TaxTMI 
TaxTMI 
2026 (6) TMI 1093
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....engaged in supplying industrial soaps and polishes and was registered under GSTIN: 33ABRPV4709K1Z1. He died on 05.03.2019. Following his demise, the business was discontinued and closed. The registration was cancelled with effect from 31.12.2019. 2.2. Thereafter, the petitioner received a communication dated 10.03.2025, followed by a notice in Form DRC-01A dated 20.05.2025, alleging that M/s.Vasu Chemicals had failed to file returns for certain e-way bills generated during the financial year 2018-2019. The petitioner submitted a reply stating that, after the death of her husband on 05.03.2019, the business had been discontinued and closed, and that she was neither involved in nor aware of the business dealings. Subsequently, a show cause notice in Form DRC-01 was issued on 26.06.2025. The petitioner again submitted a reply on 24.10.2025, reiterating her earlier stand. Rejecting the petitioner's explanation, the respondent passed the impugned order dated 11.12.2025, determining a tax liability of Rs. 3,42,355/- and levying interest and penalty. Aggrieved thereby, the present Writ Petition has been filed. C. The Arguments: 3. The primary contention of the learned counsel....
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....e imposed only on the person on whom the statute casts such obligation, not merely on the recipient of the services. 3.4. Referring to Section 9 of the CGST Act, the learned counsel contends that the levy of tax applies only to the persons specified therein and that only such persons can be regarded as "persons chargeable with tax" within the meaning of Section 74. According to him, liability to tax arises upon the occurrence of a taxable supply and, therefore, the levy cannot fall upon a legal heir. Reliance is also placed upon the definition of "taxable person" under Section 2(107) of the CGST Act, which brings a legal heir within its fold only if he continues the deceased's business. In the present case, the petitioner did not continue the business after her husband's death. In support of this proposition, reliance is placed upon the decision of the High Court of Jharkhand in Rishi Shangari v. Union of India [2025:JHHC:11331-DB], particularly Paragraphs 7 and 9 thereof. 3.5. The learned counsel further submits that, while considering a similar provision in Section 159 of the Income Tax Act, 1961 the Hon'ble Division Bench of this Court, in S.Gowthaman v. The Income Tax....
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.... the taxable person's death. In the absence of any challenge to the validity of Section 93, the impugned order, according to the respondent, is fully in accordance with the statutory scheme. D. The Discussion & Answer: 4. I have carefully considered the rival submissions from both sides and perused the materials on record. Section 93(1) of the CGST Act, which provides for the liability of legal heirs in cases where the business of the deceased taxable person is either continued or discontinued, is extracted hereunder for ready reference: ''93. Special provisions regarding liability to pay tax, interest or penalty in certain cases.- (1) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a person, liable to pay tax, interest or penalty under this Act, dies, then- (a) 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 this Act; and (b) if the business carried on by the person is discontinued, whether before or after his ....
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....'' 4.4. Section 74 of the CGST Act does not employ the expression "taxable person" but uses the wider expression "person chargeable with tax". The said expression cannot be confined only to a taxable person as defined under Section 2(107) of the CGST Act. It would encompass not only registered taxable persons and persons liable for registration, but also the legal heirs from whom the tax is recoverable, and persons such as recipients liable to pay tax under the reverse charge mechanism, electronic commerce operators, etc., in cases where the statute fastens the liability upon them. While the expression may not extend to every person connected with a transaction, it would certainly include every person upon whom the Act imposes the liability to pay tax, interest, penalty, or any other statutory dues. 4.5. The Legislature has consciously employed the expression "person chargeable with tax" in Section 74 instead of the narrower expression "taxable person". A careful reading of Section 9(1) of the CGST Act indicates that the levy is on the supply of goods or services or both, while the liability to pay the tax is fastened upon the taxable person or such other person as ma....