SHAHEDABEGUM IRSHADAHMED CHAUDHARY, LH OF DECEASED IRSHADAHMED CHAUDHARY V. STATE OF GUJARAT & ANR
High Court of Gujarat 2026 ( At Ahmedabad )| R/Special Application No. 10294 of 2026| Decided on 28/07/2026.
Background
The case arose from proceedings initiated under the Gujarat Goods and Services Tax Act, 2017 (GGST Act) against Late Shri Irshadahmed Chaudhary, the sole proprietor of Ideal Steel Corporation, a registered GST dealer engaged in the business of trading metal scrap. Shri Chaudhary passed away on 29 July 2020 after a prolonged illness. Subsequently, on 3 March 2021, the GST registration of the proprietorship concern was cancelled by the tax authorities on account of non-filing of returns for six consecutive months, and at the time of cancellation no tax demand was determined. Since the business had ceased upon the death of the proprietor and the petitioner, who was his wife and a housewife, had neither continued the business nor possessed access to its records, she remained unaware of any subsequent proceedings. Despite the proprietor’s death, the department issued a pre-show cause intimation under Section 74(5) of the GGST Act on 24 June 2025, followed by a show cause notice under Section 74(1) in Form DRC-01 on 26 June 2025 proposing a tax liability of ₹21,49,414 along with interest and penalty for the financial year 2018–19. Thereafter, an adjudication order in Form DRC-07 dated 4 December 2025 confirmed the proposed demand in the absence of any reply. The petitioner became aware of these proceedings only in May 2026 when contacted by a departmental officer, after which she submitted the death certificate and an affidavit informing the authorities of her husband’s death and challenged the notice and order before the High Court.
Issue
The principal issue before the High Court was whether a show cause notice issued under Section 74(1) of the GGST Act and the consequential adjudication order passed under Section 74(9) against a deceased sole proprietor were legally sustainable. The Court was required to determine whether proceedings initiated against a person who had died prior to the issuance of the notice were valid in law, particularly when the legal heir had neither continued the business nor been made a party to the proceedings. The Court also considered whether such proceedings were without jurisdiction and liable to be declared a nullity.
Court Decision
The High Court held that the impugned show cause notice dated 26 June 2025 and the adjudication order dated 4 December 2025 were issued in the name of a person who had died nearly five years earlier, a fact that was not disputed by the State. The Court observed that proceedings under Section 74 of the GGST Act can be initiated only against the “person chargeable with tax,” and a deceased individual cannot be treated as such. Consequently, the notice and the order were held to be without jurisdiction and a nullity in the eyes of law. The Court therefore quashed and set aside both the impugned notice and the adjudication order. However, it clarified that its decision would not prevent the tax authorities from initiating fresh proceedings, if otherwise permissible under law, against the petitioner or any other person legally liable for the outstanding tax demand. Accordingly, the writ petition was allowed.
(Above brief of the judgement prepared by Ms. Aashi Singh, Advocate, Dated: 08 Aug 2026)