The Hon’ble Jharkhand High Court in Rishi Shangari v. Union of India [W.P.(T) No. 523 of 2023 dated April 15, 2025] set aside the order stating that in absence of any material referred to by department as to on what basis it was held that the Assessee was continuing business in name of his father’s proprietary concern after his father’s death in spite of the Assessee obtaining a fresh registration in his own name.
Facts:
Mr. Rishi Shangari (“the Petitioner”) father, Mr. Navtej Kumar Shangari was registered under the Central Goods and Services Tax Act, 2017 (“the CGST Act”) on July 17, 2018 under the trade name M/s. N. Kumar and Company with effect from July 01, 2017.
Unfortunately, Mr. Navtej Kumar died on February 13, 2018. Thereafter, the Petitioner applied for a fresh GST registration and another certificate of registration on March 24, 2018 in the same proprietary concern’s name. An order was passed on December 20, 2022 vide FORM GST DRC-07 for tax period April 2018 to March 2020.
The registration in favour of proprietary concern of the father was cancelled on January 10, 2020.
A summons July 18, 2022 was issued under Section 70 of the CGST Act to the deceased father of the Petitioner, regarding non-payment of GST. The Petitioner filed a reply stating that his father died on February 13, 2018 and even enclosed the copy of the death certificate. He also pointed out that there cannot be any proceeding initiated against a dead person after his death and requested to waive the liability.
Subsequently, an Order dated November 28, 2022 (“the Impugned Order”), was passed the proprietary concern of the Petitioner’s deceased father quoting Section 93(1)(a) of the CGST Act, holding that if the business is carried on by a person’s legal representative after his death, the legal representative would be liable to pay tax, interest or penalty. The Impugned Order did not provide details of any material evidence to show as to how the Petitioner was said to be continuing business of the father’s proprietary concern having himself obtained a fresh registration on March 24, 2018. The Impugned Order also stated that Petitioner is liable to pay entire GST along with applicable interest and penalty of his late father’s firm.
Hence, aggrieved by the Impugned Order, the Petitioner filed the present writ petition.
Issue:
Whether a legal heir with fresh GST registration can be held liable for the deceased’s tax dues without proof of business continuity?
Held:
The Hon’ble Jharkhand High Court in W.P.(T) No. 523 of 2023 held as under:
- Noted that, there was no material on record to justify the finding that the Petitioner was continuing the business of his deceased father’s proprietary concern after his death, in spite of the fact that the Petitioner had obtained a fresh GST registration in his own name on March 24, 2018. Hence, the Impugned Order was perverse and without any legal basis.
Our Comments:
Section 93 of the CGST Act prescribes “Special provisions regarding liability to pay tax, interest or penalty in certain cases”. Further, Section 93(1)(a) of the CGST Act prescribes that in the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (“IBC”), where a person, liable to pay tax, interest or penalty under the CGST Act, dies, then, if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due from such person under the CGST Act.
In a pari materia case of Unnikrishnan R & Ors v. Union of India [W. P. (MD) No. 12464 of 2024 And W. M. P. (MD) Nos. 11068, 11073 & 11079 of 2024 dated June 12, 2024], the Hon’ble Madras High Court held that any order passed against a deceased person is non-est in law. If the petitioner is carrying on the business of the deceased person, then, the remedy is available to the Department to proceed against the petitioner under Section 93 of the Tamil Nadu Goods and Services Tax Act, 2017 (“the TNGST Act”). It appears to be that the petitioner is not carrying on the business of the deceased person.
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