Facts of the Case:

In this case, the petitioner, Gita Rani Pan, wife of Late Haradhan Pan, challenged a demand of ₹38,44,674 along with applicable interest and penalty for the period July 2017 to September 2021. The proceedings originated from a Show Cause Notice dated 08.03.2022 issued under Section 74 of the CGST Act in the name of Late Haradhan Pan, despite the fact that he had died on 20.05.2021.

Following her husband’s death, the petitioner obtained a fresh GST registration in her own name for the same business with effect from 21.05.2021. Despite the subsequent cancellation proceedings relating to the deceased proprietor’s registration, the Department proceeded with the SCN issued in the deceased’s name. The petitioner filed replies, following which an Order-in-Original dated 21.01.2025 was passed confirming the demand.

The petitioner contended that proceedings initiated against a deceased person were void ab initio, relying, inter alia, upon the Supreme Court’s decision in Shabina Abraham v. Collector of Central Excise & Customs. The Department, on the other hand, relied upon Section 93(1)(b), contending that the legal representative remains liable for the deceased’s tax, interest and penalty to the extent of the estate inherited, and upon Section 29(3) to contend that cancellation of registration does not extinguish pre-cancellation liabilities.

Issue:

Whether the GST authorities can issue a Show Cause Notice and determine tax liability in the name of a deceased proprietor, and subsequently call upon his legal heirs to discharge the liability under Section 93(1)(b) of the CGST Act.

Held That:

The Calcutta High Court quashed the Show Cause Notice, Order-in-Original and consequential recovery notice, holding that tax liability cannot be determined against a deceased person.

The Court drew an important distinction between the substantive liability of legal representatives under Section 93(1)(b) and the machinery for determination of tax liability under Sections 73 and 74. While Section 93(1)(b) makes the legal representative liable to pay tax, interest and penalty due from the deceased, subject to the extent of the estate available to meet such liability, it does not prescribe the machinery for determining that liability.

According to the Court, the machinery for determination continues to be contained in Sections 73 and 74, which require issuance of a Show Cause Notice to the person liable to pay tax. Therefore, where the taxable person has died before initiation of adjudication, the Department cannot issue the SCN in the deceased person’s name and subsequently require the legal heirs to answer that notice.

Relying upon the Supreme Court’s ruling in Shabina Abraham, the Court reiterated that Section 93 does not provide a machinery for assessment of a deceased person. The proper course is to issue a fresh SCN to the legal representatives in their own names, specifically describing them as legal heirs/legal representatives of the deceased, and thereafter determine the liability in accordance with Sections 73/74 and Section 93.

The Court accordingly directed the Department to issue a fresh SCN to the legal heirs within three weeks, followed by an opportunity to submit replies and a personal hearing. The fresh adjudication was required to be undertaken by a reasoned and speaking order, keeping in view the statutory limitation under Section 93(1)(b) that the liability of the legal representative, where the business is discontinued, is confined to the extent to which the estate of the deceased is capable of meeting the tax, interest and penalty liability.

The Court thus disposed of the writ petition without examining the merits of the underlying tax demand.

Case Name: Gita Rani Pan v. The Union of India & Ors. dated 27.08.2026

Citation No. 2026 Taxo.online 2525