2026 (1) TMI 50 - HC - GST

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 order passed against a dead peson - challenge to order of assessment on the ground that it is not accord with the provisions of Section 93 of the GST Act - HELD THAT:- It is settled law that the assessments and other proceedings can only be initiated against the persons who are living and such proceedings against death person would not be valid. However, the fact remains that, under Section 93 of the GST Act, the dues of the death person can be recovered either from the business he had set up or from his estate. In such circumstances, in the absences of any provision, this Court would have to be hold that the only practicable way of settling the affairs of the death person would be to direct the assessment being carried out by involving either the representative or person carrying on the business of a death person or which such business is not being carried on, by involving the legal representative who be holding the estate of the deceased person. In the said circumstances, since the petitioner is the legal representative of the deceased person, being his son, it would be appropriate to set aside the impugned Order, dated 25.01.2024, with a direction to carry out a fresh assessment after involving the petitioner herein, by issuing a notice to the petitioner. Needless to say, any recovery that may be initiated, after an Order of assessment, shall be only against the estate of a deceased person and against the petitioner to the extent of the estate of his deceased father, which is available to the petitioner. Petition disposed off. 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.