GST Proceedings Against Legal Heirs of Deceased Proprietor: Madras High Court Interprets Section 93 of the CGST Act

Overview

A significant ruling has emerged from the Madras High Court in V. Damayanti v. The Superintendent of GST and Central Excise, addressing one of the more contested questions in GST jurisprudence — whether fresh assessment proceedings under Section 73, Section 74, or Section 74A of the Central Goods and Services Tax Act, 2017 can be initiated directly against the legal heir of a deceased proprietor, particularly in circumstances where the business had been wound up and no proceedings whatsoever were commenced during the proprietor's lifetime.

The Court answered this question in the affirmative, grounding its conclusion in a plain-language reading of Section 93 of the CGST Act and reinforcing its position with the Hon'ble Supreme Court's interpretive guidance in Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd. [2024 INSC 756].

Background and Facts of the Case

The petitioner, V. Damayanti, was the widow of Late V. Vasudevan, who had been the sole proprietor of M/s. Vasu Chemicals, a business engaged in the supply of industrial soaps and polishes, registered under GSTIN: 33ABRPV4709K1Z1.

V. Vasudevan passed away on March 05, 2019. In the aftermath of his death, the business operations were brought to a complete halt and the GST registration of M/s. Vasu Chemicals was cancelled with effect from December 31, 2019.

Approximately six years after the proprietor's demise, the petitioner received a communication dated March 10, 2025 from the revenue authorities, followed by an intimation in Form DRC-01A dated May 20, 2025. These communications alleged that M/s. Vasu Chemicals had failed to disclose certain e-way bill transactions pertaining to Financial Year 2018-19.

In her reply, the petitioner maintained that she had no involvement in or knowledge of the business affairs of her late husband and that the enterprise had ceased operations entirely following his death. Notwithstanding this explanation, a show cause notice in Form DRC-01 dated June 26, 2025 was subsequently issued. The petitioner once again filed her reply on October 24, 2025, reiterating her earlier submissions.

The Superintendent of GST and Central Excise rejected the petitioner's contentions and passed Order-in-Original No. 06/2025-GST-(SUPDT.) dated December 11, 2025 under Section 74 of the CGST Act, raising a tax demand of Rs. 3,42,355/- along with applicable interest and penalty.

Aggrieved by the said order, the petitioner approached the Madras High Court by way of a writ petition, being W.P.(MD) No. 10000 of 2026.

Whether fresh proceedings under Section 73, Section 74, or Section 74A of the CGST Act are legally maintainable against the legal heir of a deceased proprietor, in a situation where the business has been discontinued and no notice or assessment had been initiated during the proprietor's lifetime?

The Court's Analysis and Holdings

Interpretation of Section 93(1)(b) — Posthumous Determination of Tax Liability

The Court's reasoning began with a careful reading of Section 93(1)(b) of the CGST Act, which expressly provides that where the business of a deceased person has been discontinued, the legal representative shall be liable to discharge, out of the estate of the deceased — and to the extent the estate is capable of meeting the charge — any tax, interest, or penalty, "whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death."

The Court held that the phrase "determined after his death" is not confined merely to the issuance of a final adjudication order. It necessarily encompasses the entire adjudicatory process, including the issuance of show cause notices, opportunity of hearing, and all procedural steps that precede the final determination. To read it otherwise would render the legislative provision ineffective in practice.

"Person Chargeable with Tax" — A Wider Expression Than "Taxable Person"

The Court drew an important statutory distinction between two expressions: