Department Required To Serve Notice Upon Legal Representative Of Deceased Before Proceeding Under GST Act: Allahabad High Court

The Allahabad High Court has held that the Goods and Service Tax Department is required to serve notice upon the legal representative of a deceased before proceeding against the deceased under the Central Goods and Service Tax Act, 2017.

Petitioner’s husband was the sole proprietor of the firm was engaged in providing services as a Consultant. A show cause notice was issued in the name of petitioner’s husband imposing liability of Rs.8,97,716/- under the proviso to Section 73(1) of the Finance Act, 1994 read with Sections 142, 173, 174 of the CGST Act towards Service Tax for the Financial Year 2014-15 along with equivalent penalty and interest thereon.

Subsequently, the penalty order was passed where further penalty of Rs.10,000/- was imposed under Section 71(1)(c) of the Finance Act, 1994 read with Sections 142, 173, 174 of the CGST Act.

Counsel for petitioner argued that the factum of the death of her husband was communicated to the Department. However, the Department continued to proceed in his name. It was also argued that the show cause notice and consequential order were never served upon the petitioner. Further, the proceedings were challenged on grounds that the show cause notice for Financial Year 2014-15 was issued after a period of five years from the relevant date. Accordingly, the proceedings were patently illegal and liable to be set aside.

Defending the order, counsel for Department argued that the order had been issued in the name of the firm. However, it was admitted that no notice was served upon the petitioner regarding the proceedings initiated against the firm despite knowledge of the fact that the sole proprietor had passed away.

The bench comprising of Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastava observed that the factum of death of the sole proprietor of the firm was mentioned in the penalty order. It was further observed that in the order records that opportunity of personal hearing has been given but “neither any authorized representative appeared nor any communication was received from the party even though the communication was made by the department on registered address and registered e-mail.”

The Court held that the GST Department is required to serve notice upon the petitioner who is the legal representative of the deceased before proceeding in the matter. Since there was no record that notice was served upon the legal representative of the deceased assessee, the Court set aside the penalty order only.

The Court directed the Assistant Commissioner, Central Goods & Service Tax, Division-I, Noida to take a fresh decision after giving the petitioner an opportunity of hearing.

Case Title: Mrs Lalitha Subramanian vs. Union Of India And 3 Others 2023 LiveLaw (AB) 448 [WRIT TAX No. - 1137 of 2023]

Citation: 2023 LiveLaw (AB) 448

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