Gujarat HC Quashes Tax Notices, Demand Order Issued Against Deceased Taxpayer

The Gujarat High Court has quashed show-cause notices and a subsequent tax demand order issued against a businessman who had died more than three years before the proceedings were initiated.

A division bench of the High Court was hearing a petition filed by the widow of the deceased businessman, who had operated a trading business and died of COVID-19 on May 3, 2021.

Tax Proceedings Began Years After Death

Following his death, the tax authorities cancelled the firm’s GST registration in July 2021.

However, in mid-2024, the Gujarat State Tax Department issued pre-show-cause intimations and notices under Section 73 of the Gujarat Goods and Services Tax (GGST) Act, 2017, proposing a tax liability of ₹28,49,906, along with interest and penalty, for the financial year 2020-21.

The notices were uploaded on the GST portal, while physical copies were reportedly affixed at the business premises.

The petitioner, a homemaker who was not involved in her late husband’s business, said she was unaware of the proceedings. The tax authority subsequently passed an ex-parte order on February 1, 2025, confirming the demand.

Court Allows Fresh Proceedings Against Legal Heir

The petitioner’s counsel argued that the notices and subsequent order could not be sustained as they had been issued against a person who was already deceased.

The Assistant Government Pleader, however, submitted that several hearing notices had been issued and posted at the business premises, but no representative appeared before the department.

The High Court noted that the department was unaware of the taxpayer’s death when it initiated the proceedings. It nevertheless quashed the show-cause notices and the demand order.

At the same time, the court granted the tax authorities liberty to initiate fresh proceedings against the legal heir in accordance with law.