Authority: High Court of Chhattisgarh at Bilaspur

Order Date: 24 July 2026

Case Overview

  • Petitioner: Smt. Devan Anisha, widow of the late Mahendran Rupesh Naidu, residing at Flat No. 103, 1st Floor, Deep Apartment, Pragati Nagar, Bhilai, Durg, Chhattisgarh.
  • Respondents: (1) Union of India through the Secretary, Ministry of Finance, Department of Revenue; (2) Commissioner (Appeals), CGST, Customs & Central Excise, Central GST Building, Raipur; (3) Assistant Commissioner, CGST & Central Excise, Division‑I, Bhilai; (4) Indian Overseas Bank, Bhilai Branch.
  • Nature of Proceedings: Petition under WPT No. 67 of 2025 seeking quash of a garnishee notice issued under Section 87(b) of the Finance Act 1994 and Section 142 of the CGST Act 2017, and direction to desist from recovering tax dues from the legal heirs of the deceased proprietor.
  • Background:
  • Mahendran Rupesh Naidu was the sole proprietor of M/s Mahendran Rupesh Naidu, engaged in subcontracting services during FY 2013‑14.
  • A show‑cause notice dated 12 Oct 2018 alleged non‑payment of service tax of Rs 10,74,919 on receipts of Rs 86,96,757.
  • The Adjudicating Authority confirmed the demand and, by order dated 30 Jun 2020, imposed additional penalties and late fees equal to the tax amount.
  • An appeal against this order was filed but dismissed on 03 Feb 2023.
  • The proprietor, Mahendran Rupesh Naidu, died on 03 May 2023.
  • Post‑death, a garnishee notice was issued on 13 Dec 2024 against his legal representatives.
  • Arguments:
  • Petitioner: The demand cannot be raised against legal heirs of a deceased proprietor, citing Supreme Court judgment in Shabina Abraham v. Collector of Central Excise and Customs (2017 (50) S.T.R. 241 (S.C.)). Requested quash of the notice and cessation of recovery.
  • Respondents (2 & 3): Assert that the original demand was issued before the death and the appellate order was passed prior to death; therefore, the revenue authorities retain the right to recover the assessed amount from the legal representatives.

Court Reasoning

  • The Court noted that the proprietorship firm continued to be liable for the tax demand of Rs 10,74,919 (plus equal penalty) despite the proprietor’s death.
  • It observed that the garnishee notice dated 13 Dec 2024 was issued after the death of Mahendran Rupesh Naidu.
  • The Court relied on the Supreme Court’s Shabina Abraham decision, particularly Para‑19, which held that Section 11 of the Central Excise Act (pari materia to Finance Act 1994) does not provide a machinery for recovery against a dead person’s legal heirs; consequently, such proceedings are illegal.
  • The Court concluded that the revenue authorities lack statutory power to attach or recover tax dues from the estate of a deceased proprietor.

Final Outcome

  • The garnishee notice dated 13 Dec 2024 is quashed.
  • The petition is allowed.
  • Revenue authorities are directed to desist from making any further recoveries of dues from the legal heirs of the deceased proprietor.

Topics: Tax Recovery, Legal Precedent