Section 93 of GST Act Covers Liability of Legal Heirs, But Determination against Dead Person Invalid: Allahabad HC [Read Order]

The Allahabad High Court has once again clarified the scope of Section 93 of the Goods and Services Tax Act, 2017, ruling that tax liability cannot be determined in the name of a deceased proprietor and that legal heirs can only be fastened with liability after proper notice and opportunity of hearing.

According to the case, multiple GST demands were raised in the name of late Pushpa Gupta, proprietor of M/s M.G. Sarees, for the financial years 2017-18 to 2020-21. The firm’s GST registration had already been cancelled following her death in June 2021, yet the department continued to issue show cause notices on the GST portal in her name. As these went unanswered, demand orders were passed totaling nearly ₹68 lakh across four years.

Mudit Gupta, son and legal heir of Pushpa Gupta, challenged the proceedings, arguing that once the department was aware of the proprietor’s death and registration cancellation, it had no jurisdiction to issue notices against the deceased. He contended that such orders were void ab initio.

The State defended the action relying on Section 93 of the GST Act, which makes legal heirs liable to pay tax dues of a deceased person, either by continuing the business or out of the estate of the deceased.

The Bench of Justice Shekhar B. Saraf and Justice Praveen Kumar Giri held that while Section 93 indeed contemplates recovery from legal heirs, it does not authorize the determination of tax against a dead person.

According to the court “Once the provision deals with the liability of a legal representative on account of death of the proprietor of the firm, it is sine qua non that the legal representative is issued a show cause notice and after seeking response from the legal representative, the determination should take place.”

For liability to be enforceable, the legal heir must first be issued a show cause notice and given an opportunity to contest the demand. Determination directly against a deceased individual, the Court held, is unsustainable in law.

Accordingly, the High Court quashed all four demand orders issued posthumously and left it open to the department to initiate fresh proceedings in accordance with law by addressing the legal representative.

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