Jharkhand High Court: Legal Heir Not Liable for Deceased’s GST Dues Without Proof of Business Continuity

Case: Rishi Shangari v. Union of India

W.P.(T) No. 523 of 2023 — Judgment dated April 15, 2025 (Jharkhand High Court)

The Jharkhand High Court recently set aside a GST demand order issued against a legal heir for recovery of the tax dues of his deceased father. The Court held that a son cannot be made liable for GST dues of a deceased proprietor unless the department provides clear evidence showing that he continued the same business.

This ruling clarifies an important principle under Section 93(1)(a) of the CGST Act, 2017, which imposes liability on a legal representative only when the same business is carried on after the death of the proprietor.

Background and Key Facts of the Case

• Mr. Navtej Kumar Shangari (deceased) was registered under GST in the name M/s N. Kumar and Company from July 1, 2017.
• He passed away on February 13, 2018.
• His son, Mr. Rishi Shangari, applied for a fresh GST registration on March 24, 2018 in his own name.
• A GST demand (DRC-07) dated December 20, 2022 was issued for the period April 2018 – March 2020.
• The GST registration of the deceased’s firm was cancelled on January 10, 2020.
• Surprisingly, a summons dated July 18, 2022 was issued to the deceased person for non-payment of GST.
• The petitioner informed the department about his father's death and submitted the death certificate.
• Despite this, the officer passed an order on November 28, 2022 invoking Section 93(1)(a), holding the son liable.
• The petitioner challenged this order before the High Court.

Issue Before the Court

Can a legal heir with a fresh GST registration be held liable for the deceased taxpayer’s GST dues without proof that he continued the same business?

Court’s Observations & Findings

1. No Evidence of Business Continuity

The department failed to produce any evidence that the petitioner:

• continued the same proprietary business of his father
• used the same trade name or assets
• took over liabilities or continued operations of M/s N. Kumar and Company

The petitioner had obtained a fresh GST registration, indicating a new business identity.

2. Section 93(1)(a) Does Not Apply Automatically

Section 93(1)(a) applies only if the business of the deceased is continued after death.

The Court held:

• Mere legal heirship is NOT enough.
• The department must prove business continuity.

3. Summons to a Dead Person Is Invalid

Issuing summons under Section 70 to a deceased person is legally unsustainable because proceedings cannot be initiated or continued against a dead person.

4. Impugned Order Was “Perverse and Without Legal Basis”

Since there was no proof of business continuity, the demand was:

• without jurisdiction
• arbitrary
• violative of natural justice

The High Court set aside the entire order.

Final Judgment (Held)

The Court ruled:

• A legal heir with a fresh GST registration cannot be held liable for the deceased’s GST dues.
• Liability arises only if the business of the deceased is continued after their death.
• The impugned order dated November 28, 2022 was quashed.

Comparison with Madras High Court Ruling

In Unnikrishnan R & Ors v. Union of India (Madras High Court, June 12, 2024), it was held that:

• Any GST order passed against a deceased person is void.
• Section 93 applies only when the legal heir continues the same business.

Both courts reinforced that tax liability does not automatically pass to legal heirs.

Legal Fox India Analysis

• Protects legal heirs from wrongful GST demands.
• Mere inheritance is NOT enough for tax liability.
• Fresh GST registration = new legal business identity.
• Summons or notices to deceased individuals are invalid.
• GST officers must collect proper evidence before issuing demands.

Conclusion

The Jharkhand High Court reaffirmed that liability under Section 93 arises only when a legal heir continues the deceased’s business. Fresh GST registration by the legal heir clearly indicates a separate business identity, and tax liability cannot be transferred without proof of succession.

This decision provides clarity for proprietorship businesses where the proprietor passes away and legal heirs start new separate businesses.