Unnikrishnan R. Vs Union of India (Madras High Court)
Summary: In Unnikrishnan R. v. Union of India, the Madras High Court ruled that a demand order issued against a deceased person is invalid if the legal heirs are not continuing the deceased’s business. The case involved a writ petition filed by Mr. Unnikrishnan, the son of Mr. Radhakrishnan Pillai, who owned M/s. Chothi Enterprises and passed away in 2017. The Revenue Department had issued a demand order in 2023 for tax liabilities related to 2017-2018, despite the business not being continued by the heirs. The court observed that issuing a Show Cause Notice (SCN) to a deceased person was legally flawed. According to Section 93 of the Central Goods and Services Tax (CGST) Act, tax liabilities can only be recovered from legal heirs if they continue the business. Since the business was not continued by the heirs, the court invalidated the demand order and directed the department to issue fresh notices to the legal heirs if applicable. The ruling underscores that tax recovery from a deceased person’s estate is only possible if the legal heirs carry on the business operations.
The Hon’ble Madras High Court in the case of Unnikrishnan R. v. Union of India [W.P No. 12464 of 2024 dated June 12, 2024], held that order passed against the dead person is invalid when the business of the deceased person is not being operated by the legal heirs of the deceased person. Also, it was held that, the Department is empowered to recover the tax amount under Section 93 of the Central Goods and Services Tax Act (“the CGST Act”) if the business is being carried out by the legal heirs of the deceased person.
