Assessment Proceedings Against a Deceased Person under GST – Scope of Section 93 of the CGST Act, 2017

• A Critical Analysis of the Andhra Pradesh High Court ruling in Baratam Satish v. Joint Commissioner of Central Tax

1. Introduction

The issue of validity of tax proceedings initiated or continued against a deceased assessee has been a recurring subject of litigation under direct tax laws and, increasingly, under the Goods and Services Tax regime. While the Income-tax Act, 1961 contains an express provision governing such situations in the form of Section 159, the Income-tax Act, 1961 provides only a limited framework under Section 93, primarily dealing with liability and recovery.

The Andhra Pradesh High Court, in Baratam Satish Versus The Joint Commissioner of Central Tax, Vizianagaram, The Superintendent of Central Tax, Srikakulam, The Principal Chief Commissioner of Central Tax, Visakhapatnam, The Principal Chief Commissioner of Central Tax, Visakhapatnam, The Union of India - 2026 (1) TMI 50 - ANDHRA PRADESH HIGH COURT , has examined whether assessment proceedings under GST can be sustained when initiated and concluded in the name of a deceased registered person, and if not, the correct legal course available to the department.

2. Facts of the Case

• The deceased, Late B. Kameswara Rao, was a registered proprietor under GST.
• He expired on 21 December 2021.
• The proprietary business was subsequently discontinued and GST registration was cancelled.
• A show cause notice dated 16 August 2023 and an assessment order dated 25 January 2024 were issued for FY 2017–18 in the name of the deceased person.
• The son and legal heir challenged the assessment order under Article 226 of the Constitution, contending violation of Section 93 of the CGST Act and principles of natural justice.

3. Statutory Framework

3.1 Section 93, CGST Act, 2017

Section 93 provides for liability to pay tax, interest or penalty in case of death of a taxable person, and distinguishes between:

• Continuation of businessafter death – liability shifts to the legal representative or the person continuing the business; and

• Discontinuance of business – recovery to be made from the estate of the deceased, limited to the extent the estate can meet the charge.

Notably, Section 93 expressly permits determination of tax even after the death of the taxable person, but it does not prescribe the procedure for assessment or issuance of notice.

3.2 Section 159, Income-tax Act, 1961

Section 159 of the Income-tax Act explicitly provides that where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay, and proceedings may be taken against the legal representative “in the like manner and to the same extent”.

This express machinery provision has no equivalent in the GST law, which has led to interpretational challenges and judicial intervention.

4. Decision of the Andhra Pradesh High Court

The High Court held:

1. Assessment proceedings cannot be initiated or continued against a dead person, as such proceedings are a legal nullity.
2. Section 93 of the CGST Act is a recovery provision, not a procedural provision governing assessment.
3. In the absence of a specific statutory mechanism, the only practicable and legally sustainable method is to carry out assessment proceedings by issuing notice to and involving the legal representative.
4. The impugned assessment order was set aside, with liberty to the department to initiate fresh assessment proceedings against the legal heir.
5. Any recovery, if ultimately made, shall be restricted to the estate of the deceased, and not extend to the personal assets of the legal heir.

5. Analysis of the Ruling

5.1 Validity of Assessment Against a Deceased Person

The Court reaffirmed the settled principle that jurisdictional proceedings against a non-existent person are void ab initio. An assessment order passed against a deceased assessee is unenforceable, irrespective of the merits of the demand.

This principle has been consistently upheld across tax statutes, including GST.

5.2 Interpretation of Section 93

The High Court correctly distinguished between:

• Existence of liability (which survives death), and
• Procedure for crystallisation of liability (which must comply with principles of natural justice).

By holding that Section 93 does not dispense with the requirement of notice and hearing to the legal representative, the Court avoided an interpretation that would render procedural safeguards redundant.

5.3 Judicial Gap-Filling under GST

Unlike the Income-tax Act, the GST law lacks an express procedural provision for substitution of legal representatives. The Andhra Pradesh High Court adopted a purposive interpretation, enabling the department to protect revenue interests while ensuring procedural fairness.

This approach balances administrative feasibility with constitutional safeguards.

6. Judicial Precedents

In Alamelu Veerappan v. ITO, the Madras High Court held that:

• There is no statutory obligation on legal heirs to inform the department of the death of an assessee.
• Notice issued in the name of a deceased person is invalid.
• Even where Section 159 of the Income-tax Act, 1961 applies, proper notice to the legal representative is mandatory.

The Andhra Pradesh High Court’s reasoning under GST aligns closely with this principle, despite the absence of an equivalent to Section 159 in the CGST Act.

7. Consequences of the Ruling

For Tax Administration

• Mandatory verification of status of taxable person before issuance of SCN or order.
• Necessity to identify and implead legal representatives in assessment proceedings.
• Recovery confined strictly to the estate of the deceased.

For Legal Heirs

• No personal liability beyond the inherited estate.
• Right to notice and opportunity of hearing before determination of tax dues.

For Practitioners

• Assessment orders against deceased persons are vulnerable and liable to be set aside.
• Proper documentation of legal heirship and estate becomes critical in GST litigation.

8. Way Forward

A suitable amendment to the CGST Act or Rules, on the lines of Section 159 of the Income-tax Act, 1961, is desirable to expressly provide for substitution of legal representatives and continuation of proceedings.

CBIC may consider issuing a circular or SOP mandating verification of taxpayer status and outlining the procedure for assessments involving deceased proprietors.

9. Conclusion

The Andhra Pradesh High Court’s decision in Baratam Satish represents a sound and pragmatic interpretation of Section 93 of the CGST Act. It reinforces the principle that while tax liability may survive death, assessment proceedings cannot bypass basic procedural safeguards.

Until legislative clarity is provided, this ruling will serve as a persuasive precedent guiding GST authorities and practitioners on the correct course of action in cases involving deceased taxable persons.

By: CA. Chitresh Gupta

Mobile: 99103 67918

https://www.linkedin.com/in/ca-chitresh-gupta-22795920/

This article is intended for academic and professional discussion and reflects the legal position emerging from statutory interpretation and judicial precedents.