Natural justice in GST recovery requires notice and hearing to legal heirs before liability is confirmed against a deceased taxpayer.

GST proceedings initiated against a deceased taxpayer were unsustainable where the statutory notice and subsequent recovery steps were issued in the name of the taxpayer and the legal heirs were not heard. The High Court held that although the GST Act permits recovery from legal representatives, that provision does not displace the requirement of notice and opportunity of hearing before liability is confirmed or recovery is commenced. The impugned notices and recovery action were quashed for breach of natural justice, while the department was left free to restart proceedings from the scrutiny stage after due notice to the legal heirs.

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Issues: Whether show cause and recovery proceedings initiated against a deceased taxpayer, without issuing notice and affording hearing to his legal heirs, were sustainable under the Jammu and Kashmir Goods and Services Tax Act, 2017.

Analysis: The demand arose from scrutiny of returns for the financial year 2017-18 and was pursued through notices issued after the taxpayer had already died. Since the initial statutory notice under Section 74 of the Jammu and Kashmir Goods and Services Tax Act, 2017 and the subsequent notices were addressed to a dead person, the legal heirs were never given an opportunity to respond before the demand was confirmed and recovery was initiated. Although Section 93 of the Jammu and Kashmir Goods and Services Tax Act, 2017 permits recovery from legal representatives, that provision does not dispense with notice and hearing to them before fastening liability.

Conclusion: The proceedings were unsustainable for want of compliance with the principles of natural justice, and the impugned notices and recovery action were liable to be quashed.

Final Conclusion: The writ petition succeeded, while leaving the respondents free to initiate fresh proceedings from the scrutiny stage after due notice and hearing to the legal heirs.

Ratio Decidendi: Where a taxpayer dies before initiation or continuation of GST proceedings, the department must proceed against the legal heirs with proper notice and hearing before confirming liability or commencing recovery.

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