Karnataka High Court Quashes GST Recovery Against Company For Deceased Proprietor's Business' Dues

The Karnataka High Court has quashed GST recovery notices issued against a private limited company for dues of a proprietary concern run by a deceased proprietor.

It observed that the company was a distinct and separate entity from the proprietary concern and could not be proceeded against for its GST dues.

Justice B. M. Shyam Prasad was hearing a writ petition filed by BKR Services Private Limited along with the son and wife of late Rudraswamy B K, who died on May 25, 2023.

The dispute arose from GST proceedings relating to the proprietary concern B. K. R. Swamy Security Agencies, which had been operated by Rudraswamy B K before his death on May 25, 2023.

The first petitioner, BKR Services Private Limited, challenged recovery notices issued in Form GST DRC-13 to State Bank of India, seeking recovery of the tax dues from its bank account.

The company argued that it was a separate legal entity and had no connection with the proprietary concern of the deceased.

The Court noted that it was undisputed that BKR Services Private Limited was distinct from the proprietary concern constituted by the deceased. It therefore observed that the recovery notices could not have been issued against the company and quashed the DRC-13 notices dated July 4, 2026.

The Court also considered the challenge raised by the deceased proprietor's son and wife against the adjudication orders passed under Section 73 of the CGST/KGST Acts for the 2021-22 tax period.

The petitioners had contended that the authorities had failed to properly examine the effect of Section 93 of the CGST/KGST Acts, which deals with the liability of legal representatives in cases where a taxable person dies. They had also pointed out that two separate show cause notices had been issued for the same tax period, though concerning different issues.

The High Court found that the adjudication orders did not examine whether the proceedings could be sustained under Section 93(1)(a) or Section 93(1)(b). The Court noted that this amounted to a failure to consider material circumstances and warranted interference.

"...On the other contention on behalf of the second and third petitioners that two notices for the same tax period, though on different issues, could not have been issued, this Court must opine that this aspect must be left open to be considered with an opportunity to these petitioners to file a detailed response", the Court said.

Accordingly, the Court quashed the adjudication orders dated December 22, 2025, along with their summaries in Forms GST DRC-07, and restored the proceedings.

The son and wife of the deceased proprietor were granted an opportunity to file detailed replies to the corresponding show cause notices, with all their contentions left open for consideration by the authorities.

For Petitioner: Advocate B.G. Chidananda Urs,

For Respondent: K. Hema Kumar, AGA