GST Demand Against Deceased Proprietor Quashed: Calcutta High Court Clarifies Legal Heir Liability Under Section 93 of CGST Act, 2017

Background and Context

A significant ruling has emerged from the Calcutta High Court in the matter of Gita Rani Pan Vs Union of India & Ors, addressing a critical procedural question that arises frequently in GST enforcement: can a show cause notice and a consequential tax demand order be validly sustained when issued in the name of a person who has already died, without any corresponding notice to his legal representatives?

The case arose from an Order in Original dated 21.01.2025, passed under Section 74 of the Central Goods and Services Tax Act, 2017, raising a demand of Rs. 38,44,674/- along with applicable interest and penalty, covering the tax period from July 2017 to September 2021, corresponding to Financial Years 2017-18 to 2020-21.

Factual Matrix

The facts of this case present a clear sequence of events that ultimately formed the basis of the legal challenge:

  • Late Haradhan Pan, the original proprietor of the business, passed away on 20.05.2021.
  • His wife, the petitioner Gita Rani Pan, applied for a fresh GST registration in her own PAN on 18.06.2021, declaring commencement of business from 21.05.2021. The department subsequently issued a new registration number.
  • An application for cancellation of the deceased proprietor's existing GST registration was filed on 10.05.2022, and the registration was cancelled with effect from that date.
  • Notwithstanding the above, the GST authorities issued a show cause notice dated 08.03.2022 — nearly ten months after the proprietor's death — in the name of Late Haradhan Pan.
  • The petitioner responded to this notice on 22.04.2024 and again on 06.08.2024, following which the impugned Order in Original was passed on 21.01.2025.

The petitioner challenged the entire proceeding, contending that the show cause notice, the Order in Original, and the consequential recovery notice were fundamentally flawed and legally unsustainable, as they had all been initiated and finalized against a person who was no longer alive.

Proceedings Against a Dead Person Are a Nullity

The petitioner's primary argument rested on the well-established legal position that any notice or proceeding initiated in the name of a deceased person is a nullity, non-est, and void ab initio. The petitioner argued that there exists no legal fiction under the Central Goods and Services Tax Act, 2017 that would allow proceedings to be treated as valid merely because they were addressed to a person who had since died.

Definition of "Person" Under the CGST Act

Reliance was placed on Section 2(84) of the CGST Act, 2017, to establish that the statutory definition of "person" does not encompass a deceased individual. Since tax determination under Section 73 or Section 74 of the CGST Act must necessarily be directed at a "person" within the meaning of the statute, proceedings against the dead fall entirely outside the legislative framework.

Absence of Machinery Provision for Deceased Assessees

The petitioner drew a pointed contrast with the Income Tax Act, 1961, which contains Section 159 as a specific machinery provision enabling assessment in cases of death. The CGST Act, 2017 contains no equivalent mechanism for determining tax liability in the name of a deceased person. In the absence of such a provision, any proceeding purportedly initiated against the deceased lacks statutory sanction.

Case Laws Relied Upon by the Petitioner

The following judgments were cited in support:

  1. Arvind Treaders -versus- State of Uttar Pradesh & Another, reported in 2025 (4) TMI 1380 — relied upon for the proposition that a show cause notice cannot be issued in the name of a dead person for determination of the deceased's liability without giving an opportunity to the legal representative.