Facts of the Case

The petitioner, A.H. Marble Crafts, approached the Rajasthan High Court challenging the inaction of the GST Network in activating the common GST portal to enable the petitioner to discharge the tax liability under Section 93 of the CGST Act, 2017.

The original proprietor of the firm, Shri Abdul Hameed Bhati, passed away on 31.01.2018. Following his death, the legal heir informed the GST Department through a written communication. However, the information regarding the death was not uploaded electronically through FORM GST REG-16 as prescribed under the GST law.

As a result, the GST registration of the deceased proprietor could not be cancelled through the prescribed procedure, the GSTINs of the transferor and transferee were not linked, and the petitioner was prevented from filing pending GST returns. Subsequently, the petitioner obtained a fresh GST registration but continued to face difficulties due to the non-linking of GST registrations.

Aggrieved by the refusal to activate the portal and facilitate the statutory process, the petitioner filed the writ petition before the Rajasthan High Court.

 

Issues Involved

  1. Whether the GST authorities were justified in refusing to activate the GST portal merely because the application for cancellation was not submitted electronically in FORM GST REG-16.
  2. Whether the petitioner could be denied the opportunity to discharge tax liabilities due to a procedural lapse despite having informed the department regarding the death of the sole proprietor.
  3. Whether the GST authorities should permit linking of the GSTIN of the deceased proprietor with that of the legal heir in accordance with Clause 3(b) of CBIC Circular No. 96/15/2019-GST.

 

Petitioner's Arguments

The petitioner submitted that the death of the sole proprietor had already been communicated to the GST Department, though the information was furnished in an incorrect format instead of FORM GST REG-16.

It was argued that the respondents adopted an excessively technical approach by refusing to process the request solely because the prescribed electronic form had not been used.

The petitioner relied upon Clause 3(b) of CBIC Circular No. 96/15/2019-GST dated 28.03.2019, which specifically permits legal heirs of a deceased sole proprietor to apply for cancellation of registration through FORM GST REG-16 and enables linking of the GSTIN of the transferor with that of the transferee.

The petitioner contended that the authorities should be directed to activate the GST portal so that FORM GST REG-16 could be filed electronically and the statutory process could be completed, thereby facilitating clearance of tax liabilities.

 

Respondent's Arguments

The respondents contended that the petitioner's application for cancellation had been submitted in FORM GST REG-29 instead of the prescribed FORM GST REG-16.

According to the respondents, since the prescribed procedure was not followed electronically, the GST system could not link the GSTIN of the deceased proprietor with the GSTIN obtained by the petitioner after transfer of the business.

However, during the hearing, the respondents were unable to dispute that the only obstacle in linking the GST registrations was the failure to submit the information electronically through FORM GST REG-16.

 

Court Order / Findings

The Rajasthan High Court observed that the respondents had adopted an excessively hypertechnical approach in denying relief to the petitioner.

The Court held that the petitioner had already informed the department regarding the death of the original proprietor, thereby demonstrating bona fide intention to regularize the registration and discharge pending tax liabilities.

The Court ruled that a purely procedural lapse should not deprive the petitioner of the opportunity to comply with statutory requirements.

Accordingly, the Court directed the respondents to activate the GST common portal within 30 days to enable the petitioner to upload the required information through FORM GST REG-16.

The Court further directed that after submission of the prescribed information, the GSTIN of the transferor and the GSTIN of the transferee shall be linked in accordance with Clause 3(b) of CBIC Circular No. 96/15/2019-GST.

The writ petition was allowed. No order as to costs.

 

Important Clarification

  • Legal heirs of a deceased sole proprietor are entitled to seek cancellation of GST registration through FORM GST REG-16.
  • Mere procedural or technical defects should not prevent compliance with statutory obligations when the intention to comply is evident.
  • GST authorities should not deny relief solely because an incorrect form was initially used if substantive compliance has been established.
  • Linking of GSTINs after transfer of business due to death should be facilitated in accordance with CBIC Circular No. 96/15/2019-GST.
  • Courts may intervene where technical procedural objections defeat the substantive rights of taxpayers.

Sections Involved

  • Section 29 of the Central Goods and Services Tax Act, 2017
  • Section 93 of the Central Goods and Services Tax Act, 2017
  • FORM GST REG-16
  • CBIC Circular No. 96/15/2019-GST dated 28.03.2019 (Clause 3(b))

 

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1784616529_1620compressed.pdf

 

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