Introduction
In a significant ruling, the Bombay High Court has reaffirmed the importance of natural justice and due process under the GST law. The Court held that tax recovery proceedings cannot be initiated against a legal heir without prior adjudication of liability, even if the business name is identical.
The case of Navin Vishwanathan vs. State of Maharashtra addresses a critical issue under the Central Goods and Services Tax Act, 2017—whether GST dues of a deceased proprietor can be recovered from the legal heir without following proper legal procedure.
Facts of the Case
– The Petitioner’s father operated a proprietorship business under the name M/s. Oriental Facility and held a GST registration.
– The GST registration was cancelled suo motu with effect from 01.01.2023.
– The father passed away on 11.02.2024.
– The Petitioner started his independent proprietorship business under the same trade name but with a separate GST registration and different place of business.
– The department raised a demand of approx. ₹3.86 crore against the father’s business.
– Initially, the deceased’s bank accounts were attached and later released.
– After one year, the department issued DRC-13 and attached the Petitioner’s bank account without issuing notice or hearing.
Key Legal Issue
Whether GST dues of a deceased person can be recovered from a legal heir merely due to similarity in trade name without initiating proceedings under Section 93 of the CGST Act.
Court’s Observations
1. Separate GST Registration = Separate Taxable Person
Each GSTIN represents a distinct taxable entity. Mere similarity in trade name does not establish continuation of business.
2. Section 93 Requires Proper Determination
Liability of a legal heir must be adjudicated and cannot be presumed.
3. Recovery Under Section 79 Cannot Precede Liability
Recovery provisions can be invoked only after liability is determined.
4. Violation of Natural Justice
No show cause notice or hearing was provided, violating principles of natural justice and Article 300A.
5. Improper Use of Provisional Attachment Powers
Attachment of bank accounts must be based on tangible material and necessity to protect revenue.
Judgment / Final Outcome
– The attachment order (DRC-13) was quashed.
– The Petitioner’s bank account must be de-frozen within one week.
– The department is free to initiate fresh proceedings under Section 93 in accordance with law.
Conclusion
This judgment reinforces that legal heirs are not automatically liable for GST dues of deceased persons. Separate GST registrations must be respected, and recovery proceedings cannot bypass adjudication. Authorities must follow due process and principles of natural justice before taking coercive actions.
Practical Takeaways:
– Ensure Section 93 proceedings are initiated before recovery.
– Similar trade name does not imply same entity.
– Bank attachments without notice can be challenged.
– Authorities must follow due process before invoking recovery provisions.
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Disclaimer: This article is for informational purposes only and is based on the judgment of the Bombay High Court and provisions of the Central Goods and Services Tax Act, 2017. It does not constitute legal or professional advice; readers should consult a qualified professional before taking any action. The views expressed are personal, and no liability is accepted for errors, omissions, or outcomes arising from its use.
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