Assessment on Dead Person Invalid: HC Orders Fresh GST Proceedings Against Legal Heir

Late B. Kameswara Rao was a registered person under the GST Act and carried on business in the name of M/s. Aravinda Enterprises. He passed away on 21.12.2021. Thereafter, the business was discontinued on 20 February 2023, and the closure was approved by the GST authorities on 21 April 2023. Despite this, the GST department issued a show cause notice dated 16.08.2023 for the period July 2017 to March 2018 and passed an Order-in-Original dated 25.01.2024 determining tax, interest, and reverse charge liability.

Aggrieved, the son and legal heir of the deceased challenged the proceedings on the ground that the show cause notice and assessment order were issued against a deceased person and were therefore void and without jurisdiction.

Core Issue: Whether assessment proceedings and an Order-in-Original under the GST Act can validly be issued against a deceased person, and how Section 93 of the CGST Act is to be applied in such cases.

HC’s Ruling: The Hon’ble High Court held that assessment and adjudication proceedings cannot be initiated or continued against a deceased person, as such proceedings are legally unsustainable. The Court clarified that Section 93 of the CGST Act only deals with the recovery of tax dues from the legal representative or estate of the deceased and does not prescribe the manner of conducting assessment proceedings after death.

The Court ruled that the only workable course is to set aside the impugned assessment and direct the department to conduct a fresh assessment by issuing notice to the legal representative. Therefore, the Order-in-Original was set aside, with liberty to the department to initiate fresh assessment proceedings after duly involving the petitioner. The Court further clarified that any recovery, if eventually made, shall be limited strictly to the estate of the deceased and only to the extent available with the legal heir.

To Read Full Judgment, Download PDF Given Below