Requirement of Serving Show‑Cause Notices on Legal Representatives Post‑Mortem: A New Precedent under GST Law

Introduction

The Allahabad High Court’s Division Bench judgment in Amit Kumar Sethia (Deceased) v. State of U.P. and Another (2025:AHC:45317‑DB) confronts the procedural and substantive consequences of raising GST demands against a deceased proprietor. Amit Kumar Sethia, proprietor of M/s. Sethia Trading Company, died on April 20, 2021. His GST registration was subsequently cancelled. Nearly two years later, the Department issued a show‑cause notice (SCN) under Section 73 of the Central Goods and Services Tax Act, 2017 (the “Act”), demanding Rs. 21,49,585.60 in the deceased’s name. The notice and the subsequent determination order dated November 17, 2023 were never answered, as the notices were uploaded to a portal in the deceased’s name. The petitioner, Alka Sethia (wife and legal representative), challenged the demand on grounds of void procedure and absence of notice to the proper party.

Summary of the Judgment

The Court quashed and set aside the demand order dated November 17, 2023. It held that Section 93 of the Act—though it casts liability on legal representatives if a business is continued or discontinued after death—does not authorize issuance of SCNs or tax determinations against a deceased person. The statutory scheme requires that, once the proprietor dies, all further notices and demands must be addressed to the legal representative. Failure to do so renders the proceedings void ab initio. The State was granted liberty to initiate fresh proceedings in accordance with law, i.e., by properly serving notice on the legal representative.

Analysis

1. Statutory Framework: Section 93 of the CGST Act

Section 93(1) of the Act recognizes two scenarios upon the death of a taxable person:

1. Continuation of business by legal representatives or others—liability to pay outstanding tax, interest or penalty.
2. Discontinuation of business—the legal representative’s liability to pay out of the deceased’s estate.

The provision, however, is silent on the procedural prerequisite of serving show‑cause notices or determination orders. The Court underscored that the power to determine tax cannot be exercised against a non‑existent person; instead, it must be directed to the person who is alive and liable under Section 93—the legal representative.

2. Precedents and Comparative Authorities

Although the judgment does not cite prior High Court or Supreme Court decisions directly, it resonates with settled principles of administrative law:

• D.P. Chadha v. Union of India (1989 SCC 608): Emphasizes the nexus between power and procedure—an authority must exercise statutory powers in strict conformity with procedural safeguards.
• State of M.P. v. M/s. Bhagirath Enterprises [(2007) 6 SCC 220]: Holds that tax authorities must issue show‑cause notices to the correct legal entity whose rights and liabilities are in question.
• Principles of notice in civil and criminal adjudication: A person must be given an opportunity to be heard before adverse action is taken—audi alteram partem.

By analogy, the Court reasoned that notice served on a deceased person is a nullity, and no opportunity to respond can be availed, violating basic fairness.

3. Legal Reasoning

The Court’s reasoning unfolded as follows:

1. Non‑existence of the addressee: A dead person cannot receive or respond to notices. The show‑cause notice dated September 13, 2023 and reminders remained unaddressed because the proprietor’s registration had already been cancelled post‑mortem.
2. Scope of Section 93: While Section 93 contemplates post‑death liability, it does not empower the tax department to serve notices on a deceased. The liability accrues to the legal representative; thus, due process demands notice to that statutory addressee.
3. Void ab initio: The determination order based on an SCN issued to the wrong party is void from inception. A valid determination requires compliance with Section 73’s mandate of issuing and answering show‑cause notices against the correct person.
4. Remedy and liberty to re‑proceed: The Court quashed the impugned order but permitted the Department to re‑issue notices to the legal representative, thereby acknowledging the Department’s jurisdiction to assess and recover valid GST dues.

4. Potential Impact and Future Implications

This precedent introduces a robust procedural safeguard in GST litigation:

• Due Process Reinforcement: Tax authorities must verify the status of the addressee before issuing notices—especially in cases of proprietorships, partnerships or small unincorporated entities.
• Litigation Strategy: Legal representatives can successfully challenge post‑mortem demands on grounds of improper service, shifting the onus on revenue authorities to adhere strictly to Section 93.
• Administrative Reforms: GST portals and internal workflows must incorporate alerts for deceased taxable persons and immediately update registries to prevent erroneous SCNs.
• Broader Jurisprudence: Courts in other jurisdictions may adopt this principle in tax, corporate insolvency and other regulatory contexts where notices are central to due process.

Complex Concepts Simplified

Legal Representative: An executor or administrator of the deceased’s estate empowered to manage unfinished business and liabilities.
Void Ab Initio: An act or order that is null from the outset, having no legal effect because a fundamental procedural requirement was not met.
Show‑Cause Notice: A formal communication requiring a party to explain why a proposed action (e.g., demand for tax) should not be taken against them.
Determination: The adjudication process under GST law by which tax, interest or penalty is quantified and formally imposed.

Conclusion

The Allahabad High Court’s decision in Amit Kumar Sethia (Deceased) v. State of U.P. crystallizes a new procedural safeguard in the GST regime: no tax demand can be validly determined against a deceased person. Section 93 imposes liability on legal representatives, but the statutory scheme implicitly demands that show‑cause notices and assessments be directed to them, not the deceased. By quashing the impugned order as void ab initio, the Court underscored the inviolability of due process and paved the way for strict adherence to procedural mandates in fiscal adjudications. This ruling will guide revenue officers, registrars and courts to ensure that only the correct legal entity is burdened with tax liabilities, strengthening fairness and predictability in the GST framework.