2006 (3) TMI 703 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to notice for production of books of account and proposed penalty after death of registered dealer.

Analysis:
The petitioner, who succeeded to the business after his father's death, challenged a notice by the first respondent to produce books of account for verification and proposed penalty if not produced. The business was inspected during the father's lifetime, but books were not produced. The petitioner contended that the first respondent lacked authority to levy penalty on the legal heir after the dealer's death. The petitioner cited legal precedents to support his argument, while the Government Pleader referred to a different decision. The court noted that the petitioner had taken over the business but clarified that the notice did not automatically imply penalty; penalty would only arise if violations were found after verifying the books of account. The court emphasized that the liability of the legal heir is limited to the assets of the deceased dealer.

The court examined the relevant provision of the KGST Act regarding assessment of legal representatives after the dealer's death. It highlighted that the legal heir's liability is restricted to the assets inherited from the deceased, and any recovery is based on the assets of the deceased dealer. The court explained that proceedings initiated against the dealer continue even after death, with legal representatives being liable only to the extent of the assets they hold. The legal heir can be proceeded against as if the original dealer were alive, but personal actions like prosecution are not permissible. The court upheld the notice issued against the petitioner, granting six months to produce the books of account for verification. The court concluded that all proceedings for assessment and penalty can be continued and recovered from the assets of the deceased dealer held by legal heirs.

In summary, the court dismissed the original petition but allowed time for compliance with the production of books of account. The judgment clarified the legal position regarding the liability of legal heirs in cases of tax assessment and penalty after the death of the dealer, emphasizing the limited liability of legal representatives to the assets of the deceased.