The Allahabad High Court in the case Mrs Lalitha Subramanian v. Union Of India And 3 Others observed and has held that the Goods and Service Tax Department is being required to serve notice upon the legal representative of a deceased before proceeding against the deceased as stated under the Central Goods and Service Tax Act, 2017.
In the present case, the petitioner husband being the sole proprietor of the firm who was engaged in providing services as a consultant. The court issued the show cause notice in the name of petitioner’s husband imposing liability for an amount of Rs.8,97,716/- under the proviso to Section 73(1) of the Finance Act, 1994 reading with section 142, section 173, section 174 of the CGST Act towards Service Tax for the Financial Year 2014-15 along with equivalent penalty and interest thereon.
Therefore, the penalty order was being passed where further penalty for an amount of Rs.10,000/- was imposed under Section 71(1)(c) of the Finance Act, 1994 read with Sections 142, 173, 174 of the CGST Act.
The counsel appearing for the petitioner argued before the court that the factum of the death of her husband was communicated to the Department. Thus, the Department continued to proceed in his name.
It was also argued before the court that the show cause notice and consequential order were never served upon the petitioner and the said proceedings were challenged on grounds that the show cause notice for Financial Year 2014-15 was issued after a period of five years from the relevant date. Accordingly, the proceedings were patently illegal and liable to be set aside.
The counsel appearing for the department argued before the court that the order had been issued in the name of the firm.
Further, ti was also admitted that not notice was served upon the petitioner regarding the proceedings initiated against the firm despite knowledge of the fact that the sole proprietor had passed away.
The bench comprising of Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastava in the case observed and has stated that the factum of death of the sole proprietor of the firm was mentioned in the penalty order.
Further, it has been observed by the court that in the order records that opportunity of personal hearing has been given but neither any authorized representative appeared nor any communication was received from the party even though the communication was made by the department on registered address and registered e-mail.
The court while considering the facts and circumstances of the case stated that the GST Department is required to serve notice upon the petitioner who is the legal representative of the deceased before proceeding in the matter.
The court stated that there was no record that notice was served upon the legal representative of the deceased assessee.
Further, the court directed Assistant Commissioner, Central Goods and Service Tax, Division-I, Noida to take a fresh decision after giving the petitioner an opportunity of hearing. Accordingly, the court set aside the penalty order only.