AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1060
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....hed for recovery of alleged outstanding GST dues of the Petitioner's deceased father. FACTS IN BRIEF 3. The material facts, briefly stated, are as follows: (a) The Petitioner's father, late Mr. Pudugraman Neelakantan Vishwanathan, carried on his proprietorship business under the trade name "M/s. Oriental Facility", holding GST Registration No. 27AMGPP7304N1ZL, with its principal place of business at Sector 8B, Flat No. C-232, Vikasani CHS, CBD Belapur, Thane - 400614. (b) By an order dated 7th March 2024, passed on show cause notice dated 29th December 2022, the said GST registration stood suo motu cancelled with effect from 1st January 2023. (c) The Petitioner's father passed away on 11th February 2024. (d) Prior to the demise of his father, the Petitioner is stated to have commenced his independent proprietorship business engaged in labour supply and employment services by adopting the same trade name of "M/s. Oriental Facility", allegedly as a mark of continuity with his father's legacy. (e) On 22nd February 2023, the Petitioner obtained a separate GST registration for his said proprietorship business, bearing GSTIN ....
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....s deceased father cannot justify recovery proceedings against a different taxable person. He further submits that no proceedings under Section 93 determining liability of a legal heir were initiated and the impugned attachment has been effected without issuance of any show cause notice or grant of hearing, thereby violating principles of natural justice; and coercive recovery under Section 79 cannot precede adjudication of liability. 5. Mr. Sahoo relies on the following judgments which hold that a prior show cause notice was required to be issued by the Department to the Petitioner before foisting any such GST liability of his deceased father on him: (i) Galaxy International vs. Union of India (2025) 32 Centax 212 (Bom). (ii) Prasanna K Shetty vs. State of Maharashtra (2024) 17 Centax 418 (Bom). (iii) Arvind Traders vs. State of Uttar Pradesh (2025) 30 Centax 141 (All). (iv) Rajvanti Devi vs. State of UP (2026) 40 Centax 10 (All). (v) Baratam Satish vs. Joint Commissioner of Central Tax (2026) 38 Centax 118 (A.P.). (vi) S. R. Steels vs. Deputy State Tax Officer, Hosur (2024) 24 Centax 14 (Mad). 6. It is therefore submitted....
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....g the charge, the tax, interest or penalty due from such person under this Act, whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death." 11. At this stage, certain undisputed features assume significance: (i) the Petitioner's deceased father and the Petitioner hold separate GST registrations; (ii) both concerns operated from different registered places of business; (iii) under the GST regime, each GSTIN constitutes an independent taxable person; and (iv) no show cause notice determining the Petitioner's liability under Section 93 of the CGST Act has been issued prior to attachment of his bank account. 12. Recovery powers under Section 79 are undoubtedly wide. However, such coercive powers pre-suppose the existence of an established liability against the person from whom recovery is sought. Section 93 contemplates liability of legal representatives or persons continuing the business of a deceased taxable person. Whether the Petitioner satisfies the statutory conditions of that provision is a matter requiring determination upon notice, consideration ....
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.... specifies the authority to whom the power to order a provisional attachment is entrusted. The third part defines the conditions which must be fulfilled to validate the power or ordering a provisional attachment. The fourth part indicates the manner in which an attachment is to be levelled. The final and the fifth part defines the nature of the property which can be attached. Each of these special divisions which have been explained above is for convenience of exposition. While they are not watertight compartments, ultimately and together they aid in validating an understanding of the statute. Each of the above five parts is now interpreted and explained below: (i) The power to order a provisional attachment is entrusted during the pendency of proceedings under any one of six specified provisions : Sections 62, 63, 64, 67, 73 or 74. In other words, it is when a proceeding under any of these provisions is pending that a provisional attachment can be ordered; (ii) The power to order a provisional attachment has been vested by the Legislature in the Commissioner; (iii) Before exercising the power, the Commissioner must be 'of the opinion that for th....
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....paid or erroneously refunded or where input-tax credit has been wrongly availed or utilised by reason of fraud, or any wilful mis-statement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input-tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. (2) The proper officer shall issue the notice under sub-section (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order. (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input-tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of statement under sub-section (3) shall be deem....
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....he said notice shall be deemed to be concluded. Explanation 1.-For the purposes of section 73 and this section,- (i) the expression "all proceedings in respect of the said notice" shall not include proceedings under section 132; and (ii) where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded. Explanation 2.-For the purpose of this Act, the expression "suppression" shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer.' 45. Sub-section (1) of section 74 empowers the proper officer to serve a notice on a person chargeable with tax where it appears that (i) Any tax has not been paid; (ii) Tax has been sho....
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....rder. These provisions indicate how sub-sections (5), (8) and (11) operate at different stages of the process. 48. Now in this backdrop, it becomes necessary to emphasize that before the Commissioner can levy a provisional attachment, there must be a formation of 'the opinion' and that it is necessary 'so to do' for the purpose of protecting the interest of the Government revenue. The power to levy a provisional attachment is draconian in nature. By the exercise of the power, a property belonging to the taxable person may be attached, including a bank account. The attachment is provisional and the statute has contemplated an attachment during the pendency of the proceedings under the stipulated statutory provisions noticed earlier. An attachment which is contemplated in section 83 is, in other words, at a stage which is anterior to the finalization of an assessment or the raising of a demand. Conscious as the Legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, it conditioned the exercise of the power by employing specific statutory language which ....
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....wer. Each of these ingredients must be strictly applied before a provisional attachment on the property of an assesses can be levied. The Commissioner must be alive to the fact that such provisions are not intended to authorize Commissioners to make preemptive strikes on the property of the assessee, merely because property is available for being attached. There must be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the Government revenue. 50. These expressions in regard to both the purpose and necessity of provisional attachment implicate the doctrine of proportionality. Proportionality mandates the existence of a proximate or live link between the need for the attachment and the purpose which it is intended to secure. It also postulates the maintenance of a proportion between the nature and extent of the attachment and the purpose which is sought to be served by ordering it. Moreover, the words embodied in sub-section (1) of section 83, as interpreted above, would leave no manner of doubt that while ordering a provisional attachment the Commissioner must in the formation of the opinion act on the ....
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....uch a case only, however, on formation of subjective satisfaction/opinion, the Commissioner may exercise the powers under section 45 of the VAT Act".' (emphasis supplied) 51. We adopt the test of the existence of 'tangible material'. In this context, reference may be made to the decision of this court in the Commissioner of Income-tax v. Kelvinator of India Ltd. [(2010) 320 ITR 561 (SC); (2010) 2 SCC 723.] Mr. Justice SH Kapadia (as the learned Chief Justice then was) while considering the expression 'reason to believe' in section 147 of the Income-tax Act, 1961 that income chargeable to tax has escaped assessment, inter alia, by the omission or failure of the assessee to disclose fully and truly all material facts necessary for the assessment of that year, held that the power to reopen an assessment must be conditioned on the existence of 'tangible material' and that 'reasons must have a live link with the formation of the belief'. This principle was followed subsequently in a two-Judge Bench decision in Income-tax Officer, Ward No. 162(2) v. Techspan India Private Ltd. [(2018) 404 ITR 10 (SC); (2018) 6 SCC 685.] While adverting to these decisions we have noticed....