained unanswered and the department subsequently passed the demand order.

Argument of the Petitioner

The petition was filed by Shalini Srivastava, the wife of the deceased proprietor. She argued that the department was already aware of the death of the proprietor and the cancellation of the GST registration.

Therefore, issuing a show cause notice and conducting proceedings in the name of a deceased person was void ab initio (invalid from the beginning) and the resulting order should be quashed.

Stand of the Department

The department relied on Section 93 of the GST Act, which deals with liability for tax, interest, or penalty after the death of a person. According to the department, this provision allows recovery of tax dues from legal representatives even if the determination takes place after the death of the proprietor.

Observations of the Court

The Court examined the scope of Section 93 and clarified that the provision deals with recovery of tax liability from legal representatives, but it does not permit tax determination against a deceased person.

The Court emphasized that if the tax authorities intend to enforce liability against the legal representative, they must:

• Issue a show cause notice to the legal representative, and

• Provide an opportunity to respond and present their case before passing any order.

Court’s Decision

In this case, the show cause notice, reminders, and the final demand order were all issued after the death of the proprietor, and no notice was served on the legal representative.

Accordingly, the Court held that the entire proceedings were legally unsustainable and quashed the order dated 25.02.2025.

However, the authorities were granted liberty to initiate fresh proceedings in accordance with law, if required.

Key Takeaway

This judgment reinforces an important legal principle under GST law:

• Tax proceedings cannot be initiated or continued against a deceased person.

• If liability exists, legal representatives must be properly notified and given an opportunity to respond before any determination is made.

This ruling provides valuable guidance for taxpayers and professionals dealing with GST litigation and procedural compliance.

CA SAGAR GUPTA

SAGAR S GUPTA & CO

www.cassgc.com