GST Notices issued in name of deceased assessee not treated as served on legal heir;

Notices issued in name of deceased assessee not treated as served on legal heir;

Issue:

Whether an assessment order imposing tax, interest, or penalty liability on a deceased person, but passed against their legal heir, is valid if the legal heir was unaware of the proceedings and was not given an opportunity of hearing, even if notices were sent in the name of the deceased.

Facts:

• An assessment order, imposing tax, interest, or penalty liability, was passed in the case of a deceased person.
• This order was passed against the legal heir of the deceased (the petitioner).
• The petitioner contended that he was completely unaware of these proceedings and that the assessment order was passed without providing him any opportunity of hearing.
• It was suggested that notices might have been sent in the name of the deceased father of the petitioner.

Decision:

The court held in favor of the assessee (legal heir). It ruled that it would be appropriate for the petitioner-heir to be given an opportunity to present his contentions against the proposed demands, as these demands would ultimately become the liability of the petitioner-heir. Even assuming that notices were sent in the name of the late father of the petitioner, such notices could not be treated as validly served on the petitioner (the legal heir). In view of the ambiguity regarding the service of notice, the impugned assessment order was set aside, and the matter was remanded back to the Assessing Authority for a fresh decision after duly providing notice and an opportunity of hearing to the petitioner.

Key Takeaways:

• Principles of Natural Justice: This case strongly re-affirms the fundamental principles of natural justice, particularly “audi alteram partem” (hear the other side). No person should be condemned unheard, and this applies equally to legal heirs inheriting liabilities.
• Assessment Against Deceased Person: An assessment order cannot be validly passed against a person who is already deceased. Proceedings must be initiated or continued against their legal representatives.
• Proper Service of Notice on Legal Heirs: When a person dies, their legal heirs step into their shoes for tax liabilities. It is incumbent upon the tax authorities to properly identify and serve notices on the legal heirs. Sending notices in the name of the deceased is not valid service on the legal heir.
• Liability of Legal Heirs: While a legal heir is liable for the deceased’s tax dues, their liability is typically limited to the extent of the assets inherited. However, this liability can only be established after due process, including proper notice and an opportunity to present their case.
• Consequences of Procedural Irregularity: Failure to provide proper notice and hearing to the legal heir is a significant procedural irregularity that renders the assessment order invalid.
• Remand as Remedy: The common remedy for such violations of natural justice is to set aside the order and remand the matter back to the lower authority to re-do the proceedings after providing the necessary opportunity and complying with due process.
• Applicability (GST Context): Although the question mentions Section 93 of the Central Goods and Services Tax Act, 2017/Andhra Pradesh Goods and Services Tax Act, 2017, the principles of natural justice concerning assessment of deceased persons and service of notice on legal heirs are universal across tax statutes (Income-tax, GST, etc.).