TaxTMI 
TaxTMI 
When Tax Law Meets Succession, the Statute Draws the Line
The Madras High Court judgment in V. Damayanti, W/o. Late V. Vasudevan (Proprietor, M/s. Vasu Chemicals) Versus The Superintendent of GST and Central Excise, Madurai - 2026 (6) TMI 1093 - MADRAS HIGH COURT, deals with a sensitive and practically important question under GST law. Can the tax department initiate fresh proceedings against the legal heir of a deceased taxpayer when the business was discontinued and no proceedings had been initiated during the deceased's lifetime?
This question is not merely technical. It arises at a difficult intersection of tax liability, death, succession, business closure and fairness to family members. On one hand, the revenue may have a legitimate claim relating to transactions undertaken by the deceased taxable person during his lifetime. On the other hand, a legal heir may never have carried on the business, may have no knowledge of its transactions, and may face proceedings years after the taxpayer's death. The judgment attempts to answer this issue by closely reading Section 93 of the CGST Act, 2017.
The decision is also important because it must be carefully distinguished from cases where notices are issued directly in the name of a deceased person. Such notices invalid because a dead person cannot respond to a show-cause notice. The present case was different. The proceedings were directed against the legal heir by invoking the statutory mechanism of Section 93. That distinction makes all the difference.
A Closed Proprietary Business, an Old E-Way Bill Trail and a New Demand
The petitioner, V. Damayanti, was the wife of the late V. Vasudevan, the proprietor of M/S. Vasu Chemicals. The business supplied industrial soaps and polishes and was registered under GST. Late V. Vasudevan died on 05.03.2019. After his death, the business was discontinued and closed. The GST registration was cancelled with effect from 31.12.2019.
Several years later, the petitioner received a communication dated 10.03.2025, followed by Form GST DRC-01A dated 20.05.2025. The department alleged that M/s. Vasu Chemicals had failed to file returns for certain e-way bills generated during the financial year 2018-19. The petitioner replied that after the death of her husband, the business had been closed, and she was neither involved in nor aware of the business dealings.
A show cause notice in Form GST DRC-01 was thereafter issued on 26.06.2025. The petitioner again replied on 24.10.2025, reiterating her stand. The respondent rejected the explanation and passed an order dated 11.12.2025 under Section 74 of the CGST Act. The order determined a tax liability of Rs. 3,42,355 and levied interest and penalty. The petitioner challenged the order before the High Court.
The narrow but significant issue before the Court was whether proceedings could be initiated from the outset against the legal heir of a deceased taxable person when the business had been discontinued, and no notice or assessment proceedings had been initiated during the deceased's lifetime.
Section 93 Is the Recovery Bridge After the Taxpayer's Death
The heart of the judgment lies in Section 93 of the CGST Act, 2017. This provision addresses special situations in which a person liable to pay tax, interest, or penalty dies. It covers two situations. The first arises when the deceased's business is continued after death by the legal representative or any other person. In that case, the person continuing the business becomes liable for any tax, interest, or penalty due from the deceased.
The second arises when the business is discontinued, whether before or after death. In such a case, the legal representative is liable to pay, out of the deceased's estate and only to the extent the estate is capable of meeting the charge, the tax, interest, or penalty due from the deceased. The provision expressly covers liability determined before death and remaining unpaid, as well as liability determined after death.
This language proved decisive. The petitioner argued that Section 93 should apply only where proceedings had already been initiated against the deceased taxpayer during his lifetime and were pending at the time of his death. According to the petitioner, if no notice had been issued during the deceased's lifetime, the department could not initiate fresh proceedings after the deceased's death. The Court rejected this restrictive reading because Section 93 expressly contemplates determination after death.
A Post-Death Determination Includes the Notice That Makes It Possible
A central part of the judgment concerns the interpretation of the words 'determined after his death' in Section 93. The Court held that these words cannot be confined to the final act of passing an order. Determination of tax liability is not a single mechanical act. It is the end result of a statutory process. That process includes issuing notice, calling for an explanation, considering the reply, examining the records, and then passing the order.
If the words 'determined after his death' were read to mean only final determination, without permitting the preceding procedural steps, the provision would become unworkable. A liability cannot be validly determined without notice and opportunity. Therefore, once the statute authorises determination after death, it must also be understood to authorise the necessary procedural steps leading to such determination, including proceedings under Sections 73, 74 or 74-A, as the case may be.
This reasoning gives Section 93 practical meaning. It prevents the provision from becoming a dead letter when the department discovers liability only after the taxable person's death. At the same time, the proceedings must be framed against the legal heir or estate, not against the deceased person as though he were still alive.
Person Chargeable With Tax Is Wider Than the Registered Taxpayer
The petitioner placed strong reliance on Section 74, which requires notice to be issued to the 'person chargeable with tax'. According to the petitioner, this expression should refer only to the person on whom the levy falls, namely the taxable person who made the supply. Since the deceased alone had carried on the business, it was argued that the legal heir could not be treated as the person chargeable with tax.
The Court did not accept this argument. It noted that Section 74 does not use the narrower expression 'taxable person'. Instead, it uses the wider expression 'person chargeable with tax'. This expression cannot be confined only to the registered taxable person. It may include any person on whom the Act fastens an obligation to discharge tax, interest, penalty or other statutory dues.
The Court gave examples. A recipient may be liable under reverse charge. An e-commerce operator may be held liable in certain situations. Similarly, where Section 93 fastens liability on a legal heir, such legal heir can fall within the scope of the expression 'person chargeable with tax'. The expression therefore takes its meaning from the statutory scheme and not merely from the person who originally made the taxable supply.
The Levy May Be on Supply, but Liability Can Travel by Statute
The petitioner relied on the Supreme Court decisions in Peekay Re-Rolling Mills (P) Ltd. Versus Assistant Commissioner And Another - 2007 (3) TMI 356 - Supreme Court; Associated Cement Companies Ltd. Versus State of Bihar and others - 2004 (9) TMI 380 - Supreme Court and LAGHU UDYOG BHARATI Versus UNION OF INDIA - 1999 (7) TMI 1 - Supreme Court. These judgments were cited to explain the distinction between levy, collection, and the person on whom the law places responsibility.
The Court accepted that these concepts have distinct legal meanings but held that the cited decisions did not assist the petitioner in the present case. The issue was not merely the abstract distinction between levy and collection. It was whether the CGST Act itself created a statutory liability against the legal heir under Section 93. Since Section 93 expressly creates such liability, the legal heir can be proceeded against within the limits of that provision.
This part of the judgment is useful because it prevents a common misunderstanding. The levy may arise from a supply made by the deceased taxable person. But the statutory responsibility to discharge that liability may, in specified situations, be placed on another person. Section 93 is one such situation. Therefore, the legal heir is not made liable because she made the supply. She is made answerable only because the statute permits recovery from the estate inherited from the deceased.
Taxing Statutes Speak Through Their Text, Not Equity Alone
The Court also relied on Chief Commissioner of Chief Commissioner of Central Goods and Service Tax & Ors. Versus M/s Safari Retreats Private Ltd. & Ors. - 2024 (10) TMI 286 - Supreme Court. In that case, the Supreme Court reiterated an important rule of interpretation: taxing statutes must be construed as they stand. Courts should not add or subtract words from a statute on grounds of equity, hardship, or presumed intention.
Applying this principle, the Court held that Section 93 could not be read in the restrictive manner suggested by the petitioner. The provision expressly refers to tax, interest, or penalty determined after death. It also expressly creates liability if the business is discontinued. Therefore, the Court could not read in an additional condition that proceedings must have commenced during the deceased's lifetime.
The decision thus rests on a plain reading of the statutory text. The Court treated Section 93 as a specific GST provision dealing with the death of a taxable person. It declined to import limitations from other statutes or from general notions of fairness where the language of the CGST Act was clear.
The Estate Is the Boundary, Not the Heir's Personal Wealth
The most important safeguard in the judgment is the limitation on recovery. The Court did not hold that the legal heir becomes personally and unlimitedly liable for all past dues of the deceased's business. In cases where the business is discontinued, Section 93(1)(b) restricts liability to the estate inherited from the deceased and only to the extent that the estate is capable of meeting the charge.
This safeguard is essential. A widow or legal heir who did not run the business should not be treated as if she personally committed the default. Liability is not based on her personal conduct. It is based on the estate left by the deceased. If the estate is sufficient, recovery may be made from it. If the estate is insufficient, the statute itself limits the department's reach.
This makes the judgment balanced. It protects the revenue from losing legitimate dues merely because the taxable person has died. But it also protects the legal heir from exposure beyond the inherited estate when the business has not been continued. That balance is the real architecture of Section 93.
A Notice to the Dead Is Void; a Notice to the Legal Heir May Survive
This judgment must not be confused with cases where a show cause notice or assessment order is issued in the name of a deceased taxpayer. Such proceedings are vulnerable because a dead person cannot be a party to proceedings and cannot respond to a notice. In Smt. Gulabben Gopaldas Jamvecha W/o Late Shri Gopaldas Jaisukhlal Jamvecha Versus The State Of Gujarat & Anr. - 2026 (7) TMI 69 - GUJARAT HIGH COURT, the Gujarat High Court quashed proceedings issued in the name of a deceased taxpayer, while leaving liberty to proceed in accordance with law against the proper person or estate.
The Madras High Court ruling in V. Damayanti operates at the next stage. It answers whether proceedings may be initiated against the legal heir where Section 93 is invoked. The answer is yes, provided the proceedings are properly framed and the liability is confined to the statutory limit. Therefore, the two lines of cases are not inconsistent. They complement each other.
The practical rule is clear. The department should not issue a notice to the deceased person. It should issue proceedings against the proper legal representative or other person made liable by law. The legal heir, in turn, can contest the demand on the merits, limitation, facts, documents, and the extent of the estate inherited.
The Compliance Lesson: Identify the Heir, Trace the Estate, Frame the Notice Correctly
The judgment offers a clear practical route. The Department must first examine whether the deceased taxpayer's business was continued or discontinued. If it were continued, liability may fall on the person continuing it under Section 93(1)(a). If it was discontinued, proceedings may be taken against the legal representative under Section 93(1)(b), but recovery must remain confined to the inherited estate. At the same time, legal heirs must distinguish between invalid proceedings issued in the name of the deceased and properly framed proceedings against the heir or estate. In such proceedings, they may still raise all lawful defences, including limitation, factual errors, lack of evidence, incorrect invocation of Section 74 and absence or insufficiency of inherited estate.
The Durable Rule: The Right Person, Provision and Limit Must Travel Together
V. Damayanti clarifies that GST liability does not automatically die with the taxpayer. Where Section 93 applies, proceedings may be initiated against the legal heir or estate even after death, but only through the route provided by law. In discontinued business cases, recovery remains confined to the estate inherited from the deceased. The real distinction is therefore clear: proceedings against a dead person are without jurisdiction, while properly framed proceedings against the legal heir may survive, subject to the statutory limit
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