Tax Assessment Against Deceased Sole Proprietor Vitiated Due

Tax Assessment Against Deceased Sole Proprietor Vitiated Due to Lack of Hearing for Legal Heirs

Issue

Whether an assessment or demand order passed under Section 75 in the name of a deceased sole proprietor, without issuing notice or affording a personal hearing to the legal representatives, is legally sustainable.
Whether legal heirs can claim complete immunity from the tax liabilities incurred by a deceased sole proprietor under the CGST/RGST Act.

Facts

The petitioners are the legal representatives of a deceased individual who operated a GST-registered sole proprietorship.
The GST registration of the proprietorship concern was cancelled retrospectively by the tax administration without granting a personal hearing.
The tax department subsequently issued a Show Cause Notice (SCN) in Form GST DRC-01 in the name of the deceased individual, failing to serve it upon or involve the legal heirs.
No opportunity for a personal hearing was provided to the legal representatives during the proceedings.
The Assistant Commissioner ultimately passed a final demand/assessment order for the financial period 2019-20 directly in the name of the deceased sole proprietor.
The legal heirs invoked the writ jurisdiction of the High Court, asserting a severe breach of the statutory mandate for a personal hearing and a violation of the principles of natural justice.

Decision

Held, yes: While the statute under Section 93 fastens tax liabilities onto the estate of a deceased person whose business is discontinued due to death, legal representatives cannot claim total immunity from these liabilities.
Held, yes: However, the valid imposition of any tax liability on the legal heirs strictly requires full compliance with the statutory mandate of providing a personal hearing and passing a reasoned, speaking order.
Held, yes: Because the assessment proceedings were initiated, adjudicated, and enforced against the deceased person and his heirs without such mandatory compliance, the entire proceeding stands legally vitiated.
Held, yes: The impugned assessment order is set aside, and the matter is remanded back to the tax authorities to conduct a fresh compliance process that includes the legal heirs.

Key Takeaways

No Immunity for the Estate: Legal heirs are not absolved of tax debts left behind by a deceased taxpayer. Under Section 93 of the GST framework, the tax liability attaches directly to the estate of the deceased, meaning the revenue can recover dues up to the value of the inherited assets.
Assessment Against a Deceased Person is Void: A Show Cause Notice or a final demand order issued in the name of a deceased individual is a structural nullity. Once a taxpayer passes away, the tax department must legally substitute the legal heirs into the active proceedings.
Hearing Mandate is Absolute: Section 75(4) makes a personal hearing mandatory whenever an adverse decision is contemplated against a party. When dealing with legal representatives, the revenue must extend this opportunity to them directly before passing any order that financially impacts the inherited estate.

HIGH COURT OF RAJASTHAN

Lrs of Krishan Lal

Union of India^*

Arun Monga and Sandeep Shah, JJ.

D.B. Civil Writ Petition No. 10360 OF 2025

MAY 13, 2026

Sharad Kothari, Pranjul Mehta, Dinesh Kumar Bishnoi, Kalpit Shishodia and Chirag Soni for the Petitioner. Mahaveer Bishnoi, AAG for the Respondent.

ORDER

Arun Monga, J. – Petitioners herein, LRs of the deceased-assessee i.e. late Shri Krishan Lal are before this Court assailing an Assessment Order dated 29.08.2024 passed by the respondent No.3-Assistant Commissioner, State Tax, Ward-1, Circle-A, Sri Ganganagar, wherein demand of unpaid tax for the Financial Year i.e. 2019-2020, respectively has been raised qua the business activities being carried out by late Shri Krishan Lal.

2. Succinctly speaking, the relevant facts of the case, shorn of the unnecessary details, are as follows:-

2.1. Late Shri Krishan Lal (hereinafter referred to as “the deceased”) was operating as sole proprietor of M/s Krishan lal Khet Pal (GSTIN 08ABDPL1259L1ZH). The deceased passed away on 25.05.2022. The GST registration of the proprietorship was cancelled retrospectively w.e.f. 30.09.2022 vide order dated 13.10.2022, allegedly without adherence to due process and without affording an opportunity of personal hearing.

2.2. Thereafter, the Joint Commissioner, State Tax, Sri Ganganagar, issued a show cause notice dated 17.05.2024 in Form GST DRC-01 under Sections 50 & 73(1) of the CGST/RGST Act for FY 2019-20, calling upon the deceased to make payment within 30 days. According to the petitioners, notice was neither in the prescribed format nor accompanied by any opportunity of personal hearing.

2.3. Thereafter, a demand order dated 29.08.2024 was passed in the name of the deceased, allegedly in breach of Section 75(4) of the CGST Act, which mandates the grant of a personal hearing.

3. Hence, this instant writ petition.

4. Learned counsel for the petitioners cites an order dated 10.02.2026 passed by this Court in a similar case of Hitesh Patel v. State Of Rajasthan [DB CWP NO. 3078 of 2026, dated 10-2-2026] He submits that this Court had an occasion to deal with the same controversy, where no opportunity of hearing was granted to the LRs of the deceased. Relevant of the order, ibid, is as under:-

“7. Having heard the rival contention of the parties and upon perusal of the record, we are of the view that the petitioner cannot claim immunity from the tax liability, if any, in view of Section 93 of CGST Act, relevant of which is reproduced hereinunder:-

“Section 93. Special provisions regarding liability to pay tax, interest or penalty in certain cases.-

(1) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a person, liable to pay tax, interest or penalty under this Act, dies, then-

(a) if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due from such person under this Act; and

(b) if the business carried on by the person is discontinued, whether before or after his death, his legal representative shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is capable of meeting 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.”

8. In light of the aforesaid legal position, it is clear that Section 93(1)(b) of the CGST Act expressly provides that where tax liability is sought to be recovered qua a business that has been discontinued due to the death of the assessee, the legal representative shall be liable to discharge such liability out of the estate of the deceased.

9. However, Section 93, supra, is subject to the caveat contained in Section 75 of the CGST Act, which mandates that any person upon whom tax liability is proposed to be imposed must be afforded an opportunity of personal hearing, and that any order passed pursuant thereto must be a reasoned and speaking order. For ready reference same is reproduced as under:-

“75 General provisions relating to determination of tax. –

(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

(6) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.”

10. Trite it may sound that the assessment proceedings which are initiated and are to be enforced against the person who are the heirs/LRs of the deceased assessee would be vitiated in the absence of compliance of the statutory provisions contained under Section 75(4) and (6) of the CGST Act, ibid.”

5. On a Court query, learned counsel for the respondent does not oppose the aforesaid submission and states that he has no objection in case the instant petition is also disposed of in same terms.

6. Accordingly, the writ petition is disposed of in terms of the judgment, ibid.

7. Before parting, we may also hasten to add that other challenge in the writ petition qua the statutory provisions and in view of the aforesaid order passed by this Court, learned counsel for the petitioner submits that the said challenge is not being pressed in the present matter, with liberty to raise and pursue the same in appropriate proceedings. Same is accordingly kept open to be adjudicated in future, should the occasion so arise.

8. All pending application(s) including stay petition stand disposed of.