Court holds that tax liability of deceased must be determined only after issuing notice to legal heirs with opportunity for hearing, quashes original order demanding GST from late Haradhan Pan
In a significant judgment dated August 27, 2026, the Calcutta High Court, presided over by Justice Smita Das De, declared that the issuance of a Show Cause Notice or determination of tax liability against a deceased person under the Central Goods and Services Tax (CGST) Act, 2017 is null and void unless the notice is issued to the legal heirs with an opportunity to respond. The case arose from a demand notice of over Rs. 38 lakh raised against the late Haradhan Pan for GST dues for the period July 2017 to September 2021.
The petitioner, Mrs. Gita Rani Pan, wife and legal heir of the deceased, challenged the legality of the Show Cause Notice issued in the name of her late husband, who had passed away in May 2021. Despite her application for fresh registration in her own name and subsequent cancellation of her deceased husband's GST registration, the GST authorities proceeded with the Show Cause Notice and order against the deceased individual.
The Court held that the CGST Act does not contain any machinery provision to determine tax liability in the name of a deceased person and emphasized that Section 93(1)(b) of the CGST Act clearly states that legal heirs are liable to pay tax only to the extent of the estate inherited, but the liability must be determined by issuing a fresh Show Cause Notice to the legal heirs. The Court relied on Supreme Court precedents, including Sabina Abraham v. Collector of Central Excise and Customs, which prohibit initiating tax proceedings in the name of a dead person.
Rejecting the department's contention that the petitioner delayed informing about the death and that cancellation was belated, the Court reiterated that the issuance of notice to a deceased person is a legal nullity. The Court quashed the Show Cause Notice, the Order in Original, and recovery notices issued in the deceased's name.
The Court directed the GST authorities to issue a fresh Show Cause Notice within three weeks to the legal heirs named in the supplementary affidavit-Mrs. Gita Rani Pan, and the deceased's son and daughter. The legal heirs are to respond within three weeks, followed by a personal hearing opportunity. The authorities are mandated to pass a reasoned and speaking order within six weeks after the hearing, considering the estate's capacity to meet the tax liability.
This judgment clarifies the procedural safeguards required under the CGST Act when dealing with tax liabilities of deceased persons, reinforcing that legal heirs must be formally notified and heard before any demand is confirmed. It also underscores the difference between charging provisions and machinery provisions in tax law, emphasizing adherence to procedural fairness.
Bottom Line:
Issuance of a Show Cause Notice or determination of tax liability against a deceased person is null and void unless issued to the legal heirs with an opportunity to respond, as required under the CGST Act, 2017.
Statutory provision(s):
Central Goods and Services Tax Act, 2017 Sections 2(84), 29(3), 73, 74, 93(1)(b)
Gita Rani Pan v. Union of India, (Calcutta) : Law Finder Doc Id # 2969233
