The Calcutta High Court has held that a show cause notice issued in the name of a deceased taxpayer is a nullity and that tax liability under the Goods and Services Tax law cannot be determined against a dead person.
The bench of Justice Smita Das De clarified that although Section 93 of the Central Goods and Services Tax Act, 2017 makes legal representatives liable in certain circumstances, the GST authorities must initiate proceedings by issuing a notice directly to the legal heirs in their own names.
The court quashed a show cause notice issued under Section 74 of the CGST Act, the resulting order-in-original raising a demand of ₹38,44,674 along with applicable interest and penalty, and the related recovery notice.
Buy Now: E-Way Bill Judgements From 2020–2026 [Includes Orders of GSTAT]
The dispute concerned a show cause notice dated March 8, 2022, issued under Section 74 of the CGST Act in the name of Haradhan Pan. The notice covered the tax period from July 2017 to September 2021, corresponding to financial years 2017-18 to 2020-21.
Haradhan Pan, however, had died on May 20, 2021—several months before the notice was issued.
His wife, Gita Rani Pan, informed the Court that after the proprietor’s death, she had applied for a fresh GST registration on June 18, 2021, using her own Permanent Account Number. In that application, she declared that the business had commenced in her name with effect from May 21, 2021. The GST Department subsequently granted a fresh registration number.
An application seeking cancellation of the GST registration standing in the deceased proprietor’s name was also filed on May 10, 2022. The registration was cancelled with effect from the same date.
Despite these circumstances, the tax proceedings continued in the deceased proprietor’s name. The petitioner submitted replies on April 22, 2024 and August 6, 2024. The adjudicating authority thereafter passed an order-in-original on January 21, 2025, confirming a demand of ₹38,44,674 together with interest and penalty.
Appearing for the petitioner, counsel argued that the show cause notice and all consequential proceedings were void ab initio because they had been initiated and concluded against a person who was no longer alive.
Reliance was placed on the definition of “person” under Section 2(84) of the CGST Act. It was contended that the definition does not include a deceased individual and, therefore, tax could not be determined under Sections 73 or 74 against a dead person.
The petitioner submitted that proceedings for determination of tax must be brought against a living taxable person or, where the taxable person has died, against the legal representative in accordance with law. A notice addressed to a deceased person could not be validated merely because a legal heir subsequently responded to it.
It was further argued that, unlike Section 159 of the Income Tax Act, 1961, the CGST Act does not contain a machinery provision authorising the Department to assess a deceased person in the name of that person.
The petitioner relied on several decisions, including Arvind Traders v. State of Uttar Pradesh, T. Nigil v. Commissioner of GST and Central Excise, Kakali Saha, Legal Heir of Ashok Saha v. State of West Bengal, and the Supreme Court’s rulings in Gurnam Singh v. Gurbachan Kaur and Shabina Abraham v. Collector of Central Excise and Customs.
The CGST authorities opposed the petition and contended that the death of the proprietor had not been communicated to the Department within the prescribed time. They also pointed out that the application for cancellation of the deceased proprietor’s registration had been filed belatedly.
The Department relied on Rules 19 and 20 of the CGST Rules and maintained that the delayed cancellation application could not erase the consequences of the proceedings.
It further invoked Section 29(3) of the CGST Act, which provides that cancellation of registration does not affect a person’s liability to pay tax and other dues or discharge obligations relating to any period before cancellation, irrespective of whether those dues are determined before or after cancellation.
Reliance was also placed on Section 93(1)(b) of the CGST Act. The provision states that where the business carried on by a person is discontinued, whether before or after the person’s death, the legal representative is liable to pay, out of the deceased’s estate and to the extent the estate can meet the charge, the tax, interest or penalty due from the deceased.
The Department accordingly argued that liability could be determined even after the taxpayer’s death and recovered from the legal representatives, subject to the statutory limitations.
The High Court identified the principal question as whether a show cause notice and consequential tax determination made against a deceased person, without issuing notice to the legal representatives, could be sustained.
The Court answered the question in the negative and observed:
“It is a well settled proposition of law that issuance of a notice in the name of a dead person is a nullity, non-est and void ab initio in the eye of law.”
Examining Section 93(1)(b), the Court held that before fastening liability upon a legal representative, a show cause notice must be issued to that representative and an opportunity must be granted to respond. Tax liability cannot first be determined against the deceased and then imposed upon the legal heirs.
The Court referred to the decision in Arvind Traders, in which it was held that a notice cannot be issued in the name of a dead person to determine the deceased’s liability without giving the legal representative an opportunity of hearing.
It concluded that determination of tax in the name of a non-existent person or entity was not legally permissible and that such proceedings stood vitiated.
The High Court drew an important distinction between a charging provision and a machinery provision. It observed that the Department’s counsel had confused the two concepts.
According to the Court, Section 93(1) creates liability by providing that legal heirs may be required to pay tax dues of a deceased person to the extent that the inherited estate is capable of meeting the demand. However, Section 93 does not prescribe the machinery for determining that liability.
The machinery for determining tax remains contained in Sections 73 and 74 of the CGST Act. These provisions require the issuance of a show cause notice to the person against whom liability is proposed to be determined.
Therefore, the proper procedure is to issue a notice to the legal representative in the representative’s own name, while describing that person as the legal heir of the deceased taxpayer. The Department cannot issue a notice to the deceased taxpayer and subsequently require the legal heirs to answer that notice.
Referring to the Supreme Court’s ruling in Shabina Abraham, the High Court reiterated that a provision imposing liability upon legal representatives does not, by itself, supply the machinery for assessing a dead person.
The High Court quashed and set aside the show cause notice dated March 8, 2022, the order-in-original dated January 21, 2025, and the recovery notice dated June 8, 2024.
The relief, however, does not prevent the Department from initiating legally valid proceedings against the deceased proprietor’s legal heirs.
The Court directed the concerned authority to issue a fresh show cause notice in the names of the three legal heirs identified in the supplementary affidavit: the deceased proprietor’s wife, Gita Rani Pan; his son, Barun Pan; and his married daughter, Kakoli Manna (Pan).
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
Read More: CIT(A) Can’t Dismiss Income Tax Appeal Merely for Non-Prosecution Without Deciding Merits: ITAT
