A GST assessment order passed in the name of a deceased sole proprietor is a nullity.

A GST assessment order passed in the name of a deceased sole proprietor is a nullity.

Issue

Whether a GST assessment order determining a tax liability is legally sustainable if it is issued in the name of a sole proprietorship concern after the death of its sole proprietor.

Facts

• AR Rahman Spices was a sole proprietorship business entity owned and operated by S. Majeeth.

• The sole proprietor, S. Majeeth, passed away on June 30, 2023.

• Following his death, the revenue department continued tax proceedings against the firm and passed a final assessment order determining a tax liability on April 25, 2024.

• The impugned assessment order was issued directly in the name of the defunct sole proprietorship concern.

• The petitioner challenged the validity of this post-death assessment order by filing a writ petition before the High Court.

Decision

• Order Declared a Nullity: The High Court observed that the impugned assessment order was passed significantly after the date of death of the sole proprietor.

• Unsustainable Liability: Because a sole proprietorship has no legal identity separate from its owner, an order issued against a deceased individual is a legal nullity and cannot be sustained.

• Order Quashed with Liberty: The High Court allowed the writ petition and completely quashed the tax demand order. However, the department was granted explicit liberty to issue a fresh notice to the legal heirs and proceed in accordance with the law.

Key Takeaways

• No Tax Demands on the Deceased: A tax assessment order cannot be issued against a dead person; any such order passed post-death without bringing legal representatives on record is void ab initio (invalid from the beginning).

• Proprietorship Has No Separate Identity: Unlike a corporate entity, a sole proprietorship ceases to exist upon the death of its proprietor. Legal proceedings must pivot to face the legal heirs rather than the trading name.

• Procedural Reset for Revenue: Quashing an order due to the death of a taxpayer does not automatically wipe out the underlying tax liability; the revenue department retains the statutory right under Section 93 to restart the process against the surviving legal heirs.