The Karnataka High Court in this case of has held that a private limited company, being a separate and distinct legal entity, cannot be subjected to recovery proceedings for GST dues of a proprietary concern operated by a deceased proprietor. The Court quashed the DRC-13 recovery notices issued against BKR Services Private Limited and also set aside the adjudication orders concerning the deceased proprietor’s son and wife, directing fresh consideration after examining the statutory framework under Section 93 of the CGST/KGST Acts.

GST dues of a proprietary concern cannot be recovered from a separate private limited company merely because the company is associated with the deceased proprietor. Further, where a taxable person dies, the authorities must properly examine the applicability of Section 93 before determining the liability of legal representatives or successors. Failure to consider such material statutory provisions can render the adjudication order vulnerable to judicial interference.

Facts of the Case:

In this case, the proceedings arose from GST liabilities pertaining to M/s. B.K.R. Swamy Security Agencies, a proprietary concern operated by late Rudraswamy B.K., who died on 25.05.2023. BKR Services Private Limited, along with the deceased proprietor’s son and wife, approached the Karnataka High Court challenging the recovery and adjudication proceedings. The first petitioner, BKR Services Private Limited, specifically challenged Form GST DRC-13 recovery notices dated 04.07.2026 issued to State Bank of India seeking recovery of the alleged GST dues from the company’s bank account. The company contended that it had a separate legal identity and had no liability for the dues of the deceased proprietor’s proprietary concern.

The Court noted that it was undisputed that BKR Services Private Limited was distinct and separate from the proprietary concern constituted by the deceased proprietor. The recovery action against the company therefore became the principal issue in relation to the first petitioner.

The deceased proprietor’s son and wife, being the second and third petitioners, challenged the adjudication orders passed under Section 73 of the CGST/KGST Acts for the tax period 2021-22, together with the corresponding summaries in Form GST DRC-07. They contended that the authorities had failed to examine the effect of Section 93 of the CGST/KGST Acts, which governs liability in cases where a taxable person dies. They had also informed the department about the death of the proprietor and disputed their liability in the proceedings. Additionally, they pointed out that two separate show cause notices had been issued for the same tax period, although concerning different issues.

Issue:

Whether GST recovery proceedings relating to the proprietary concern of a deceased proprietor could be initiated against a separate and distinct private limited company by issuing Form GST DRC-13 to its bank. Whether the adjudication orders against the deceased proprietor’s son and wife could be sustained without examining the applicability of Section 93(1)(a) and Section 93(1)(b) of the CGST/KGST Acts. 

Held That:

The Karnataka High Court allowed the writ petition and held that the DRC-13 recovery notices could not have been issued against BKR Services Private Limited, since the company was a distinct and separate entity from the proprietary concern of the deceased proprietor. Accordingly, the Court quashed the recovery notices dated 04.07.2026 issued to State Bank of India in respect of the company.

In relation to the second and third petitioners, the Court found that the adjudication orders failed to examine whether the proceedings could be sustained in view of Section 93(1)(a) or Section 93(1)(b) of the CGST/KGST Acts. The failure to consider this material statutory aspect warranted judicial interference. The Court therefore quashed the adjudication orders dated 22.12.2025 along with the corresponding Form GST DRC-07 summaries and restored the proceedings, granting the deceased proprietor’s son and wife an opportunity to submit detailed replies to the show cause notices.

The Court expressly left open the contention regarding the issuance of two separate show cause notices for the same tax period, observing that the issue should be considered after the petitioners were afforded an opportunity to file detailed responses. Thus, all their contentions were left open for consideration by the adjudicating authority.

Case Name: BKR Services Private Limited v. The State of Karnataka dated 17.07.2026 

Citation No. 2026 Taxo.online 2360