HC Quashes Bank Account Attachment of Son for Father’s GST Dues; No Recovery Without Prior Adjudication Under Section 93

The petitioner, Navin Vishwanathan, carried on an independent proprietorship business under the name “M/s Oriental Facility” with a separate GST registration and distinct place of business. His father, who earlier operated a proprietorship under the same trade name, had outstanding GST dues and passed away on 11.02.2024. After his death, the department issued a demand order against the father’s concern and later attached the petitioner’s bank account under Sections 79 and 93 of the CGST Act to recover dues of over Rs. 4.15 crore, without issuing any show cause notice or determining the petitioner’s liability as a legal heir.

The petitioner challenged the attachment, contending that his business was a separate taxable entity and that coercive recovery without adjudication and hearing was illegal.

Main Issue: Whether the department can recover GST dues of a deceased person from his legal heir by attaching the heir’s bank account without prior adjudication under Section 93 and without issuing a show cause notice.

HC Held: The High Court allowed the writ petition and quashed the bank account attachment. It held that recovery under Section 79 presupposes an established liability, which was absent in the present case. The Court emphasized that liability under Section 93 wherein the legal heir/successor liability has been provided must first be determined through due process, including issuance of notice and opportunity of hearing.

The Court found that both the petitioner and his deceased father were separate taxable persons with distinct GST registrations and places of business. Mere similarity in trade name could not justify automatic recovery. The department’s action of directly freezing the petitioner’s bank account without adjudicating whether he had continued the business of the deceased amounted to a jurisdictional error.

It was also held that such coercive action violates principles of natural justice and the constitutional protection of property under Article 300A. The Court clarified that while the department is free to initiate appropriate proceedings under law, recovery cannot be enforced without first determining liability in accordance with Section 93.

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