2026 (2) TMI 390 - HC - GST

Determination against a deceased proprietor invalid where no showcause was issued to legal representative; impugned order set aside.

Determination under Section 73 of the Act issued against a soleproprietor who had died was held invalid because proceedings were not directed to or ... Invalidity of determination issued against a deceased person - liability of legal representative after death u/s 93 - requirement to issue show cause notice to legal representative before determination - appeal rejected on limitation without adjudicating substantive jurisdictional defect - HELD THAT:- It is not in issue that the firm P.B. Sethi Plastics, is a sole proprietorship firm, whose sole proprietor is Buldeo Raj Sethi. It is also not in dispute and rather admitted to the parties that Buldeo Raj Shethi, the sole proprietor of the firm, expired on 21.07.2020 and post death of the erstwhile sole proprietor Buldeo Raj Sethi on 21.07.2020, the application was made on behalf of the sole proprietor that the GST of the firm be surrendered and cancelled and the order came to be passed on 07.10.2020. It is also not in dispute that the proceedings under Section 73 of the Act came to be initiated against the sole proprietorship firm, whose sole proprietor was the deceased Buldeo Raj Sethi, while issuing the show cause notice dated 21.09.2023 and the order under Section 73 of the Act came to be passed by the original authority on 20.12.2023. The appeal came to be filed questioning the order passed under Section 73 of the Act dated 20.12.2023 before the appellate authority, which came to be rejected on 26.06.2025 by the appellate authority. Meaning thereby that even otherwise, it was not humanly possible that even on due diligence, the writ petitioner should have obtained knowledge about passing of the order under Section 73 of the Act on 20.12.2023, particularly when, GST registration was cancelled. More so, the issue is on a larger aspect. Whether the proceedings emanating from the issuance of show cause notice dated 21.09.2023 and passing of an order under Section 73 of the Act could have been passed on 20.12.2023 against a dead person or not. Since the entire proceedings under Section 73 of the Act was initiated against a dead person, then the legal issue so raised by the writ petitioner in the appeal has not been considered while dismissing the appeal on limitation, thus the order impugned cannot be sustained. With the aforesaid observations, the writ petition stands disposed of. Issues: Whether proceedings under Section 73 of the U.P. Goods and Service Tax Act, 2017 (determination of tax) can be validly initiated and an order of determination passed against a sole proprietor after his death without issuing notice to the legal representative; and whether the appellate authority's rejection of the appeal on grounds of limitation precluded consideration of that substantive issue.Analysis: The facts admitted that the sole proprietor died on 21.07.2020, that GST registration was cancelled thereafter, and that the show cause notice dated 21.09.2023 and the order dated 20.12.2023 under Section 73 were issued against the deceased proprietor. Section 93 addresses liability of legal representatives to pay tax or penalty but does not itself authorize determination against a deceased person. The reasoning in the cited Division Bench decision (Amit Kumar Sethia) was applied: where liability is to be fixed on the legal representative, a show cause notice and opportunity must be afforded to that representative before determination. The appellate authority rejected the appeal on limitation without addressing the core legal issue that proceedings were initiated against a deceased person and that the legal heir had not been proceeded against; hence the substantive contention was not considered.Conclusion: The order dated 20.12.2023 under Section 73 and the appellate order dated 26.06.2025 rejecting the appeal are set aside. The respondents remain free to initiate appropriate proceedings in accordance with law (which requires issuing notice to the legal representative and providing opportunity before determination).Ratio Decidendi: Determination of tax or penalty under the GST statute cannot be validly made against a deceased person; where liability is sought to be fastened on a legal representative, a show cause notice and opportunity must be given to that legal representative before any determination is made.