2025 (10) TMI 488 - HC - GST

Section 93 CGST does not authorize determination or recovery from a deceased person or heirs without notice to legal representative

Om Prakash Wadhawan Versus State of U.P. Thru. Prin. Secy. Institutional Finance And Another

HC quashed and set aside a demand order made against a deceased proprietor, holding s.93 CGST addresses liability when business continues or is ... Order for demand raised against the deceased - Department was well aware of the fact that proprietor of the firm has already died and the registration of the firm has already been cancelled - HELD THAT:- A perusal of Section 93 of CGST Act, would reveal that the same only deals with the liability to pay tax, interest or penalty in a case where the business is continued after the death, by the legal representative or where the business is discontinued, however, the provision does not deal with the fact as to whether the determination at all can take place against a deceased person and the said provision cannot and does not authorise the determination to be made against a dead person and recovery thereof from the legal representative. Once the provision deals with the liability of a legal representative on account of death of the proprietor of the firm, it is sine qua non that the legal representative is issued a show cause notice and after seeking response from the legal representative, the determination should take place - the determination made in the present case wherein the show cause notice was issued and the determination was made against the dead person without issuing notice to the legal representative, cannot be sustained. The order is quashed and set aside - petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether a tax determination under Section 73 of the Goods and Services Tax Act, 2017 can validly be issued and finalized in the name of a person who had died prior to issuance of the show cause notice and determination. 2. Whether Section 93 of the Act empowers the tax authority to make a determination against a deceased person and/or authorises issuance of show cause notices and recovery proceedings in the name of the deceased rather than against the legal representative. 3. Whether, when a taxable person has died, it is a legal and procedural requirement to issue notice to the legal representative before making a determination of tax, interest or penalty and seeking recovery from the estate or legal representative. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of determination made in the name of a deceased person Legal framework: Determination of tax liability under Section 73 is administrative action by revenue to quantify tax, interest and penalty. Section 93 deals with special provisions regarding liability to pay tax, interest or penalty in certain cases upon death of the person liable. Precedent Treatment: No prior judicial precedents were cited in the judgment; the Court relied upon statutory text and its plain meaning. Interpretation and reasoning: The Court examined the timing of the show cause notice and determination vis-à-vis the date of death. It held that Section 93 addresses who is liable to pay after death (legal representative or successor) but does not confer authority to continue the determination process against the deceased person. The competence to determine a liability presupposes an effective addressee capable of receiving notice and responding; a deceased person cannot be served with a show cause notice in any meaningful sense. Consequently, an administrative determination issued in the name of a deceased person is procedurally and legally infirm. Ratio vs. Obiter: Ratio - Determination under the Act cannot validly be made against a dead person where the person had died prior to issuance of the show cause notice and determination. Conclusions: The determination issued in the name of the deceased is unsustainable and liable to be quashed. Issue 2 - Scope and effect of Section 93: whether it authorises determination against deceased and recovery therefrom Legal framework: Section 93(1)(a)-(b) provides that where a person liable to pay tax dies, his legal representative or any person continuing the business shall be liable to pay tax, interest or penalty; where the business is discontinued, the legal representative is liable to pay out of the estate to the extent it can meet the charge, whether such tax has been determined before death but remained unpaid or is determined after death. Precedent Treatment: No judicial authorities were relied upon or distinguished; statutory construction guided the Court. Interpretation and reasoning: The Court construed Section 93 narrowly as addressing post-death liability and the target for recovery (legal representative or estate) but not as authorising the initiation or completion of a determination against the dead person. The provision contemplates that tax may be determined after death and recovered from the estate or representative, but the statutory scheme presupposes that proceedings are directed at the living legal representative (who can respond and whose rights are affected). Thus Section 93 does not validate a determination made solely in the name of the deceased without issuing notice to the legal representative. Ratio vs. Obiter: Ratio - Section 93 confers liability on legal representatives or successors but does not authorise procedural acts (show cause, determination) to be undertaken in the name of the deceased; proceedings must be directed to the legal representative where liability is to be enforced. Conclusions: Section 93 cannot be relied upon to cure the defect of issuing determinations against a deceased person; recovery may be pursued against legal representatives but only after appropriate proceedings directed to them. Issue 3 - Requirement to issue notice to legal representative before determination and recovery Legal framework: Principles of fair procedure and statutory scheme require that a person liable be given notice and an opportunity to be heard before determination; Section 93 identifies the liable person post-death. Precedent Treatment: None cited; Court relied on statutory construction and procedural fairness. Interpretation and reasoning: The Court held that where Section 93 assigns liability to legal representatives or estate, it is a sine qua non that the legal representative is issued a show cause notice and afforded an opportunity to respond before determination is made. The absence of notice to the legal representative and issuance of show cause/determination only in the name of the dead person negates procedural fairness and renders the proceedings unsustainable. Ratio vs. Obiter: Ratio - Notice must be issued to the legal representative before making a determination that affects the estate or legal representative; failure to do so renders the determination void insofar as it is in the name of the deceased. Conclusions: Determination and recovery steps taken without serving notice on the legal representative are invalid; the revenue may, however, institute fresh proceedings in accordance with law by issuing notice to and adjudicating against the legal representative or estate. Relief and Consequence Legal reasoning leads to quashing of the impugned determination made against the deceased; the revenue remains free to proceed afresh in conformity with Section 93 and principles of natural justice by issuing notice to the proper legal representative and pursuing recovery in accordance with law.