Demand Order Passed Against Deceased Person is Not Valid
By: Admin
September 23, 2024 | Important Pronouncements | 4 Min Read
The Madras High Court, in the case of Unnikrishnan R. v. Union of India [W.P No. 12464 of 2024 dated June 12, 2024], ruled that a demand order issued against a deceased person is invalid when the deceased’s business is not continued by the legal heirs. However, the Court noted that under Section 93 of the CGST Act, the Department has the authority to recover tax if the legal heirs continue the business.
Key Highlights:
- Mr. Radhakrishnan Pillai, the deceased owner of ‘M/s Chothi Enterprises,’ passed away on October 11, 2017. The family did not continue his business.
- A Show Cause Notice (SCN) was issued on September 29, 2023, in the name of the deceased.
- The Court held that the SCN and subsequent demand order were legally invalid.
- The Court emphasized that the CGST Act’s Section 93 applies if the business is continued by the legal heirs.
Court’s Observations:
- The SCN issued to a deceased person cannot be legally upheld.
- If the Petitioner or other legal heirs had continued the business, the tax demand could have been pursued under Section 93.
- The Impugned Order was set aside, with instructions to the Respondent to issue a notice to the Petitioner on behalf of the legal heirs.
Our Comments:
As per Circular No. 96/15/2019-GST, in the event of the death of a sole proprietor, the legal successor must file FORM GST ITC-02 to transfer any unutilized Input Tax Credit (ITC) to the successor’s account before the registration is canceled
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