2025 (5) TMI 299 - HC - GST

Legal Heirs Win: Tax Proceedings Against Deceased Proprietor Invalidated, Ensuring Fair Hearing and Procedural Compliance Under GST Rules

HC allowed writ petition challenging GST tax liability against deceased proprietor's legal heir. Court found tax proceedings initiated posthumously ... Challenged the imposition of GST tax liability on legal heir of the deceased - prayer to issue a fresh notice and give opportunity of personal hearing to the successor proprietor/petitioner and to pass a fresh order thereafter - principles of natural justice - HELD THAT:- The discussion has the benefit of good authorities in point. A Division Bench of this Court while examining with the consequences of the death of a proprietor of a proprietorship firm and proceedings taken out under the GST Act against legal heirs of the said proprietorship firm this Court in M/S Upmanyu Kattha Industries Vs State of U.P. and another [2025 (1) TMI 593 - ALLAHABAD HIGH COURT]. The case at hand is covered by the holding of this Court in M/S Upmanyu Kattha Industries. Thus, the impugned order dated 21.08.2024 is liable to be set aside and is set aside. The writ petition is allowed. The Allahabad High Court, through Hon'ble Ajay Bhanot, J., addressed a writ petition challenging the imposition of GST tax liability on the petitioner, the legal heir of Prabha Devi, proprietor of a now-defunct proprietorship firm. The proceedings under the GST Act were initiated posthumously against Prabha Devi for the years 2017-20. The Court emphasized that 'the petitioner being a legal heir... was entitled to opportunity of hearing before any tax liability could be imposed upon him under the GST Act.'Relying on precedent from a Division Bench in *M/S Upmanyu Kattha Industries Vs State of U.P.*, which held that assessments against a deceased proprietor are unsustainable and that heirs must be afforded a hearing, the Court found the impugned order invalid. It stated that since the tax proceedings were initiated 'against a dead person,' the order could not stand.Consequently, the Court set aside the impugned order dated 21.08.2024 and remitted the matter to the assessing authority to proceed afresh, ensuring the petitioner is properly noticed and heard under the relevant provisions of the U.P. GST Act. The writ petition was allowed.