GST Proceedings Against Deceased Proprietor: What the Allahabad High Court Has Clarified

1. Background: GST Liability and Proprietorship Concerns

Goods and Services Tax (GST) is levied on the supply of goods and services and is effectively borne by the end consumer. However, the statutory responsibility to collect and deposit GST with the Government lies on the business entity that undertakes the taxable supply.

Most GST compliances proceed on the assumption that the business is a going concern, i.e., it will continue to operate indefinitely and will remain answerable for all tax obligations arising from its activities. This assumption, however, is put to test in the case of sole proprietorships, where the business is inextricably linked with the individual proprietor.

When the proprietor of a sole proprietorship dies, a peculiar situation arises:

  • The GST registration is in the name of the deceased individual (as proprietor).
  • The business may either be continued by legal heirs or brought to an end.
  • The department may still wish to determine and recover tax dues for past periods.

In such circumstances, the question arises: Can GST authorities continue or initiate proceedings in the name of a person who has already died, especially after cancellation of registration on account of death?

This issue was recently examined by the Allahabad High Court in a matter where the GST authorities issued a show cause notice and passed an ex parte order against a deceased proprietor, despite being informed of his death and having cancelled his GST registration.

The judgment provides important clarity on the validity of proceedings against a deceased person and the correct procedure for recovery from legal heirs.

2. Facts of the Case: Ashwani Kumar Pandey v. State of U.P.

The case under discussion is Ashwani Kumar Pandey v. State of U.P. [2026] 182 taxmann.com 98 (Allahabad) decided by the HIGH COURT OF ALLAHABAD.

2.1 Parties and Business Structure

  • The writ petitioner, Ashwani Kumar Pandey, is the son of Late Mr. Ram Prasad Panday.
  • Late Mr. Ram Prasad Panday was the sole proprietor of M/S Pandey Iron Dealer.
  • The business was a proprietorship concern registered under the Uttar Pradesh Goods and Services Tax Act, 2017.

2.2 Death of Proprietor and Cancellation of GST Registration

  • Date of death of proprietor: February 06, 2021.
  • After the demise of Mr. Ram Prasad Panday, his counsel submitted an application before the Proper Officer seeking cancellation of GST registration on account of death.
  • The GST registration was cancelled on June 27, 2023.
  • Therefore, as of that date, the department was formally aware that the registered person had died and that the registration no longer existed.

2.3 Subsequent Departmental Action

Despite being informed of and acting upon the death of the proprietor (by cancelling the registration), the authorities later initiated proceedings as follows:

  • A show cause notice (SCN) dated May 21, 2024 was issued.
  • An ex parte order dated August 21, 2024 was passed under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017.
  • Both the SCN and the order were uploaded on the GST portal in the name of the deceased sole proprietor.

Since the registered person had died, and both the SCN and order were only uploaded electronically, the legal heirs were not actually aware of these proceedings at the relevant time.

2.4 Writ Petition Before the High Court

Both the proprietor and his wife had passed away. The son, Ashwani Kumar Pandey, approached the High Court, contending that:

  1. The show cause notice and subsequent order were issued against a dead person, and thus:
    • The very initiation of proceedings was void in law.
    • Any determination of liability in the name of the deceased was a nullity.
  2. Information about the death had already been communicated to the authorities, and the registration had been cancelled on that basis.
  3. Hence, the authorities could not legally proceed in the name of the deceased person after having accepted his death for cancellation.

The petitioner sought, inter alia, to:

  • Quash the order dated 24.04.2024 passed under section 50 and section 122 of the U.P. G.S.T. Act, 2017 for the tax period April 2018 to March 2019, wherein a demand of **Rs. 55,42,604.52/- (Tax Rs. 26,64,713.72/- and Interest of Rs.