GST assessment order passed against a deceased sole proprietor is a nullity and void ab initio.

GST assessment order passed against a deceased sole proprietor is a nullity and void ab initio.

Issue

Whether a show-cause notice and subsequent assessment order issued under Section 73 of the CGST/TNGST Act in the name of a deceased sole proprietor are legally valid, or if the proceedings are a nullity due to a fundamental lack of jurisdiction.

Facts

• Proprietorship Status: The assessee was a sole proprietorship concern whose individual proprietor passed away prior to the initiation of the GST tax proceedings.

• Issuance of Notice: Following the death of the proprietor, the tax department issued a Show Cause Notice (SCN) under Section 73 of the Act, which covers tax or Input Tax Credit (ITC) disputes not involving fraud.

• Assessment Order: The adjudicating authority proceeded with the case and passed a final assessment order directly in the name of the deceased individual.

• Legal Challenge: The proceedings were challenged on the grounds that the department lacked jurisdiction to initiate or conclude tax assessments against a dead person.

Decision

• Lack of Jurisdiction: The High Court held that because the records clearly established that the SCN was issued post-death and the assessment order stood in the name of a deceased person, the entire proceeding lacked legal jurisdiction.

• Proceedings Deemed a Nullity: It was ruled that tax proceedings initiated and finalized against a dead person are an absolute nullity. This structural defect goes to the very root of the matter and completely vitiates the validity of the assessment order.

• Order Set Aside with Liberty: Consequently, the impugned assessment order was quashed and set aside. However, the Court granted the Revenue Department the liberty to initiate fresh proceedings against the legal heirs of the deceased in accordance with the law.

Key Takeaways

• Dead Person Cannot Be Sued: Under tax jurisprudence, a deceased individual cannot be a party to assessment proceedings. Any notice or order issued to a dead person has no legal existence.

• Proprietorship vs. Legal Entity: A sole proprietorship has no independent legal identity separate from its owner. Once the proprietor dies, the proprietorship concern ceases to exist for the purpose of receiving statutory notices.

• Procedural Remedy for Revenue: Section 93 of the CGST Act provides a framework for recovering dues from legal heirs. To sustain a valid assessment, the department must actively identify the legal representatives and issue fresh notices directly to them rather than carrying forward proceedings against the deceased.