GST Dues of Deceased Not Recoverable from Legal Heir Without Evidence of Business Continuation: Jharkhand HC [Read Order]

The Jharkhand High Court ruled that GST dues of a deceased person cannot be recovered from a legal heir unless there is concrete evidence showing continuation of the business by the heir after the death of the original proprietor.

Rishi Shangari, the petitioner, is the son of Late Navtej Kumar Shangari, who was the proprietor of N. Kumar and Company and had obtained GST registration effective from July 1, 2017. Navtej Kumar Shangari passed away on February 13, 2018. After his father's death, the petitioner applied for a fresh GST registration and was issued a new certificate on March 24, 2018 in the same trade name.

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Despite this, the tax authorities passed orders on December 20, 2022 under GST Form DRC-07 for the tax periods April 2018 to March 2019 and April 2019 to March 2020, naming the deceased Navtej Kumar Shangari as the liable person. A summons under Section 70 of the CGST Act was also issued to the deceased on July 18, 2022 regarding alleged non-payment of GST.

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The petitioner’s counsel responded by submitting his father's death certificate and arguing that proceedings cannot be initiated against a deceased person. They also requested that the liability be waived. On November 28, 2022, the Assistant Commissioner of CGST passed an order relying on Section 93(1)(a) of the CGST Act, 2017, holding the petitioner liable for his late father’s tax dues, interest, and penalty, on the ground that he had continued the business.

The petitioner challenged the order before the High Court. The petitioner’s counsel argued that there was no evidence to show that the petitioner had continued his father’s business under the same registration. The petitioner had in fact obtained a new registration in his own name and operated independently.

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The revenue counsel argued that under Section 93(1)(a), legal heirs are liable if they continue the business of the deceased but revenue failed to produce any material evidence showing such continuation by the petitioner under the same GST registration.

The division bench comprising Chief Justice M.S. Ramachandra Rao and Justice Rajesh Shankar observed that no proceedings could be initiated against a deceased person and held that there was no basis to impose liability on the petitioner without proving that he had continued his father's business under the same registration.

The court ruled that the Assistant Commissioner of CGST order was perverse, unsupported by evidence, hence unsustainable. The writ petition was allowed and the impugned order was set aside.

To Read the full text of the Order CLICK HERE

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