GST assessment issued against deceased taxpayer; order set aside, fresh notice to legal heir required u/s93 limits recovery to estate.

An assessment order was challenged as having been passed against a deceased person and as being inconsistent with s.93 of the GST Act. The HC held that assessment and allied proceedings cannot validly be initiated against a dead person; however, s.93 permits recovery of the deceased's tax dues only from the business or the estate, requiring involvement of the person carrying on the business or, if not carried on, the legal representative holding the estate. Consequently, the impugned assessment order was set aside and a fresh assessment was directed after issuing notice to and involving the legal representative, with any subsequent recovery confined to the estate and only to the extent of the estate available with the legal representative.

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ISSUES PRESENTED AND CONSIDERED

1) Whether an assessment order passed after a registered person's death, without involving the legal representative, is valid.

2) How Section 93 of the GST Act applies to liability and recovery of tax, interest and penalty when the registered person has died and the business is discontinued.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of assessment proceedings/orders initiated or continued against a deceased person without impleading the legal representative

Legal framework: The Court examined Section 93(1) of the GST Act, noting it addresses liability and recovery where a person liable to tax, interest, or penalty dies, and differentiates between cases where business is continued and where it is discontinued.

Interpretation and reasoning: The Court held that Section 93 does not prescribe the manner in which assessment proceedings relating to a deceased person are to be carried out. The Court nevertheless applied the settled principle that assessments and other proceedings can only be initiated against living persons, and proceedings against a deceased person are not valid. At the same time, since Section 93 contemplates recovery of dues of a deceased person (either from the continuing business or from the estate where business is discontinued), the Court reasoned that, in the absence of an express procedural provision, the only practicable way to settle the deceased person's tax affairs is to conduct assessment proceedings by involving the legal representative (or the person continuing the business, if applicable).

Conclusion: The Court set aside the impugned assessment order and directed a fresh assessment to be carried out after involving the legal representative by issuing notice to him.

Issue 2: Extent and mode of recovery under Section 93 where business is discontinued after the registered person's death

Legal framework: The Court applied Section 93(1)(b), which provides that if the business is discontinued, the legal representative is liable to pay, out of the estate of the deceased and to the extent the estate can meet the charge, the tax, interest, or penalty due, whether determined before death and unpaid or determined after death.

Interpretation and reasoning: The Court clarified that Section 93 is essentially concerned with recovery of tax and other amounts due against a deceased person, not with the procedural mechanics of assessment. Since the business was discontinued, the Court treated the legal representative's exposure as limited to the estate of the deceased available with him, consistent with Section 93(1)(b).

Conclusion: The Court directed that any recovery, after a fresh assessment order, shall be only against the estate of the deceased and against the legal representative only to the extent of the estate of the deceased that is available to him.

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