Madras High Court Holds Fresh GST Assessment Proceedings Can Be Initiated Against Legal Heirs After Death of Taxable Person Under Section 93 CGST Act

In a significant ruling, the Madras High Court has held that fresh assessment proceedings under the Central Goods and Services Tax Act, 2017 (CGST Act) can be initiated against the legal heirs of a deceased taxable person, even where the business has been discontinued and no proceedings were initiated during the lifetime of the deceased. The decision was delivered by Justice D. Bharatha Chakravarthy on 16 June 2026 in a writ petition challenging an order passed under Section 74 of the CGST Act.

The petitioner, the widow of a deceased proprietor, challenged the initiation of assessment proceedings and the consequent tax demand, arguing that she was not involved in the business, which had been discontinued after her husband’s death. The authorities had issued notices and ultimately passed an order determining tax liability, interest, and penalty against the petitioner as legal heir, despite no proceedings having been initiated during the lifetime of the deceased.

The core legal issue before the Court was whether, in cases where the business is discontinued and no proceedings were initiated during the lifetime of the taxable person, fresh assessment proceedings could be commenced against the legal heirs under the CGST Act.

The petitioner contended that Section 93 of the CGST Act, which deals with the liability of legal heirs, must be read harmoniously with Sections 73 and 74, which require notice to the “person chargeable with tax” before determination of liability. It was argued that Section 93 only permits continuation of pending proceedings, not initiation of fresh proceedings against legal heirs after the death of the taxable person, especially where the business has ceased. The petitioner relied on Supreme Court and High Court precedents interpreting similar provisions in other tax statutes, and emphasized that the liability to pay tax cannot be imposed on a legal heir unless the statute expressly provides for it.

The respondent revenue authorities argued that Section 93 of the CGST Act expressly contemplates both situations: where tax liability is determined before death and remains unpaid, and where it is determined after death. The provision, it was submitted, authorizes the initiation and recovery of tax, interest, and penalty from legal heirs, even after the death of the taxable person, subject to the limitation that recovery is only to the extent of the estate inherited.

In its detailed analysis, the Court examined the statutory scheme of the CGST Act, particularly Section 93, which provides for the liability of legal heirs in cases where the business is either continued or discontinued after the death of the taxable person. The Court noted that Section 93(1)(b) specifically allows for recovery of tax, interest, or penalty determined after the death of the taxable person from the legal representative, to the extent the estate inherited is capable of meeting the charge. The Court further clarified that the expression “person chargeable with tax” in Section 74 is broader than “taxable person” and includes legal heirs where the statute imposes such liability.

The Court rejected the petitioner’s argument that Section 93 should be read restrictively to only permit continuation of pending proceedings, holding that the plain language of the statute authorizes initiation of fresh proceedings against legal heirs, even where the business has been discontinued and no notice was issued during the deceased’s lifetime. The Court emphasized that taxing statutes must be construed according to their express language, and limitations not found in the text cannot be read in by the Court.

Ultimately, the Court held that fresh proceedings may be initiated against legal heirs under Sections 73, 74, or 74A of the CGST Act, in view of Section 93, even if the business has been discontinued and no proceedings were pending at the time of death. However, the liability of the legal heir is limited to the extent of the estate inherited from the deceased.

The writ petition was accordingly dismissed, affirming the validity of the assessment proceedings initiated against the petitioner as legal heir. The Court’s decision provides important clarity on the scope of liability and procedural rights of legal heirs under the CGST Act in cases involving deceased taxable persons.