SCN and Tax Demand Order Issued Against Deceased Taxpayer Are Legally Void and Quashed
SCN and Tax Demand Order Issued Against Deceased Taxpayer Are Legally Void and Quashed
Issue
Whether a Show Cause Notice (SCN) and a consequential tax demand order issued under Section 74 of the CGST/GGST Act against a deceased sole proprietor, without knowledge of the death, are legally sustainable against the legal heir.
Facts
-
Business & Cancellation: The deceased taxpayer ran a sole proprietorship in metal scrap trade for the period 2018-19. After his death, the business was discontinued, and the GSTIN was subsequently cancelled due to continuous non-filing of returns, recording a nil demand at the time of cancellation.
-
Issuance of SCN: Unaware of the taxpayer’s death, the Department issued an SCN under Section 74 in the name of the deceased proprietor.
-
Ex-Parte Demand Order: As no reply was filed, the Department proceeded ex-parte and confirmed a tax demand order directly against the deceased person.
-
Challenge by Legal Heir: The petitioner, who is the housewife and legal heir (wife) unconnected with the business, learned of the proceedings later and submitted the death certificate via affidavit to challenge the demand.
Decision
-
Orders Quashed: The High Court held that both the SCN and the consequential demand order issued against a deceased person were legally void and accordingly quashed and set them aside.
-
Unconnected Legal Heir: The Court noted that the petitioner was a housewife with no involvement in the business and that the GSTIN had already been cancelled with zero outstanding demand prior to the proceedings.
-
Liberty to Reinitiate: Liberty was reserved for the tax authorities to initiate fresh proceedings against the legal heir in accordance with law under Section 93 for any legitimate outstanding dues.
-
Petition Allowed: The writ petition was allowed in favor of the assessee.
Key Takeaways
-
Proceedings Against Deceased Void Ab Initio: A Show Cause Notice or demand order issued in the name of a deceased individual is a nullity in law and cannot be enforced against legal representatives without following due process.
-
Compliance with Section 93 Required: To recover tax dues of a deceased taxpayer, authorities must specifically invoke Section 93 of the CGST/GGST Act and issue proper notices directly to the legal representative/heir.
-
Closure on Cancelled GSTINs: Demands initiated after the cancellation of a GSTIN (which showed zero liability at cancellation) must strictly adhere to statutory procedures before attempting to fast-track recoveries against surviving family members.
Utkarsh Desai and Abhay Y. Desai for the Petitioner. Ms Tanushree Shrimali, AGP for the Respondent.
JUDGMENT
Ms. Vaibhavi D. Nanavati, J.– Heard learned advocate Mr. Utkarsh Desai for learned advocate Mr. Abhay Desai for the petitioner and learned Assistant Government Pleader Ms. Tanushree Shrimal for the respondent – State.
2. By way of the present petition, the petitioner herein has prayed for the following reliefs:
“09. In view of the aforesaid premises, the Petitioner humbly pray that:
A. Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction quashing and setting aside the impugned notice dated 26.06.2025 (Annexure F) issued against the deceased taxpayer since the same is without jurisdiction and a nullity in law;
B. Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction quashing and setting aside the impugned order dated 04.12.2025 (Annexure G) issued against the deceased taxpayer since the same is without jurisdiction and a nullity in law;
C. Pending notice, admission and final hearing of this petition, Your Lordships may be pleased to stay further proceedings pursuant to the impugned order dated 04.12.2025 (Annexure G) issued by the Respondent;
D. Ex parte ad interim relief in terms of prayer ‘C’ may kindly be granted;
E. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice, for which act of kindness your petitioners shall forever pray.”
BRIEF FACTS:
3. The petitioner herein is the legal heir (wife) of Late Irshadahmed Chaudhary who was engaged in the business of trading of metal scrap in the name and style of Ideal Steel Corporation. The same was registered under GST bearing the number 24AERPC6697J1ZW. The petitioner’s husband, i.e., Shri Irshadahmed Chaudhary passed away on 29.07.2020 after prolonged illness.
3.1. The registration of the proprietorship entity was cancelled by the respondent authorities vide order dated 03.03.2021, assessing nil demands on failure to file the GST returns for a continuous period of six months. The business of the deceased proprietor was carried on from the rented premises and the petitioner did not have any access to the said business premises. The business was not continued upon the death of the proprietor.
3.2. The petitioner being a housewife, was unable to locate the records of the business undertaken by the deceased husband. Upon death of the proprietor and subsequent to the cancellation of registration, issued pre-show cause notice intimation under Section 74(5) of the Gujarat Goods and Services Tax Act, 2017 (for short, “the GGST Act”) dated 24.06.2025 in the name of the proprietor in FORM DRC-01A, intimating proposed tax liability of Rs.21,49,414/- along with interest and penalty for the tax period Financial Year 2018-19. Since the intimation was issued after the death of the taxpayer, the present petitioner was not aware of the same and was unable to respond to the said intimation. The respondent authority thereafter, issued the impugned notice under Section 74(1) of the GGST Act, along with FORM DRC-01 dated 26.06.2025 on the deceased taxpayer seeking to recover the tax liability of the aforesaid amount. However, since the business of the proprietor was discontinued, the petitioner was not aware of such notice being issued. The respondent thereafter passed the impugned order along with FORM DRC-07 dated 04.12.2025 against the deceased taxpayer, confirming the demands proposed in the show-cause-notice in the absence of any reply filed by the deceased taxpayer.
3.3. It is the case of the petitioner that subsequent to the issuance of the impugned order, she received a call from the departmental officer in the month of May, 2026 informing her about the impugned notice and the order issued on the GSTN portal. Upon such information, the petitioner promptly submitted an affidavit physically to the State Tax Officer, informing him about the death of Shri Irshadahmed Chaudhary, the proprietor of Ideal Steel Corporation. The death certificate along with the affidavit are duly produced on record. The aforesaid has given rise to the filing of the present petition.
4. Learned advocate Mr. Desai appearing for the petitioner at the outset submits that the impugned notice dated 26.06.2025 and the impugned order dated 04.12.2025 are passed in the name of a dead person. It is submitted that the petitioner herein under Section 74(1) of the GGST Act, 2017 permits the proper officer to serve notice on the “person chargeable with tax” to determine the due from such person by passing an order. It is further submitted that the definition of “person” under Section 2(84) of the GGST Act, 2017, which includes an individual (in the case of a proprietorship concern) and not the legal heirs of such individual.
4.1. In the facts of the present case, the proprietor tax payer passed away on 29.07.2020, whereas the impugned notice was issued only on 26.06.2025, and the impugned order was passed only on 04.12.2025. Further nil dues were determined at the time of cancellation of the registration of the deceased proprietor. It is submitted that in view of the above, neither the notice under Section 74(1) of the GGST Act nor order under Section 74(9) of the GGST Act can be issued or passed against the deceased person. Resultantly, the impugned proceedings against the deceased taxpayer are without jurisdiction and a nullity in eye of law and deserves to be quashed and set aside.
5. Learned AGP Ms. Shrimal is not in a position of controvert the aforesaid factual position that the impugned notice dated 26.06.2025 and the impugned order dated 04.12.2025 are issued against a dead person.
6. Under such circumstances, in view of the aforesaid, since the impugned notice dated 26.06.2025 and the impugned order dated 04.12.2025 are passed against a dead person, which is not in dispute as referred to herein-above, the same are required to be quashed and set aside.
7. We have noted that the petitioner herein is a housewife, and not connected with her husband’s business. The GSTIN number was also cancelled by the authorities by order dated 03.03.2021 wherein assessing nil demands on failure to file GST returns for a continuous period of six months, the respondent authority issued the impugned notice dated 26.06.2025 and the impugned order dated 04.12.2025 to a dead person since they were unaware about the death of the tax payer, i.e., Shri Irshadahmed Chaudhary (husband of the petitioner).
8. For the reasons as referred to herein-above, the impugned notice 26.06.2025 and the impugned order dated 04.12.2025 are hereby quashed and set aside. It is further clarified that it is open for the respondents to initiate proper proceedings in accordance with law against the petitioner herein for the outstanding demand.
9. Accordingly, the present petition stands allowed.