Proceedings under Gujarat GST Act, 2017 against deceased proprietor declared invalid; legal heirs entitled to proper notice and opportunity before any tax recovery action
In a significant judgment dated August 13, 2026, the Gujarat High Court (Division Bench) has set aside and quashed the GST demand notices and orders issued against a deceased taxpayer, holding that such proceedings initiated under the Gujarat Goods and Services Tax Act, 2017 (GGST Act) are invalid if legal heirs are unaware and have not been given any opportunity to respond.
The case arose after the petitioner, Ushaben Kalpeshbhai Patni, wife of the late Shri Kalpeshbhai Ramubhai Patni, challenged notices and orders issued by the State Tax Officer, Ahmedabad, demanding recovery of Rs. 28,49,906/- along with interest and penalty on account of alleged tax liabilities for the financial year 2020-21. Shri Kalpeshbhai Patni, who was running a proprietorship business named Shivam Trading Co., passed away on May 3, 2021, due to Covid-19. Following his death, the GST registration of the proprietorship was cancelled in July 2021.
The petitioner, a housewife, asserted she had no connection with the business and was unaware of the GST proceedings initiated posthumously against her deceased husband. The impugned notices and orders were issued via the GSTN portal addressed to the deceased taxpayer, without any direct communication or proper notice to the petitioner as the legal heir. She only became aware of the proceedings after receiving information from the GST consultant handling the deceased’s returns.
The respondent authorities contended that multiple notices were issued on the GSTN portal and at the place of business, but no response was received, justifying the confirmation of the demand. However, the Court observed that since the petitioner was neither involved in the business nor made aware of the proceedings, issuing notices and orders solely in the name of the deceased taxpayer was legally flawed.
Relying on principles of natural justice and procedural fairness, the Court held that proceedings under Section 73(5) of the GGST Act against a deceased person without informing the legal heirs are invalid. The Court quashed all notices and the final demand order, while clarifying that the tax authorities are free to initiate fresh proceedings against the petitioner after providing proper notice and opportunity in accordance with law.
This judgment underscores the importance of ensuring legal heirs are properly informed and given a chance to respond before tax recovery actions are taken, especially where the original taxpayer is deceased and the business has not been carried on. It protects innocent legal heirs from arbitrary tax demands and reinforces procedural safeguards under the GST regime.
Bottom Line:
Proceedings initiated under the Gujarat Goods and Services Tax Act, 2017 against a deceased person are invalid, as legal heirs unaware of the proceedings cannot be held liable without proper notice and opportunity to respond.
Statutory provision(s):
Gujarat Goods and Services Tax Act, 2017 - Section 73(5), Section 73(1)
This report summarizes the Gujarat High Court's landmark ruling in Special Civil Application No. 8255 of 2025, delivered by Hon’ble Judges Mr. A.S. Supehia and Vaibhavi D. Nanavati, which provides clarity on the invalidity of GST tax proceedings against deceased persons without proper notice to legal heirs.
Ushaben Kalpeshbhai Patni v. State Tax Officer, (Gujarat)(DB) : Law Finder Doc Id # 2962328
