TaxTMI 
TaxTMI 
2026 (9) TMI 1901
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....vides for tax, interest or penalty being "determined after his death". The question is whether those words permit proceedings to be commenced after death, or only the completion of proceedings already commenced during the deceased's lifetime. 3. For the reasons that follow, this Court holds that Section 93 does permit proceedings to be commenced after death, provided the conditions prescribed by the provision are satisfied. Whether those conditions were satisfied when the Department proceeded against the Petitioner is a separate matter and does not depend on the existence of the statutory power under Section 93 of the Act. 4. The Petitioner also challenges the constitutional validity of Section 93(1)(b) of the CGST Act, which exposed the Petitioner to such proceedings and seeks release of Rs.15,40,000/- retained by the Department. These issues fall for separate consideration. FACTUAL MATRIX 5. The proceedings arise from an investigation conducted by the Directorate General of GST Intelligence ('DGGI') concerning alleged fraudulent availment and passing on of Input Tax Credit and refund of Integrated Goods and Services Tax on the strength of invoices without correspondin....
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....equently filed no reply. The Respondents dispute this assertion and rely upon the modes of service stated to have been adopted under Section 169 of the CGST Act. The Adjudicating Authority proceeded ex-parte against those noticees who had not responded. 12. In the operative portion of the Impugned Order, clause AD imposes a penalty of Rs.1,50,000/- upon the Petitioner. The immediately succeeding clause AE, however, contains a statement that no penalty is being imposed upon the Petitioner and also contains inconsistent language concerning appropriation of Rs.15,40,000/-. SUBMISSIONS ADVANCED ON BEHALF OF THE PARTIES 13. Learned counsel representing the Petitioner submits that the expression "is determined after his death" occurring in Section 93(1) of the CGST Act permits only completion of proceedings which had already commenced during the lifetime of the deceased. According to him, fresh proceedings proposing a penalty for the alleged acts of late Sh. Ankit Dabas could not have been initiated against the Petitioner more than three years after his death. 14. It is further submitted that liability for aiding or abetting under Section 122(3)(a) is founded upon the persona....
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....n it and recognised that a pure question of law may be examined notwithstanding the availability of an alternative remedy. This Court, therefore, proceeds to examine these questions. 18. The same consideration does not require this Court to undertake an appellate examination of the Impugned Order in all respects. Whether the SCN was duly served, whether the material on record establishes the alleged contravention, whether the requirements of Section 93(1)(b) are satisfied on the facts, the computation of the penalty and the effect of the operative clauses of the OIO concern the individual adjudication. These are matters which can appropriately be examined in the statutory Appeal. The exercise of jurisdiction under Article 226 ought not to substitute the appellate mechanism for determination of such issues. 19. There is one further aspect concerning the availability of that remedy. The Impugned Order is dated 01.02.2025, whereas the present Writ Petition was instituted on 23.05.2025. Section 107(1) of the Act prescribes a period of three months from "communication of the decision or order" for filing an Appeal, and sub-section (4) permits the Appellate Authority, upon sufficie....
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....rge. 22. The construction urged by the Petitioner, in essence, would require the words "is determined after his death" to be read as meaning "is determined after his death in proceedings already commenced during his lifetime". The provision contains no such qualification. Its concluding words distinguish a liability determined before death but remaining unpaid from one determined thereafter. They do not make a Notice during the deceased's lifetime a condition precedent to the latter determination. 23. The opening words "where a person, liable to pay tax, interest or penalty under this Act, dies" do not lead to a different conclusion. Those words cannot be confined to a liability already quantified before death, for the provision itself contemplates the tax, interest or penalty being determined thereafter. The underlying liability must, of course, arise from conduct attributable to the deceased under the substantive provisions of the Act. Section 93 enables that liability to be determined and, where its conditions are satisfied, enforced through the legal representative in the manner prescribed therein. 24. The fact that investigation had commenced and the statement of late....
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....Act's adjudicatory provisions. Section 122 supplies the substantive penalty, Section 126 requires a hearing and disciplines its imposition. Explanation 1(ii) to Section 74 recognises connected proceedings against persons liable to penalty under Section 122. These provisions operate within their respective fields. The power to determine liability after death follows from Section 93 read with that scheme, rather than from a rule or a recovery provision alone. 29. The Petitioner also relies upon Commissioner of Income Tax v. Late Dr. K.C.G. Verghese (2019) 416 ITR 155 (Mad). There, penalty proceedings under the Income Tax Act were initiated after the death of the assessee, and the Madras High Court upheld deletion of the penalty. The Court observed, inter alia, that no penalty proceedings had been initiated against the assessee during his lifetime and that the assessment had not been made in the hands of the legal representatives. Significantly, Section 159(2)(b) expressly permits 'any proceeding which could have been taken against the deceased if he had survived' to be taken against the legal representative. Despite that language, the Court concluded that the penalty proceedings c....
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....presentative capacity. Whether the Notice was validly served is, as already noticed, a separate question. 33. The constitutional challenge requires consideration on this construction. Section 93(1)(b) must therefore be examined on the grounds of discrimination and denial of a meaningful defence as advanced by the Petitioner. 34. The provision preserves liabilities attributable to the deceased's lifetime conduct for lawful determination and satisfaction from his estate. Death creates the need for someone to represent that estate. The resulting distinction bears a direct relation to the statutory purpose. Section 93 does not deem the representative to have committed the alleged wrong, and clause (b) confines payment to the estate's capacity to meet the charge. The underlying contravention and the conditions of representative liability must still be established by the Adjudicating Authority. 35. The loss of the person possessing first-hand knowledge may seriously affect the explanation available to the representative and the weight that can fairly be attached to the evidence. Section 126(3) of the CGST Act in fact requires an effective opportunity of hearing. The representati....
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.... Lakhs voluntarily submitted by Late Sh. Ankit Dabas with the department, should not be appropriated against the aforesaid liability." 39. The apparent inconsistency between clauses AD and AE of the Impugned Order was not addressed by either side during the course of hearing. It would not be appropriate to make an issue which was not argued before this Court an independent ground for interfering with the Impugned Order. The questions based on facts and those touching upon the merits of the Impugned Order-In-Original ('OIO') can appropriately be examined by the Appellate Authority. 40. The claim concerning Rs.15,40,000/- requires separate consideration. The Department describes the amount as voluntarily submitted pending investigation and records its placement in a fixed deposit. The Petitioner disputes that description. The Department must establish a subsisting lawful basis for the continued retention and account for the money and its earnings. 41. In K.M. Food Infrastructure Pvt. Ltd. v. Director General, DGGI Headquarters, W.P.(C) 328/2024 and W.P.(C) 363/2024, decided on 13.02.2024, this Court directed return of cash with the interest earned on fixed deposits after fin....
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....y observation which may be construed as touching upon their merits. The findings in the present judgment are confined to the questions specifically decided herein concerning the interpretation and constitutional validity of Section 93 of the CGST Act. 47. Independently, within three weeks from today, the Respondents shall furnish to the Petitioner a complete account of Rs.15,40,000/-, including its present status, particulars of the fixed deposit, interest earned thereon, and details of any withdrawal, appropriation, transfer or release, together with the supporting records. 48. For every amount claimed to be lawfully retained or appropriated, the Respondents shall identify the precise statutory provision and order relied upon, the liability sought to be secured or discharged, its computation, and the basis on which it is asserted to be enforceable against the estate of late Sh. Ankit Dabas. A general reference to the Impugned Order shall not constitute sufficient compliance with this direction. If reliance is placed upon that Order, the Respondents shall explain how it is said to authorise retention or appropriation of the whole amount. They shall separately address the enti....