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Holds Section 93 CGST Act Permits Tax Liability Determination After Death
In a significant ruling on the scope of the , the has held that Section 93 of the Act permits tax, interest, or penalty liability to be determined even after the death of the person against whom the underlying liability arises. The Division Bench, comprising Justice Anil Kshetarpal and Justice Vimal Kumar Yadav, clarified that the provision does not require to have commenced during the deceased's lifetime. The decision came in a petition filed by Jaiwanti, the widow and of late Ankit Dabas, who challenged proceedings initiated against her in relation to alleged acts committed by her deceased husband.
Background of the Case
The dispute arose from a issued on , more than three years after Ankit Dabas died on . The SCN, issued by the , proposed penalties against Jaiwanti under by invoking Section 93, in her capacity as the of her late husband. The proceedings stemmed from an investigation concerning alleged (ITC) and on the strength of invoices without corresponding supply of goods.
Jaiwanti argued that the expression “is determined after his death” in Section 93 permitted only the completion of proceedings that had already commenced during the deceased's lifetime. She contended that fresh proceedings proposing a penalty for alleged acts of her deceased husband could not be initiated more than three years after his death. The petitioner further raised a constitutional challenge to Section 93(1)(b), arguing that it unfairly deemed the to have committed the alleged wrong.
Court's Interpretation of Section 93
The High Court rejected the narrow interpretation advanced by the petitioner. It observed that Section 93 expressly contemplates liability being “determined after his death” and contains no qualification that such determination must arise from proceedings commenced during the deceased's lifetime. “The provision preserves liabilities attributable to the deceased's lifetime conduct for lawful determination and satisfaction from his . Death creates the need for someone to represent that ,” the Bench noted.
The Court further emphasized that the CGST Act does not make issuance of a notice during the lifetime a to a determination after death. It clarified that Section 93 is not an independent penal provision against a . Rather, Section 122 supplies the substantive penalty, while Section 93 governs the manner in which the liability may be enforced following the death of the person to whom the underlying conduct is attributed. In cases where the business has been discontinued, the Court noted, Section 93(1)(b) confines the 's liability to the of the deceased and only to the extent that the is capable of meeting the charge.
Rejection of Constitutional Challenge
The Court also rejected the constitutional challenge to Section 93(1)(b). It observed that the provision does not deem the to have committed the alleged wrong. Instead, it confines payment to the 's capacity to meet the charge. “The and the conditions of must still be established by the adjudicating authority,” the Bench said.
The Court acknowledged that the death of the person possessing first-hand knowledge may affect the explanation available to the . However, it noted that Section 126(3) requires an , and that the representative must be supplied with the relied-upon material and permitted to contest the alleged contravention, the statutory basis, and the proposed amount. “Inability to give a personal account of the deceased's affairs cannot be treated as an admission,” the Court observed.
Procedural Inconsistency and Relief Granted
In the present case, the Court noted an apparent inconsistency in the : one clause imposed a penalty of ₹1.5 lakh upon the petitioner, while another stated that no penalty was being imposed upon her. Given this discrepancy, the Court left the issues open for consideration by the and granted the petitioner four weeks to file an appeal under .
The Court's decision provides important clarity on the operation of Section 93 in the context of GST enforcement. It confirms that the tax department may pursue liabilities against the of a deceased person even if no proceedings were initiated during the person's lifetime, provided the conditions of are satisfied.
Implications for Legal Practice
This ruling has significant implications for legal practitioners advising clients in GST matters. It underscores that the death of a taxpayer does not extinguish potential tax liabilities. Legal representatives, including widows, children, or executors of an , may be subject to proceedings under Section 93 for acts committed by the deceased. Practitioners should advise clients to maintain records and documentation related to the deceased's business affairs, as the burden of explanation may fall on the representative.
The judgment also reinforces the principle that the adjudicating authority must still establish the and the conditions of . The is entitled to a fair hearing and to contest the proposed amount. The Court's observation that provides a safeguard for representatives who lack first-hand knowledge of the deceased's transactions.
Conclusion
The 's ruling affirms the broad scope of , allowing tax liability to be determined after the death of a person even without prior proceedings. By rejecting the constitutional challenge and emphasizing procedural fairness, the Court has balanced the interests of revenue collection with the rights of legal representatives. The case now moves to the , where the inconsistency in the will be addressed. This judgment will serve as a key reference for future disputes involving under the GST regime.
