The Patna High Court held tax assessment against a deceased person invalid, annulling the demand. It directed the Commercial Taxes Officer to initiate fresh proceedings against the legal heir in accordance with law, ensuring compliance with proper legal procedure.
BIHAR: The Patna High Court reviewed a tax assessment issued in the name of a trader who had already died and held that no assessment can be validly made against a deceased person. The court annulled the assessment and the related tax demand, and remitted the matter to the Commercial Taxes Officer to proceed anew against the legal heir in accordance with law.
Background of the Case
The dispute arose under the Bihar Value Added Tax Act, 2005, involving the proprietary concern M/s Ganesh Traders, Munger. The business was registered under the Act on an application by the original proprietor, the husband of the present petitioner, and a registration certificate in his name (TIN 10560654035) was issued on 26.02.2005.
The proprietor, Kedar Prasad Keshri, died on 06.10.2017. Despite his death, the tax department issued a notice dated 04.12.2017 initiating assessment proceedings, and a Section 31 assessment order was passed on 30.03.2018 by the Commercial Taxes Officer, Munger Circle. A demand notice dated 22.12.2018 followed. The authority’s own record (annexed to the petition) recorded that the proprietor had died on 06.10.2017 and that the assessment proceeded ex parte.
Aggrieved by the ex parte assessment and the demand issued in her deceased husband’s name, the widow and current proprietor challenged the action before the Patna High Court by filing a writ petition.
Proceedings and submissions
The Bench of Hon’ble Mr. Justice Jyoti Saran and Hon’ble Mr. Justice Arvind Srivastava heard Mr. Jyoti Ranjan Jha for the petitioner and Mr. Vikash Kumar, Standing Counsel 11, for the State. The court limited its review to the preliminary legal question whether an assessment order can lawfully be made against a proprietor who had died before issuance of the show-cause notice and before the assessment.
Petitioner’s points:
- The registration under Section 19 was in the name of the husband (TIN noted above).
- The notice initiating assessment (Annexure 2) was issued on 04.12.2017, after the proprietor’s death on 06.10.2017.
- Despite record evidence of the proprietor’s death, the authority passed an ex parte assessment order dated 30.03.2018 and later issued the demand notice dated 22.12.2018.
State’s stance:
- Reliance was placed on Section 64(2) of the Act: the petitioner should have informed the Commercial Taxes Department of the proprietor’s death and updated the registration.
- Once returns are filed, certain tax liabilities are admitted and may be revised on assessment; if the assessee dies meanwhile, the legal representatives/heirs are liable under the statute.
- Section 64(2) empowers authorities to proceed against the legal representative or heir to recover dues.
- The State did not dispute, however, the legal principle that an assessment cannot be made against a deceased person.
Court’s Reasoning and Conclusions
ISSUES:
- Can an assessment order and demand notice under the Bihar Value Added Tax Act, 2005 be validly passed in the name of a proprietor who died before issuance of notice and completion of assessment?
- Does the legal heir’s failure to notify the department about the proprietor’s death validate an assessment issued against the deceased?
The court recorded two central conclusions:
First, the statutory framework (notably Section 64) empowers the assessing authority to proceed against the legal representative or heir of a deceased assessee. The statute therefore provides a remedy and does not leave the department remediless when an assessee has died; it only requires authorities to act against the proper person.
The Patna High Court held that no assessment can be passed against a deceased proprietor; such an order is void and must be quashed. The assessing authority may, however, proceed afresh against the legal representative or heir under Section 64.
Second, on the undisputed facts, the impugned assessment and show-cause notice were issued after the proprietor’s death. The court considered whether the widow’s omission to notify the department could validate the assessment. While accepting there may have been some delay or default on her part, the court held that such a lapse cannot cure the fundamental legal defect: an order issued against a person who is no longer alive cannot be rendered valid by the heir’s inaction.
The court held that any failure by the legal heir to inform the department does not cure the defect of issuing an order against a dead person, nor does it confer legal validity on such an order.
Accordingly, the court found the assessment order dated 30.03.2018 and the demand notice dated 22.12.2018 to be legally unsustainable.
Directions
The Patna High Court quashed Annexures 3 and 4 (the assessment order and the demand notice) and remitted the matter to the Commercial Taxes Officer, Munger Circle, for fresh proceedings in strict conformity with Section 64 of the Bihar VAT Act.
The court directed the petitioner to appear personally or through a representative on or before 06.05.2019 at 11:00 a.m., whereupon the authority was to decide the matter in accordance with law and the guidance set out in the judgment.
Case Title: M/s Ganesh Traders, Munger v. The State of Bihar & Ors. Civil Writ Jurisdiction Case No. 5492 of 2019
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