Legal Heir Not Liable for Deceased’s GST Dues Without Proof of Business Continuity
By Author | May 13, 2025
Category: GST Judgements, Jharkhand HC
Case Overview
In Rishi Shangari v. Union of India [W.P.(T) No. 523 of 2023, decided on April 15, 2025], the Jharkhand High Court quashed an order that wrongly held a legal heir responsible for the GST dues of his deceased father. The Court emphasized that without clear evidence of business continuity, no such liability can be imposed.
Background and Timeline
Mr. Rishi Shangari is the son of Mr. Navtej Kumar Shangari, who was registered under the CGST Act, 2017 as the proprietor of M/s. N. Kumar and Company.
- Mr. Navtej Kumar passed away on February 13, 2018.
- Afterward, Mr. Rishi Shangari obtained a new GST registration on March 24, 2018, in his own name.
- The GST department issued an order (Form GST DRC-07) on December 20, 2022, covering the tax period from April 2018 to March 2020.
- Authorities cancelled the earlier GST registration on January 10, 2020.
- Despite these facts, the department sent a summons to the deceased on July 18, 2022, under Section 70 of the CGST Act.
Rishi responded by submitting his father’s death certificate and explaining that he had started a separate business. He also clarified that legal proceedings cannot continue against a deceased person.
The Disputed Order
On November 28, 2022, the department passed an order citing Section 93(1)(a) of the CGST Act. The order claimed that Rishi continued his father’s business and, therefore, was liable for all outstanding dues.
However, the department failed to present any evidence to support this claim. It ignored the fact that Rishi had already taken a new GST registration in his own name and was not operating the earlier proprietary concern.
Legal Question
Can a legal heir with a new GST registration be held liable for the deceased’s GST dues without evidence of business continuity?
Court’s Ruling
The Jharkhand High Court firmly answered no. It ruled that:
- There was no documentary evidence showing that Rishi continued the business after his father’s death.
- The issuance of a new GST registration indicated the start of a separate entity.
- As a result, the department’s order lacked any legal or factual basis.
Therefore, the Court set aside the impugned order and ruled in Rishi’s favor.
Legal Framework and Interpretation
Section 93(1)(a) of the CGST Act deals with liability in the case of death. According to this provision, a legal heir becomes liable only if they continue the same business. If the legal heir starts a different business under a new registration, liability does not transfer automatically.
In a similar judgment—Unnikrishnan R & Ors v. Union of India—the Madras High Court held that orders against a deceased person are invalid. The Court further observed that if a legal heir operates the same business, then and only then can the department proceed under Section 93.
Final Takeaway
The Court’s judgment sends a clear message:
Tax liability under GST cannot be imposed on a legal heir unless there is concrete evidence that the same business continued after the owner’s death.
Legal heirs who obtain a new registration and operate independently cannot be held accountable for the dues of the deceased without clear proof of continuity.
