GST registration cancellation started against deceased proprietor, notice to dead person held invalid; fresh action allowed against heirs

Proceedings for cancellation of GST registration initiated and concluded against a deceased proprietor were void. Applying the principle that a show cause notice or order issued to a dead person is a nullity, non est and void ab initio unless addressed to the legal representatives, the HC held that the entire proceedings, including the impugned cancellation order, could not stand. The impugned orders were quashed, with liberty to the tax authority to initiate fresh proceedings in accordance with law against the legal representatives, if warranted; the petition was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether GST proceedings initiated and concluded by issuing intimation/show cause notice and passing adjudication and recovery orders in the name of a deceased sole proprietor are a legal nullity (non est/void ab initio) and liable to be quashed.

(ii) Whether, upon quashing such proceedings, the tax authorities should be granted liberty to initiate fresh proceedings in accordance with law against the appropriate person(s), if permissible.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Validity of proceedings issued to a deceased sole proprietor

Legal framework (as discussed by the Court): The Court proceeded on the legal position emerging from the application of Section 93 of the CGST/KGST regime (as reflected in the reasoning adopted from the discussed precedents) that where a person liable to pay tax dies, liability may be pursued in the manner provided therein; however, action must be directed to the legally appropriate recipient and not to a non-existent person.

Interpretation and reasoning: The Court found it undisputed that the sole proprietor had expired and that subsequent departmental steps (intimation in Form DRC-01A, show cause notice under Section 74(5) in Form DRC-01, and the culminating adjudication/summary order and recovery notice) were issued in the name of the deceased, and not to the petitioner/legal representative, and further that these culminated in orders without bringing the proceedings to the petitioner's knowledge. Relying on the ratio reflected in the considered judgments, the Court held that proceedings/orders made against a dead person are a nullity in law. Consequently, the foundational notices and the resultant adjudication and recovery measures could not be sustained.

Conclusion: The Court conclusively held that proceedings and orders against the deceased ex-proprietor are null, non est and void ab initio, warranting quashing of the show cause notice, adjudication/summary orders, and recovery notice.

Issue (ii): Liberty to proceed afresh in accordance with law

Legal framework (as discussed by the Court): The Court accepted that the statutory scheme permits the department, where legally permissible, to proceed against the proper person(s) (such as a legal representative or other person continuing the business), consistent with Section 93-type liability provisions.

Interpretation and reasoning: While setting aside the impugned actions solely on the ground that they were directed to a non-existent person, the Court preserved the department's ability to take "appropriate steps" by following due process against the correct party, if the law so permits. This was treated as necessary to balance the illegality of the prior notices/orders with the authority's power to act in accordance with law.

Conclusion: The Court quashed the impugned notices/orders but expressly reserved liberty to the respondents to initiate and proceed further in accordance with law.

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