An assessment order issued against a deceased sole proprietor is a nullity in law.

An assessment order issued against a deceased sole proprietor is a nullity in law.

Issue

• Whether an assessment order passed under Section 73 of the GST Act against a sole proprietorship concern after the death of its sole proprietor is legally valid, or if it constitutes a nullity for being issued against a non-existent person.

Facts

• AR Rahman Spices was a sole proprietorship business entity owned and managed by its sole proprietor, S. Majeeth.

• The sole proprietor passed away before the conclusion of the tax assessment proceedings, leaving the business concern without any living proprietor.

• Following departmental proceedings, the Assessing Officer passed a final assessment order dated January 29, 2025, directly against the business concern after the proprietor’s demise.

• A writ petition was filed before the High Court challenging the validity of the assessment order on the grounds that it was an absolute nullity passed against a dead person.

Decision

• Order Against Deceased is Void: The High Court held that since AR Rahman Spices was a sole proprietorship concern, it had no independent legal existence separate from its proprietor, S. Majeeth.

• Assessment Declared a Nullity: Because the final assessment order was issued subsequent to the death of the sole proprietor, it was ruled to be a nullity in law and could not legally survive.

• Order Quashed with Liberty to Reopen: The High Court allowed the writ petition and quashed the impugned order, granting the tax department liberty to issue a fresh notice to the legal heirs and proceed afresh in accordance with the law.

Key Takeaways

• Proprietorship Has No Separate Legal Identity: A sole proprietorship concern is not a distinct legal persona. It begins and ends with the proprietor; therefore, any tax demand or order issued in the name of the shop or concern after the proprietor’s death is inherently void.

• Non-Existent Persons Cannot Be Taxed: The tax department cannot pass an assessment order against a dead person. Procedural fairness requires that as soon as a taxpayer dies, the proceedings must be shifted and addressed to the living legal heirs.

• Survival of Tax Liabilities: While an order against a deceased individual is structurally defective and easily quashed, the underlying tax liability does not automatically vanish. Under Section 93, the revenue retains the statutory right to recover dues by initiating fresh, procedurally correct actions against the legal heirs.