Legal Heir Not Liable Under CGST Act For Dues Without Evidence Of Continuing Deceased’s Business: Jharkhand High Court
The petitioner challenged a 2022 tax recovery order holding him liable for his deceased father's GST dues, despite having obtained a separate registration.
Chief Justice MS Ramachandra Rao, Justice Rajesh Shankar, Jharkhand High Court
The Jharkhand High Court has held that a legal heir cannot be made liable for the tax dues of a deceased individual unless there is concrete evidence proving that the heir continued to operate the business of the deceased.
The writ petition challenged a tax recovery order by the Assistant Commissioner of CGST, Jamshedpur. The petitioner's father was a registered proprietor under the GST regime and had obtained a registration certificate accordingly. Following his father’s death, the petitioner applied for and was issued a separate GST registration in his own name on March 24, 2018. However, despite this, the tax authorities continued to treat him as a successor to his father’s proprietary business.
In 2022, the State Tax Officer, Jamshedpur issued two tax liability orders (GST DRC-07) in the name of the deceased for the periods April 2018–March 2019 and April 2019–March 2020 respectively. Additionally, a summon under Section 70 of the CGST Act was issued to the deceased individual. In response, the petitioner submitted his father's death certificate and requested that no proceedings be initiated against a person who had already passed away. He further sought the waiver of any liability under the circumstances. The Assistant Commissioner, CGST, rejected the petitioner's submission and invoked Section 93(1)(a) of the CGST Act, 2017.
Relying on this section, the tax authority passed the impugned order dated November 28, 2022, holding the petitioner accountable for the liabilities of the deceased.
A Division Bench of Chief Justice M.S. Ramachandra Rao and Justice Rajesh Shankar said, “In the absence of any material referred to by the said respondent as to on what basis it is held that the petitioner was continuing the business in the name of his father's proprietary concern after his father's death in spite of the petitioner obtaining a fresh registration in his own name on 24.03.2018, we are of the opinion that the impugned order dt. 28.11.2022 is perverse, based on no evidence and cannot be sustained.”
The High Court disagreed with the tax department’s reasoning, noting that the authorities had failed to provide any documentary or factual basis to support the conclusion that the petitioner had continued to operate the business of his late father.
The Bench emphasized that the petitioner had rightfully obtained a fresh registration in his own name, and there was no justification for extending his father's tax liabilities to him without clear proof of business continuation.
Furthermore, the Court underscored that proceedings against a deceased person—as had been initiated by the department—are legally untenable unless proper substitution or legal justification is made.
The Court added. “3rd respondent did not provide details of any material evidence to show as to how the petitioner was said to be continuing business of the father's proprietary concern having himself obtained a fresh registration on 24.03.2018.”
The High Court set aside the impugned order dated November 28, 2022, holding it to be arbitrary and unsupported by evidence, and thereby allowed the writ petition.
Cause Title: Rishi Shangari v. Union of India & Ors., [2025:JHHC:11331-DB]
Appearance:
Petitioner: Advocates Deepak Kumar Sinha, Rakhi Sharma
Respondents: Advocates Rahul Saboo, Gauranj Jajodia, Amit Kumar, Anurag Vijay
