2024 (10) TMI 130 - HC - GST

Challenge to SCN issued u/s 74 of the Central Goods and Services Tax Act, 2017 - respondents submits that the petitioner has since been carrying on the business of her deceased husband and therefore, in terms of Section 93 of the CGST Act, the respondents are entitled to initiate the proceedings for recovery of any amount due under the relevant statute from the said concern - HELD THAT - It is settled law that the identity of the sole proprietorship concern is not different from that of a sole proprietor. In the present case, a sole proprietor of the concern M/s S.K. Gupta Co. Mr Surender Kumar Gupta, has since expired and therefore, it is relevant in fact, that the impugned SCN has been issued to a non-existent person. Undeniably, in a case where the person is liable to pay tax, interest and/or penalty, has expired and the business is carried on by the taxpayer s legal representative or any other person after his demise, the said legal representative or such other person is liable to pay the due, interest or penalty as payable by the deceased taxpayer. However, the show cause notice for recovery of any such amount is required to be issued to the legal representative or such other person, who is carrying on the business of the deceased taxpayer. In the present case, impugned SCN has not been issued to the legal representative of the deceased taxpayer but to the deceased taxpayer. In UNNIKRISHNAN R, SUJATHA R, NALINAKSHI AMMA VERSUS THE UNION OF INDIA, THE COMMISSIONER OF COMMERCIAL TAXES, THE STATE TAX OFFICER, KUZHITHURAI 2024 (7) TMI 606 - MADRAS HIGH COURT the Madras High Court has held ' The order that has been passed against the dead person is non-est in law. If the petitioner is carrying on the business of the deceased person, then, the remedy is available to the Department to proceed against the petitioner under Section 93 of the TNGST Act, 2017. It appears to be that the petitioner is not carrying on the business of the deceased person.' The impugned SCN is set aside. It is clarified that, this order will not preclude the respondents from issuing a notice to the legal representative or any other person, if it is found that the business of the deceased taxpayer is being carried on by the deceased taxpayer s legal representative or such other person - Petition disposed off.

Summary

Issues:
1. Impugning a Show Cause Notice issued under the Central Goods and Services Tax Act, 2017 to a deceased taxpayer.
2. Interpretation of Section 93 of the CGST Act regarding liability to pay tax, interest, or penalty in cases of a deceased taxpayer.
3. Validity of issuing a Show Cause Notice to a deceased taxpayer instead of their legal representative.

Analysis:
The High Court addressed the issue of impugning a Show Cause Notice (SCN) issued under the Central Goods and Services Tax Act, 2017 to a deceased taxpayer. The petitioner, the widow of the deceased taxpayer, challenged the SCN issued to the sole proprietorship concern of the deceased. The respondents argued that the petitioner, as the widow carrying on the business, is liable for any outstanding amounts under Section 93 of the CGST Act. The court noted that the identity of a sole proprietorship concern is not separate from the sole proprietor. Since the deceased sole proprietor received the SCN, who is non-existent, the court emphasized that the notice should have been issued to the legal representative or the person carrying on the business.

Regarding the interpretation of Section 93 of the CGST Act, the court highlighted the provisions related to the liability to pay tax, interest, or penalty in cases of a deceased taxpayer. The section specifies that if a business is continued after the taxpayer's death by their legal representative or another person, that individual is liable to pay any outstanding amounts. However, the court emphasized that the SCN for recovery should be issued to the legal representative or the person carrying on the business, not to the deceased taxpayer.

The court referred to a judgment by the Madras High Court, emphasizing that an order passed against a deceased person is legally invalid. The court cited the need for the Department to proceed under Section 93 of the Act against the legal representative if they are carrying on the deceased person's business. Consequently, the High Court set aside the impugned SCN, clarifying that the respondents can issue a notice to the legal representative or another person if they are found to be carrying on the deceased taxpayer's business. The petition was disposed of accordingly, and any pending applications were also resolved.