2024 (9) TMI 1685 - HC - GST

Issuance of assessment order in the name of a deceased person - Entire adjudication/assessment proceeding commencing with issuance of show cause notice, dated 28.03.2022 has been made in the name of the petitioner's father, who had died on 19.05.2021 - non-existing entity/person - HELD THAT - A reading of Section 93 would show that Clause (a) only provides that if a business carried on by the person is continued by the legal representative or any other person after his death, such legal representative or other person, who continues, shall be liable to pay tax, interest or penalty, while Clause (b) provides that 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. Under the GST Act, in the case of original assessee being a dead person it may be necessary to make the assessment in the name of the legal heirs. The assessment in the name of the dead person more so when the factum of his death has already been informed by the respondent authority, vitiates the entire proceeding. The above defect is a substantive defect. Participation in the assessment proceeding by the legal representative cannot cure the above defect. Conclusion - An assessment order cannot be validly issued in the name of a deceased person under the GST Act. Legal heirs must be notified and involved in the assessment process to ensure validity. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment are:

• Whether an assessment order can be validly issued in the name of a deceased person under the Central Goods and Services Tax Act, 2017 (GST Act).
• What is the legal effect of issuing an assessment order against a deceased person, and what remedies are available to the authorities?
• How should the liability for tax, interest, or penalty be determined and assessed when the original assessee is deceased?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Assessment in the Name of a Deceased Person

• Relevant Legal Framework and Precedents: The primary legal framework involved is Section 93 of the GST Act, which outlines the liability to pay tax, interest, or penalty in cases where the original assessee is deceased. The court also referenced a precedent case, R.Unnikrishnan Vs. Union of India, which dealt with a similar issue.
• Court's Interpretation and Reasoning: The court interpreted Section 93 to mean that while the legal representatives may be liable for the deceased's tax obligations, the assessment must still be made in the name of a living entity. The court emphasized that making an assessment in the name of a deceased person is a substantive defect that cannot be cured by the participation of legal representatives in the proceedings.
• Key Evidence and Findings: The court noted that the petitioner had informed the respondent of the death of the original assessee, yet the assessment was still made in the deceased's name. This procedural error was deemed significant enough to invalidate the proceedings.
• Application of Law to Facts: The court applied Section 93 and concluded that the assessment order against the deceased was non-est (invalid) since it failed to comply with the requirement to assess a living entity.
• Treatment of Competing Arguments: The respondents argued that they could proceed under Section 93 against the legal heirs. However, the court held that this provision does not allow for assessments in the name of deceased individuals.
• Conclusions: The court concluded that the assessment order was invalid and must be set aside, with the respondents required to issue a new notice to the legal heirs.

Issue 2: Legal Effect and Remedies for Assessment Against a Deceased Person

• Relevant Legal Framework and Precedents: Section 93 of the GST Act and the precedent case of R.Unnikrishnan were again central to this issue.
• Court's Interpretation and Reasoning: The court reiterated that any order passed against a deceased person is non-est in law. It highlighted that the authorities must follow the procedure of issuing notices to the legal heirs to rectify the defect.
• Key Evidence and Findings: The court found that the authorities had not followed the correct procedure by failing to issue a notice to the legal heirs, despite being aware of the original assessee's death.
• Application of Law to Facts: The court applied the legal principles from Section 93 and the precedent case to determine that the respondents must issue a new notice to the legal heirs to proceed lawfully.
• Treatment of Competing Arguments: The court acknowledged the respondent's request for liberty to issue a new notice and granted it, allowing the authorities to correct their procedural error.
• Conclusions: The court set aside the impugned order and granted the respondents the opportunity to issue a new notice to the legal heirs within a specified timeframe.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The assessment in the name of the dead person more so when the factum of his death has already been informed by the respondent authority, vitiates the entire proceeding. The above defect is a substantive defect. Participation in the assessment proceeding by the legal representative cannot cure the above defect."
• Core Principles Established: An assessment order cannot be validly issued in the name of a deceased person under the GST Act. Legal heirs must be notified and involved in the assessment process to ensure validity.
• Final Determinations on Each Issue: The court determined that the assessment order was invalid and set it aside. It granted the respondents the liberty to issue a new notice to the legal heirs within 30 days, thus allowing the assessment process to proceed lawfully.