(2026) 1 GSTAT E- Journal 131 (Thiruvananthapuram)Section 73Decision: In Favour of Assessee
GSTAT on Deceased Proprietors & Section 16(5): Proceedings Without Notice to Legal Heir Void Under Section 93
The GSTAT Thiruvananthapuram Bench held that tax proceedings against a deceased proprietor are void without statutory notice to the legal heir under Section 93(1)(b). Furthermore, retrospectively inserted Section 16(5) cures belated ITC claims filed prior to 30.11.2021.
Case Name / Parties
Vijayan Sahadevan (Deceased) v. The Commissioner of Kerala State GST, Thiruvananthapuram
Appeal Number
APL/19/TVP/2026
Tribunal Bench
Thiruvananthapuram Bench
Date of Judgment / Order
21/08/2026
Coram
Hon'ble Shri Subramanya Rayaprol, Vice-President • Hon'ble Shri Ramamoorthi Sriram, Member (Technical)
For Appellant: Shri Balachandran, Ld. Advocate (representing legal heir)
For Respondent: Shri M.I. Mansur M I, Ld. Joint Commissioner
Facts of the Case
The sole proprietor of a registered concern filed the Form GSTR-3B return for March 2018 belatedly on 16.06.2019. The Department issued ASMT-10 proposing disallowance of ITC of ₹1,72,430/- along with interest of ₹2,18,198/-, later culminating in SCN DRC-01 with revised interest under Section 50(1) of ₹1,87,350/- and a penalty of ₹20,000/-. The proprietor was suffering from continuous illness during the COVID-19 pandemic and suffered an ex parte Order-in-Original dated 15.02.2022, and his First Appeal was dismissed on 08.12.2022. The proprietor died on 05.09.2024, and the business was discontinued with GSTIN cancelled. On 26.03.2026, the deceased proprietor's son filed an appeal before GSTAT. The Department made no inquiry regarding whether any estate was inherited, nor did it issue any statutory notice or demand to the legal heir under Section 93.
Issues Before GSTAT
- 1Whether assessment and appellate recovery proceedings can continue against a deceased sole proprietor without statutory notice to the legal heir under Section 93(1)(b) of the CGST/KGST Act.
- 2Whether the deceased appellant was substantively eligible for the disallowed Input Tax Credit in light of retrospectively inserted Section 16(5) of the CGST Act.
- 3Whether Section 16(5) provides statutory relief against separate interest levied under Section 50(1) for delay in discharging cash tax liabilities.
Relevant Statutory Provisions & Rules
Statutory Sections
Section 16(4) of CGST/KGST Act, 2017Section 16(5) of CGST/KGST Act, 2017Section 93 of CGST/KGST Act, 2017Section 93(1)(b) of CGST/KGST Act, 2017Section 50(1) of CGST/KGST Act, 2017Section 73 of CGST/KGST Act, 2017Section 74 of CGST/KGST Act, 2017Section 74A of CGST/KGST Act, 2017Section 118 of Finance (No. 2) Act, 2024
Circulars & Notifications
Circular No. 237/31/2024-GST dated 15.10.2024Notification No. 22/2024-Central Tax dated 08.10.2024
Contentions of the Parties
Appellant / Taxpayer Contentions
- •No legal proceedings can be initiated, continued, or concluded against a dead person. Under Section 93(1)(b), fresh notice must be served on the legal representative and recovery is strictly confined to the inherited estate.
- •The Department made zero inquiry into the existence of an estate and served no notice on the legal heir, rendering the proceedings void ab initio under settled High Court jurisprudence.
- •On merits, Section 16(5) retrospectively relaxed time limits for FY 2017-18 to 2020-21 for returns filed on or before 30.11.2021; since returns were filed on 16.06.2019, the ITC is fully protected.
Respondent / Revenue Contentions
- •The legal heir is competent to pursue the appeal under Section 93, but the deceased had already litigated and lost before the First Appellate Authority while alive.
- •While Circular 237/31/2024-GST instructs authorities to apply Section 16(5) in pending appeals, Section 16(5) only waives Section 16(4) ITC disallowances and does not waive Section 50(1) interest on delayed cash tax payments.
- •Verification by the jurisdictional officer is mandatory before consequential relief under Section 16(5) can be granted.
Findings of GSTAT
Notice to a living, correctly identified person is a foundational jurisdictional requirement. An assessment or recovery against a dead person is a nullity in law. On the death of a sole proprietor, the proprietorship firm ceases to exist.
Section 93(1)(b) governs discontinued businesses of deceased taxpayers: liability of the legal representative is confined strictly to the value of the inherited estate capable of meeting the charge. Where the Department fails to ascertain whether an estate exists and serves no notice on the legal heir, there is no statutory basis for recovery.
On merits, Section 16(5) inserted vide Section 118 of the Finance (No. 2) Act, 2024 w.e.f. 01.07.2017 allows ITC for FY 2017-18 if returns were filed up to 30.11.2021. The deceased filed on 16.06.2019, making the ITC fully eligible.
Section 16(5) operates only qua Section 16(4) ITC disallowances and does not forgive independent Section 50(1) interest on late cash tax. However, because the entire proceeding is void ab initio for want of Section 93 notice to the legal heir, the entire demand, including interest, falls to the ground.
Ratio Decidendi
Key Legal Principle
“Tax proceedings cannot be conducted against a deceased sole proprietor without issuing statutory notice to the legal representative under Section 93(1)(b) of the CGST Act, and recovery is strictly confined to the inherited estate. Retrospectively enacted Section 16(5) protects belated ITC claims filed on or before 30.11.2021 in all pending matters.”
Final Decision & Relief Granted
Outcome: The appeal was allowed. The impugned Order-in-Appeal and the underlying assessment orders were quashed and set aside in toto with consequential relief.
Relief Granted: Complete setting aside of assessment and appellate orders; quashing of tax demand, interest, and penalties; immunity to legal heir in absence of Section 93 proceedings.
Operative relief was verified against the Tribunal's order and accurately summarized without altering its legal effect.
Practical Implications for Taxpayers
- Legal heirs receiving tax notices addressed to a deceased sole proprietor should immediately submit the death certificate and raise jurisdictional objections under Section 93.
- Legal heirs are not personally liable with their own assets for the deceased's tax dues; recovery is statutorily restricted only to the assets inherited from the deceased.
- Taxpayers whose FY 2017-18 to 2020-21 ITC was disallowed under Section 16(4) can invoke Section 16(5) in all pending GSTAT appeals, provided the GSTR-3B was submitted before 30.11.2021.
Practical Takeaways for Tax Professionals
- Check whether the deceased proprietor's death was formally communicated to the Department; however, remember that under Orissa HC in J.S. Enterprises and Allahabad HC in Sambul Shahid, notice to a dead person is void even if death was not formally intimated.
- Raise both jurisdictional and substantive grounds: plead Section 93 fatal notice defect first, and plead Section 16(5) statutory ITC regularisation on merits second.
- Differentiate Section 16(5) ITC relief from Section 50(1) cash interest: Section 16(5) does not extinguish interest on late cash tax discharges, but a jurisdictional knockout under Section 93 destroys the entire composite demand.
SKM
Editorial Commentary
SKM Laws Professional Analysis
This decision from the Thiruvananthapuram Bench provides an authoritative compendium of law on two crucial issues: the procedural inviolability of Section 93 and the retroactive application of Section 16(5). Too often, revenue officers continue automated ex parte proceedings against cancelled GSTINs of deceased individuals, oblivious to the fact that civil death terminates individual assessability. GSTAT reinforced ten separate High Court precedents to confirm that an assessment against a dead person is a non-entity. On Section 16(5), the Tribunal gave full effect to Parliament's legislative intent to eliminate the crushing burden of Section 16(4) time-limits for early GST years.
Related Cases & Precedents
(2026) 1 GSTAT E-Journal 181
Examining Section 16(4) transition window and mandatory personal hearing.
(2026) 1 GSTAT E-Journal 122
Quashing Section 74 SCN for self-assessed return disclosures.
Related GST Tools & Utilities
Source Citation & Forensic References:
Official Citation: (2026) 1 GSTAT E- Journal 131 (Thiruvananthapuram)
Source Publication: GSTAT E-Journal, Volume I (Till 31.08.2026), Published by Goods and Services Tax Appellate Tribunal
Journal Pages: 131-139
Legal Information Disclaimer
This case law analysis is published strictly for informational, educational, and research purposes. It does not constitute legal, tax, or professional advice. The ratio decidendi and commentary reflect professional editorial interpretations of the Goods and Services Tax Appellate Tribunal's reported judgment. Readers must refer to the full certified order of the Tribunal before initiating or defending litigation.