Order passed against deceased person is nullity

[CA Bimal Jain]

The Hon’ble Kerala High Court in the case of BENOY ABRAHAM VERSUS STATE TAX OFFICER, NEDUMANGADU - 2024 (10) TMI 1004 - KERALA HIGH COURT allowed the writ petition and quashed the held that order passed against deceased person is nullity. The Section 93 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) permits continuance of proceedings against legal heirs but does not authorize culmination of proceedings against deceased person. Tax authorities directed to continue proceedings against legal heirs by issuing notice to Assessee who holds power of attorney for other legal heirs.

Facts:

Mr. Benoy Abrahan (“the Petitioner”) was one the legal heirs of late Mrs. Santhamma T (“the Deceased”), who was a registered dealer under the CGST Act and was expired on June 08, 2021 even before the issuance of the show cause notice and this fact had been brought to the notice of the State Tax Officer (“the Respondent”) vide reply dated June 06, 2023.

The death certificate of the Deceased had also been produced and despite being aware of the death of the Deceased an Order (“the Impugned Order”) was passed in the name of late Santhamma T. The Petitioner stated that an Order was passed against a deceased person, the order is a nullity and is liable to be set aside.

Hence, aggrieved by the Impugned Order, the Petitioner filed the present writ petition.

Issue:

Whether order passed in the name of deceased GST dealer is valid?

Held:

The Hon’ble Kerala High Court in BENOY ABRAHAM VERSUS STATE TAX OFFICER, NEDUMANGADU - 2024 (10) TMI 1004 - KERALA HIGH COURT held as under:

• Observed that, the Impugned Order seems to be issued against a deceased person and hence it is a nullity. It may be true that the provisions of Section 93 of the CGST Acts permits the continuance of proceedings against the legal heirs of a deceased person, in case where the business has been discontinued. However, the said provision does not authorize the continuance and culmination of proceedings against a deceased person. Therefore, Impugned Order is a nullity as rightly contended by the learned counsel appearing for the Petitioner.
• Held that, the present writ petition is allowed and the Impugned Order is quashed. The Respondent was permitted to continue with the proceedings against the legal heirs of late the Deceased. Since the Petitioner, who was one of the legal heirs of the Deceased also holds Power Attorney for the other legal heirs, the Respondent may issue notices to the Petitioner for completion of proceedings. Such notice to the Petitioner will be deemed to be proper notice to the other legal heirs as well.

Our Comments:

Section 93 of the CGST Act governs “Special provisions regarding liability to pay tax, interest or penalty in certain cases”. Section 93(1) of the CGST Act stated that save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a person, liable to pay tax, interest or penalty under this Act, dies, then-

(a) if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due from such person under this Act; and

(b) 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 due from such person under this Act,

whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death.

The Hon’ble Madras High Court in the case of  REKHA. S, KAVITHA. S, SUDHA. V,M.K. NITHISH AND M.K. GANESH VERSUS THE ASSISTANT COMMISSIONER (ST) , CHENNAI  - 2023 (12) TMI 995 - MADRAS HIGH COURT granted relief to the legal heirs of the Deceased by setting aside the GST Assessment Order issued against the Deceased on the ground that the Order came to be passed against the dead person, which is non-est in law.

(Author can be reached at [email protected])