SCN & Order-in-Original issued after death of the assesse. Whether recovery can be initiated by department ?

[GAURAV SHARMA]

SCN was issued on October' 2020 and O-i-O was issued on December 2021. But the assessee died in the year 2019 i.e. before the issuance of SCN & O-i-O.

Kindly advide the process for the closure of the instant case so that Recovery from the department can be stopped.

[KASTURI SETHI]

Recovery proceedings cannot be initiated against dead person. There was a judgement to this effect. Make efforts on website https://indiankanoon.org It is free of charge. Only hard work is required.

[Shilpi Jain]

Section 93 of the CGST Act is relevant in this case

If the business of the deceased is carried on i.e. it is continue, the person continuing the business will be liable for the tax interest penalty

If the business is not continued then the legal representative will be liable to the extent of the estate of the deceased person

[Shilpi Jain]

The GST act is drafted in such a way that in all situations the interest of revenue is taken care, then be it even on death of any person

[KASTURI SETHI]

2021 (11) TMI 73 - SUPREME COURT A.T. MYDEEN Versus ASSTT. COMMISSIONER, CUS. DEPARTMENT

 

[KASTURI SETHI]

2020 (2) TMI 796 - KERALA HIGH COURT VIMAL RAJ Versus STATE TAX OFFICER-1, STATE GST DEPARTMENT, KOTTAYAM

 

[KASTURI SETHI]

2019 (5) TMI 224 - CESTAT ALLAHABAD AZAD ENGINEERING WORKS Versus COMMISSIONER OF C. EX. & S.T., ALLAHABAD

 

[Amit Agrawal]

Any show-Cause-Notice calling upon a dead person to defend himself is void-ab-initio. Any Order-In-Original confirming demand - resulting from such SCN - is also void-ab-initio.

Thereby, any recovery proceedings initiated against legal heirs against above-said OIO is bad in law and illegal.

Despite knowing above-said factual and legal position, if Dept. still persists with recovery proceedings on the basis of such OIO, the legal heir/s can approach jurisdictional High Court and get recovery-proceedings squashed.

All above are strictly personal views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

 2018 (2) TMI 1832 - CESTAT ALLAHABAD BHOOTPURVA SAINIK SECURITY & DETECTIVE SERVICE Versus C.C.E., ALLAHABAD

 

[GAURAV SHARMA]

Thank you all for the wonderfull insight. Special thanks to Kasturi Sir

[KASTURI SETHI]

Sh.Gaurav Sharma Ji,

If the querist is convinced, it gives immense pleasure to me. To me, my efforts have been rewarded.

I am all praise for Sh. Amit Agrawal Ji. His spontaneous views are full of legal as well as logical force on the issue. It shows his hold as well as confidence on the issue/scenario..

[Amit Agrawal]

Dear Shri Kasturi Sethi Ji,

Thank you very much for your word of appreciation!

Appreciation coming from hugely experienced head like you, makes me more humble!

Case-laws posted by you are directly on the point. I just explained rationale why Dept.'s recovery action against legal heirs, in given facts, are untenable under eyes of law.

[Amit Agrawal]

In given facts, my views - as posted at serial no. 7 - remains the same in given facts (i.e. SCN is issued to a dead proprietor calling upon him to defend against the allegations raised in the SCN and resultant OIO issued to such dead person confirming demand and asking him to pay confirmed dues) even in GST regime despite Section 93 of the CGST Act, 2017.

Reason for above is also the same. Such SCN - issued to a dead proprietor - would be void-ab-initio.

To make Section 93 works, after death of the proprietor, SCN needs to be issued upon legal representative/s (as per clause (a) or (b) of sub-section (1) of Section 93, as the case may be) of such dead proprietor and NOT to the dead proprietor.

All above are strictly personal views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Yes, Sir. SCN is to be issued to a person who is liable to pay, tax & penalty. Case law in the case of Vimal Kumar cited above also talks of/explains Section 93 of CGST Act.

In case afresh SCN is issued to the legal heir(s), the whole scenario will change.Time bar aspect may come into play depending upon the period of demand involved.

[Amit Agrawal]

I agree with you, Sir!

I just explained my view that in given facts leading to recovery action against legal heirs, Section 93 of the CGST Act, 2017 will not change anything. Nothing more.

[YAGAY and SUN]

Any SCN on dead person or on its' legal heirs have no legal sancity.

[YAGAY and SUN]

Any SCN on dead person or on its' legal heirs have no legal sanctity.

[RangaRao Kilaru]

In simple terms, SCN can't be issued to a dead person. consequently OIO is doesn't have leagal sanctity.

[chetan jadhav]

What would happened if death of proprietor takes place after issue of SCN. Will SCN be valid ...weather recovery wld be made from legal heir...

AI Summary

Liability after death: SCNs to a deceased are void; recovery requires issuing notice to legal heirs or business continuers.
An SCN or Order-in-Original addressed to a deceased person is void ab initio and cannot support recovery; recovery requires issuance of process to the legal representatives or the person continuing the business, with liability against heirs limited to the estate and subject to applicable time-bar and procedural requirements.