Facts of the Case

The petitioner, Mrs V A Nirmala Mary, approached the High Court of Karnataka under Articles 226 and 227 of the Constitution of India seeking quashing of the following proceedings issued by Respondent No. 3:

  1. Show Cause Notice dated 20.04.2021 bearing SCN Sl. No. 34/2020-21 from File No. C.No.IV/16/37/2020-21-ED-6;
  2. Order-in-Original No. 19/2021 dated 29.07.2021; and
  3. Subsequent Show Cause Notice dated 30.07.2021 bearing SCN Sl. No. 113/2021-22 from File No. C.No.IV/16/37/2020-21-ED-6.

The petitioner relied upon the death certificate of her deceased husband, M. Velu Arul Das, who had expired on 20.07.2019. According to the petitioner, the departmental proceedings were initiated thereafter against the deceased person, culminating in the impugned show cause notices and adjudication order.

The petitioner further contended that she had not authorised Mr. R. Ravi Kumar, Tax Consultant, to appear before Respondent No. 3 and contest the proceedings. It was also asserted that the petitioner and her children had not appeared before Respondent No. 3 prior to passing of the impugned order.

The petitioner therefore challenged the proceedings on the ground that they had been continued without providing an effective opportunity to the legal heirs of the deceased person.

Issues Involved

The principal issues arising for consideration were:

  1. Whether GST proceedings initiated after the death of M. Velu Arul Das could validly continue in the manner adopted by the Department.
  2. Whether the show cause notices dated 20.04.2021 and 30.07.2021 and the Order-in-Original dated 29.07.2021 were sustainable when the concerned person had expired on 20.07.2019, prior to initiation of the proceedings.
  3. Whether the petitioner and the other legal heirs of the deceased had been afforded an adequate opportunity to participate in and contest the proceedings.
  4. Whether representation by a Tax Consultant, allegedly authorised by one son of the deceased, was sufficient to defeat the petitioner’s challenge based on denial of opportunity.
  5. Whether the impugned proceedings required to be set aside and remitted to the competent authority for fresh reconsideration in accordance with law.

Petitioner’s Arguments

The petitioner submitted that M. Velu Arul Das had expired on 20.07.2019, whereas Respondent No. 3 initiated the proceedings thereafter and issued the impugned Show Cause Notice dated 20.04.2021, passed the impugned Order dated 29.07.2021 and subsequently issued another Show Cause Notice dated 30.07.2021.

It was contended that the proceedings were initiated against a person who had already died and that the resulting notices and order were therefore liable to be interfered with.

The petitioner further argued that:

  • She had not authorised Mr. R. Ravi Kumar, Tax Consultant, to represent her before Respondent No. 3.
  • Neither the petitioner nor her children had appeared before Respondent No. 3 prior to passing of the impugned order.
  • The adjudicating authority proceeded without providing an adequate opportunity to the legal heirs of the deceased.
  • The notices and order passed in proceedings against the deceased person were contended to be a nullity.
  • The proceedings were alleged to be violative of the principles of natural justice.

Accordingly, the petitioner sought quashing of the impugned notices and order and requested remand of the matter for fresh reconsideration after providing an opportunity to the petitioner and her children, being the legal heirs of the deceased.

Respondents’ Arguments

The respondents opposed the writ petition and reiterated the contentions raised in their statement of objections.

The respondents specifically submitted that one of the petitioner’s sons, Mr. Patrick Abhishek V.A., had authorised the Tax Consultant, Mr. R. Ravi Kumar, to appear on his behalf before the competent authority.

On this basis, the respondents contended that there was no merit in the writ petition and that the petition was liable to be dismissed.

Court’s Findings

The High Court considered the rival submissions and the material available on record.

The Court took note of the undisputed fact that M. Velu Arul Das had expired on 20.07.2019, prior to initiation of the proceedings by the respondents, including issuance of the impugned notices and passing of the impugned order.

The Court also noted the undisputed fact that one of the sons of the deceased had authorised the Tax Consultant, Mr. R. Ravi Kumar, to represent him before Respondent No. 3.

At the same time, the Court considered the petitioner’s specific assertion that she and her children would appear before Respondent No. 3 and produce pleadings, documents and other materials in support of their claim.

Having regard to these circumstances, the High Court adopted a justice-oriented approach and considered it appropriate to provide one more opportunity to the petitioner to contest the proceedings.

Accordingly, the Court held that the impugned order and notices deserved to be set aside and the matter remitted to Respondent No. 3 for fresh reconsideration in accordance with law.

Court Order

The High Court passed the following directions:

  1. The writ petition was allowed.
  2. The Show Cause Notice dated 20.04.2021 was set aside.
  3. The Order dated 29.07.2021 was set aside.
  4. The subsequent Show Cause Notice dated 30.07.2021 was set aside.
  5. The matter was remitted back to Respondent No. 3 for fresh reconsideration in accordance with law.
  6. The petitioner and her children were directed to appear before Respondent No. 3 on 17.10.2022 without awaiting any further notice.
  7. Liberty was reserved in favour of the petitioner and her children to submit pleadings, documents and other materials in support of their defence.
  8. The petitioner and her children were also permitted to take assistance of a Tax Consultant, if they so desired.
  9. All rival contentions were kept open.
  10. The Court expressly stated that no opinion was expressed on the rival contentions.

Important Clarification

The judgment should not be read as a final adjudication on the substantive merits of the underlying GST dispute.

The High Court did not finally determine all legal and factual contentions raised by the parties. Instead, considering that the concerned person had died before initiation of the proceedings and taking into account the circumstances relating to participation of the legal heirs, the Court adopted a justice-oriented approach and granted one more opportunity to contest the proceedings.

The matter was therefore remanded for fresh reconsideration in accordance with law. All rival contentions were expressly kept open, and the Court did not express any opinion on their merits.

Another important clarification is that although the petitioner contended that the notices and order against the deceased person were a nullity, the operative reasoning of the Court focused on setting aside the impugned proceedings and granting a fresh opportunity to the petitioner and her children. Accordingly, the judgment should be presented with precision and should not be overstated as laying down an unconditional proposition that every tax proceeding connected with a deceased person automatically becomes void in all circumstances.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783678220_2112compressed.pdf

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