The petitioner, being the son and legal heir of a deceased registered person under the GST regime, challenged an assessment order whereby tax, interest and penalty liabilities pertaining to his late father were sought to be fastened upon him. The assessment proceedings were initiated after the death of the original registered person, and the impugned order was passed treating the petitioner as the legal heir. It was contended that assessment proceedings cannot be validly initiated or continued against a deceased person, and that such proceedings, if at all permissible, must necessarily involve either the person continuing the business of the deceased or, where the business has been discontinued, the legal representative holding the estate of the deceased. The petitioner therefore assailed the validity of the assessment proceedings on the ground that they were contrary to settled legal principles and the scheme of Section 93 of the CGST Act, 2017.
The petitioner, being the son and legal heir of a deceased registered person under the GST regime, challenged an assessment order whereby tax, interest and penalty liabilities pertaining to his late father were sought to be fastened upon him. The assessment proceedings were initiated after the death of the original registered person, and the impugned order was passed treating the petitioner as the legal heir.
It was contended that assessment proceedings cannot be validly initiated or continued against a deceased person, and that such proceedings, if at all permissible, must necessarily involve either the person continuing the business of the deceased or, where the business has been discontinued, the legal representative holding the estate of the deceased. The petitioner therefore assailed the validity of the assessment proceedings on the ground that they were contrary to settled legal principles and the scheme of Section 93 of the CGST Act, 2017.
Issue: Whether assessment proceedings under the GST Act can be validly carried out against a deceased registered person without involving the legal representative. What is the scope and effect of Section 93 of the CGST Act in relation to assessment and recovery of tax dues of a deceased person.
Held that:
The Court examined Section 93(1) of the CGST Act and held that the said provision does not prescribe the manner of assessment proceedings in respect of a deceased person. Section 93 merely provides for the mode of recovery of tax, interest or penalty due from a deceased person, either from the business if it is continued by the legal representative or from the estate of the deceased if the business is discontinued. The Court reiterated the settled principle that assessment and adjudicatory proceedings cannot be validly initiated or continued against a deceased person, as such proceedings can only be undertaken against a living person. However, at the same time, Section 93 makes it clear that statutory dues of a deceased registrant do not abate, but can be recovered in the manner prescribed therein.
In the absence of a specific statutory provision governing assessment after the death of a registered person, the Court held that the only practicable and legally sustainable course is to conduct assessment proceedings by involving the legal representative, particularly where the business has been discontinued and recovery is intended to be made from the estate of the deceased.
Accordingly, the Court set aside the impugned assessment order dated 25.01.2024 and directed the respondent authorities to carry out a fresh assessment after issuing notice to and involving the petitioner, who is the legal representative of the deceased. The Court clarified that any recovery pursuant to such assessment shall be limited only to the estate of the deceased, and the petitioner shall not be personally liable beyond the extent of the estate inherited by him.