In a significant ruling with wide implications under the Goods and Services Tax (GST) regime, the Madurai Bench of the Madras High Court has held that GST proceedings can be initiated and continued against legal heirs even when no tax proceedings were pending during the lifetime of the deceased taxpayer.
The decision reinforces the scope of Section 93 of the Central Goods and Services Tax (CGST) Act, 2017 and clarifies that tax authorities retain the power to determine and recover tax liabilities after the death of a taxable person, subject to statutory limitations.
Background of the Dispute
The case arose from proceedings initiated against the legal heir of a deceased proprietor in relation to GST liabilities for the financial year 2018–19.
The petitioner, V. Damayanti, wife of late V. Vasudevan, challenged an Order-in-Original passed under Section 74 of the CGST Act. Vasudevan had operated a proprietary concern under the name Vasu Chemicals and passed away on 5 March 2019.
Following his death, the business was discontinued and the GST registration was cancelled.
Damayanti approached the High Court contending that the tax department lacked authority to commence fresh proceedings after her husband’s death because no show cause notice, assessment proceedings, or adjudication had been initiated during his lifetime.
Petitioner’s Arguments
The petitioner argued that proceedings under Section 74 of the CGST Act are maintainable only against a “person chargeable with tax.”
According to her, a legal heir who neither continued the business nor carried out any taxable activity cannot be treated as a taxable person for initiating proceedings.
It was further submitted that Section 93 of the CGST Act, which deals with tax liability in the event of death, should be interpreted harmoniously with Section 74.
The petitioner emphasized that once the business had ceased operations after the proprietor’s death and no proceedings were pending, the department could not reopen or initiate fresh adjudication against the legal representatives.
Revenue’s Stand
The Revenue opposed the petition and relied heavily on Section 93 of the CGST Act.
The department argued that the provision specifically contemplates situations where tax, interest, or penalty may be determined after the death of the taxable person.
According to the Revenue, the legislative intent behind Section 93 is to ensure that tax liabilities do not extinguish merely because the taxpayer dies before assessment or adjudication.
Therefore, legal representatives can be proceeded against in accordance with law to recover dues from the estate inherited by them.
High Court’s Analysis
Accepting the Revenue’s interpretation, the Madras High Court observed that Section 93 expressly authorizes continuation and initiation of tax proceedings even after the death of the taxable person.
The Court noted that the language of the statute clearly contemplates determination of tax, interest, and penalty after death and consequently permits recovery from legal heirs.
The Bench rejected the argument that the phrase “person chargeable with tax” under Section 74 should be interpreted narrowly.
According to the Court, once the law itself creates liability upon legal representatives under Section 93, legal heirs cannot be excluded from the adjudicatory process merely because they did not carry on business activities.
Importantly, the Court observed that determination of tax necessarily includes the entire legal process—issuance of notices, assessment proceedings, adjudication, and eventual recovery.
The judgment emphasized that courts cannot read additional restrictions into a taxing statute where the Legislature has consciously chosen not to impose such limitations.
Key Legal Principle Established
Answering the central issue, the High Court held that even where:
- The business of the deceased taxpayer has been discontinued;
- GST registration has been cancelled; and
- No show cause notice or assessment proceedings had commenced during the taxpayer’s lifetime,
fresh proceedings may still be initiated against legal heirs under Sections 73, 74, or 74A of the CGST Act by virtue of Section 93.
This interpretation ensures that tax liabilities remain enforceable notwithstanding the death of the taxpayer.
Protection Available to Legal Heirs
While upholding the department’s authority, the Court also clarified an important safeguard.
Recovery from legal heirs cannot exceed the value of the estate inherited by them.
The legal heir does not become personally liable beyond the inherited assets and recovery can only be made to the extent the estate is capable of satisfying the tax demand.
This limitation preserves fairness and prevents imposition of unlimited personal liability upon family members.
Conclusion
The ruling marks an important development in GST jurisprudence by confirming that tax liabilities may survive the death of a taxpayer and proceedings need not have commenced during the taxpayer’s lifetime.
The judgment strengthens the Revenue’s ability to protect public revenue while simultaneously limiting recovery only to inherited assets.
Taxpayers, business owners, and legal heirs should therefore remain aware that discontinuation of business or cancellation of GST registration does not automatically extinguish historical tax exposure.
Case Number: W.P.(MD) No.10000 of 2026
Court: Madurai Bench of Madras High Court
Decision Date: 16 June 2026