2025 (9) TMI 1076 - HC - GST

Show-cause notice issued to deceased is nullity; legal representatives liable for 2019-20 tax; notices quashed

Sikha Borgohain Versus Union of India And Ors, Govt of Assam, The Central Board of Indirect Taxes And Customs, The Goods And Services Tax Council, The Commissioner of Cental Goods And Service Tax, The Deputy Commissioner of Central Goods And Service Tax, The Commissioner of State Goods And Services Tax

HC held that a show-cause notice issued to a deceased person is a nullity; although legal representatives are liable under the statute for tax due for ... Issuance of SCN to a deceased person - liability of legal representatives - HELD THAT:- From the materials on record, it transpires that the petitioner’s father was liable to pay whatever tax was required during the financial year 2019-20 and in terms with Section 93 of the Act of 2017, upon the death of the father, the legal representative would be liable. There is no dispute with the fact that the petitioner herein is the daughter of Late Anil Borgohain. It is also to be taken note of that had the respondent authorities being informed about the death of the father they would have accordingly made necessary corrections and not issued the notice to Late Anil Borgohain and would have taken steps for issuance of notice upon the petitioner or other legal representatives of Late Anil Borgohain. Under such circumstances, as the said proceedings was initiated against a dead person, the same has to be construed to be a nullity and accordingly, this Court interferes with both the notice dated 28.05.2024 as well as the impugned order dated 29.08.2024. The show cause notice dated 28.05.2024 as well as the impugned order dated 29.08.2024 are both set aside and quashed - Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether a show cause notice and consequential order issued under Section 73(1) of the Central Goods and Services Tax Act, 2017 directed to a deceased taxpayer are valid or are a nullity. 2. Whether, upon the death of a registered person, legal representatives become liable for tax demands under the statutory scheme, specifically having regard to Section 93 of the Act of 2017, and the consequences for issuance of notices. 3. Whether the period between issuance of a show cause notice addressed to the deceased and the service of a certified court order quashing that notice should be excluded in computing limitation for issuance of a fresh order under Section 73. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of show cause notice and order issued to a deceased person Legal framework: Proceedings under Section 73(1) (demand for tax not paid) must be directed to a person liable to pay tax; the general principle that process and notices must be addressed to proper parties who can be lawfully proceeded against. Precedent Treatment: No express precedent was cited in the judgment. Interpretation and reasoning: The Court observed that the notice dated 28.05.2024 and the order dated 29.08.2024 were issued against a person who had died on 17.09.2021. Where a proceeding is initiated against a dead person and the authorities were not informed of death, such issuance cannot stand as valid process directed at an existing taxable person. The Court reasoned that had the authorities been informed of the death, they would have corrected the record and directed proceedings to the legal representatives instead of the deceased. Ratio vs. Obiter: Ratio - A show cause notice and consequential order issued against a deceased person in proceedings under Section 73 are a nullity; such proceedings must be addressed to the person legally liable. Conclusion: The show cause notice and the impugned order issued to the deceased are set aside and quashed as invalid. Issue 2 - Liability of legal representatives after death and requirement to issue notice to them (Section 93) Legal framework: Section 93 provides for liability of legal representatives for dues of a deceased taxable person; departmental action must be taken against persons who are legally liable. Precedent Treatment: No authority was followed, distinguished, or overruled; the Court applied statutory language and principles of agency/representation on death. Interpretation and reasoning: The Court recognized that liability for tax owed during the relevant financial year continued and, in the event of death, the legal representatives would be the proper persons to be proceeded against. The petitioner (daughter) was undisputedly a legal representative. The Court noted that the petitioner had continued filing returns on behalf of the deceased after his death, contributing to the department's lack of knowledge of the death; nevertheless, statutory responsibility rests with legal representatives once death is known or ascertainable. Ratio vs. Obiter: Ratio - Proceedings for tax recovery under the Act must be directed to the legal representatives upon death of the taxable person; the department retains the liberty to issue fresh notices to legal representatives under Section 73(1). Conclusion: While the impugned proceedings against the dead person were quashed, the authorities are granted liberty to issue a fresh show cause notice to the legal representatives in accordance with Section 73(1) and Section 93 where applicable. Issue 3 - Exclusion of period for limitation from initial notice to service of certified court order Legal framework: Limitation for issuing orders under Section 73 is governed by the Act; courts have jurisdiction to exclude periods where equitable considerations or procedural impossibility make strict computation unfair. Precedent Treatment: No specific precedent considered or cited; the Court applied equitable and procedural principles inherent in limitation computations. Interpretation and reasoning: The Court concluded that, because the impugned notice was directed at a deceased person and the petitioner approached the Court, the period from issuance of the impugned notice (28.05.2024) until the certified copy of the present court order is served on the departmental officer should be excluded for the purpose of computing limitation. The Court justified exclusion on the basis that the departmental proceedings were initiated against a dead person (hence null), the legal representatives had not informed the department of the death, and the petitioner sought judicial intervention; thus, excluding that period prevents penalizing the petitioner/legal representatives for a defect in departmental process and preserves the department's right to reopen proceedings within the remaining limitation period after proper service. Ratio vs. Obiter: Ratio - The period between issuance of a notice addressed to a deceased person and service of the court order quashing that notice is to be excluded in computing limitation for subsequent action by the department under Section 73, where the legal representatives had not informed the department of the death and have approached the Court. Conclusion: The period from 28.05.2024 (date of the defective notice) until the certified copy of the Court's order is served upon the departmental officer is excluded from limitation computation for any fresh proceedings. Remedial Direction (applying conclusions above) Legal framework: Judicial power to quash invalid proceedings and to regulate future steps to ensure compliance with statutory scheme. Interpretation and reasoning: On the basis that proceedings against a dead person are null, the Court quashed both the defective notice and order, and permitted the department to initiate fresh proceedings against the legal representatives with the specified exclusion of time to preserve both the departmental right and the legal position of the petitioner. Ratio vs. Obiter: Ratio - Quashing defective proceedings against a deceased person and allowing fresh proceedings against legal representatives with exclusion of the intervening period is an appropriate remedial course. Conclusion: The Court set aside the show cause notice and order; liberty granted to issue fresh notice to legal representatives under Section 73(1); and the intermediary period is excluded for limitation computation.