TaxTMI 
TaxTMI 
2026 (8) TMI 1362
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....t could not file the reply to the said notice. The said assessment notice culminated into GST DRC-01A dated 13-11-2020 demanding the same tax and interest. The appellant could not reply to this notice DRC-01A also due to continued illness. Further, DRC-01 dated 15-7-2021 was issued with a revised tax demand of Rs. 1,72,430/-, Interest of Rs. 1,00,340/-, Penalty of Rs. 20,000/- and additional interest of Rs. 187350/- for delay in filing of GSTR-3B returns for the period Nov-2017 to Mar-2018. The said notice was decided ex-parte and an OIO DRC 07 vide No. ZJ3202220065691/2017-18 dated 15.02.2022 was issued. The appellant had filed an appeal before the First Appellate authority, and the appeals were rejected vide the impugned OIA dated 8-12-2022. Subsequently, due to continued illness the appellant died on 5-9-2024. The Ld Advocate submits a death certificate of the deceased appellant recorded as death registration no. 811/2024 dated 23-9-2024, registered with Thrikkovilvattom Grama Panchayat, Kerala. 3.0 The present appeals are filed on 26-3-2026, by the son of the deceased appellant, who claims to be the legal heir, and in such capacity he has signed and submitted the present app....
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....on 16(5) cannot be extended on the strength of the Appellant's bare assertion that the return was filed on 06.06.2019. The date of filing, the return period to which it relates, and the fact that the ITC of Rs. 1,72,430/- claimed therein corresponds to the very ITC disallowed in the impugned orders, are matters of record capable of verification from the GST common portal and departmental records, and may be verified by the Jurisdictional Proper Officer before consequential relief under Section 16(5) is given effect to. This is consistent with the procedure contemplated under said circular and the special rectification mechanism notified vide Notification No. 22/2024-Central Tax, both of which envisage verification by the Proper Officer and therefore requires verification of the relevant particulars. 6.0 As regards, the fact that now the appellant has died, and the deceased appellant's legal heir is contesting the appeals, the Ld AR submits that he does not dispute that a legal heir is competent to pursue the present proceedings. Section 93 of the CGST/SGST Act, 2017 expressly contemplates that where a person liable to pay tax, interest or penalty dies, such tax, interest or ....
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....able 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 death, his legal representative shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such person under this Act, whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death. 11.0 We find that at the time of demise of the appellant on 5-9-2024, the matter was still under the appeal period as the appeals could have been filed before the GSTAT on or before 30-6-2026 which was further extended to 31-7-2026. The appeal was therefore filed by the legal heir of the appellant before this Tribunal. on 26-3-2026. The last GSTR-3B filed by the appellant was for the Month of May-2023 on March-2019 on 22-5-2024. After that no returns were filed and the GSTIN was also cancelled. Therefore, it can be construed that the business of the deceased was not continued in anyway. As per Section 93(1)(b), the liability if any arising out of the pre....
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....Section 93 permits recovery of tax dues from the deceased person's business or estate, fresh assessment proceedings must be initiated against the appropriate legal representative or person carrying on the business after notice and hearing. Any recovery remains limited to the deceased proprietor's estate, and a consequential rejection of the statutory appeal is invalid. (ii) In the case of Chotu Devi, Ajmer Versus Union Of India cited in 2026 (8) TMI 308 - Rajasthan High Court, it is held that a legal representative may be liable for a deceased sole proprietor's tax, interest and penalty only from the deceased's estate, where the business is discontinued and liability is determined before or after death. That statutory liability does not remove procedural safeguards: an adverse assessment requires independent notice and an opportunity of hearing for the legal representative, and the order must state relevant facts and reasons. Assessment orders issued without these safeguards are vitiated. Tax dues may therefore be pursued against the legal representative only through fresh proceedings that comply with notice, hearing and reasoned-order requirements, within ....
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.... the proceedings against a deceased sole proprietor require notice to the legal representative before continuation of tax action. An order-in-original passed against a deceased sole proprietor was treated as legally vulnerable and was quashed. The HC held that proceedings against a proprietary concern could not continue against a dead proprietor without first taking steps against the legal representative, at least by issuing notice if the department intended to proceed further. The Court did not decide the disputed question of whether death had been specifically intimated, but noted that an earlier order in similar proceedings had already stayed further action after the same objection was raised. The respondents were left free to pursue their claims in accordance with law against the petitioner's estate or legal representative." (vii) In the case of M/s P.B. Sethi Plastics Versus State of U.P. cited in 2026 (2) TMI 390 - Allahabad HC, it is held that, Assessment and recovery proceedings under Section 73 could not validly be initiated and concluded against a deceased sole proprietor, because tax liability against a dead person must be pursued, if at all, against the leg....
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....ly against the legal representatives. The SCN and ex-parte orders, including the cancellation action, were quashed and set aside; petition allowed. 13.0 We find that no notice was issued to the legal heir, no inquiry was caused regarding the inherited estate of the deceased appellant, even when the GST Registration was cancelled on 6-6-2023, due to continuous illness of the appellant and discontinuance of the business. The impugned order in appeal is unsustainable in the absence of any action by the respondent under Section 93 even after 2 years from the date of death on 5-9-2024. 14.0 As regards the second issue, we find that the belatedly filed GST Returns pertains to the period 2017-18, which is covered under the newly inserted Section 16(5) which was made effective from 1-7-2017. We find that the GST Returns for the period July-2017 to Feb-2017 were filed on 31-7-2018 and for the Month of March-2018 was filed on 16-6-2019, whereas Section 16(5) allows the taxpayer to file all the GST Returns on or before 30-11-2021 for the same period. Therefore, as per the Section 16(5), the appellant whether or not deceased, is eligible to the ITC claimed in their respective GST Returns....