Delhi High Court Clarifies Legal Position on Liability of Legal Heirs Under Section 93 of CGST Act After Proprietor’s Death

In a recent decision, the Delhi High Court addressed the issue of liability of legal heirs following the death of a proprietor against whom proceedings under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017 had been initiated. The case arose from a challenge to an order dated 25th February 2025, passed under Section 73 of the CGST Act against a proprietary concern. Notably, the proprietor passed away just two days after the impugned order was issued.

The petitioner, the widow of the deceased proprietor, contended that the business had ceased operations and that she had neither succeeded to the business nor to the estate of her late husband. She argued that, in such circumstances, the authorities were required to proceed strictly in accordance with Section 93 of the CGST Act, which governs the liability of legal representatives in the event of the death of a taxable person.

The Court observed that the widow had clearly stated she had not succeeded to the business or estate of the deceased. In light of this, the Court held that she could not be proceeded against for execution of the impugned order unless the authorities determined, as per the statutory provisions, that she had indeed succeeded to the estate or business. The Court emphasized that it was not within its purview to adjudicate whether the petitioner had succeeded to the interest of the deceased; this determination was to be made by the respondent authorities at the appropriate stage.

On this basis, the Court concluded that the writ petition was misconceived and dismissed it, clarifying that the proper course for the authorities was to proceed in accordance with the provisions of the CGST Act, particularly Section 93, when seeking to enforce recovery against legal heirs. All pending applications and interim orders were also dismissed and vacated, respectively.

This judgment reaffirms the statutory framework under the CGST Act regarding the liability of legal heirs and underscores the necessity for tax authorities to follow due process before proceeding against successors of a deceased proprietor.