ABDUL MAJEED (DECEASED) vs COMMISSIONER INLAND REVENUE (CHENAB ZONE) RTO, FAISALABAD Ss

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ABDUL MAJEED (DECEASED) VS COMMISSIONER INLAND REVENUE (CHENAB ZONE) RTO, FAISALABAD Ss. 11D & 53---Estate of deceased person---Deceased taxpayer/registered person, tax liability of---Scope---Proceedings against dead person---Propriety---Record (including death certificate of taxpayer) revealed that after more than seven months of death of taxpayer, the assessing officer initiated proceedings by issuance of a show cause notice under S. 11D of the Sales Tax Act, 1990 ('the Act'), and subsequently proceeded despite having knowledge of the death of the taxpayer and unlawfully continued the assessment proceedings without impleading the legal heirs on record and ultimately passed an ex parte assessment order almost one year after the demise of the taxpayer---Any proceedings initiated against adeceased person are a nullity in the eyes of law, as such proceedings lacked a lawful foundation from their inception, and no substitution could subsequently be made in place of a person who was already deceased at the time of initiation of the proceedings---Hence, entire proceedings carried out by the Department against the sole respondent/defendant, who had already passed away, were invalid, non existent, a nullity in the eyes of law and void ab initio, as the law does not permit the initiation or continuation of proceedings against a dead person---Provision of S. 53 of the Act clearly presupposes the existence and identification of the legal heirs or successors in whose hands the estate of the deceased vests---The statute, therefore, creates a charge upon the estate only, and not a personal liability upon the legal heirs---Consequently, unless and until the successors or legal heirs are duly impleaded and brought on record, there exists no lawful person or entity against whom any proceedings can validly be continued or any liability created---A deceased person ceases to have personality upon death ; hence any show cause notice , adjudication or recovery proceedings initiated or continued in the name of a deceased taxpayer are null and void ab initio---The expression "the hands of his successors " further manifests the same / intention---It was the bounden duty of the Department to bring on record the legal heirs of the deceased, as no proceedings of any nature, including the issuance of a show cause notice or passing of an adjudication order, can lawfully be initiated or continued against a dead person---In the present case , record even revealed that a lease agreement was executed subsequent to the demise of the taxpayer(sole proprietor) and the appellant leased out its weaving factory to another registered person (a Textile Corporation) duly incorporated in the electricity bills for tax periods in question, along with the complete installations for a period of one year, and consequently closed its own business activities (in July-2024), and no taxable supplies were made thereafter---Since no business or taxable activity was carried out by the appellant himself during the tax periods from September-2024 to December-2024 , therefore, he was not legally obligated to file sales tax returns for the said tax periods---Consequently, there was neither any evasion of tax nor any loss caused to the national exchequer, and no tax was payable under the law---At best, the Department could have lawfully proceeded to impose a penalty for the non-filing of nil sales tax returns, which constitutes a mere procedural formality, but could not have gone beyond that---In the given facts and circumstances, the question of making any assessment of minimum tax liability does not arise in the present case---Therefore Appellate Tribunal Inland Revenue set-aside the impugned show cause notice and the consequent orders passed by both the authorities below for suffering from factual and legal infirmities and same were not sustainable in the eyes of law---Appeal was allowed, in circumstances.

ABDUL MAJEED (DECEASED) vs COMMISSIONER INLAND REVENUE (CHENAB ZONE) RTO, FAISALABAD Ss — 2026 PTD 931 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

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