Delhi High Court Upholds Section 93 CGST: GST Penalty Proceedings Can Begin After a Person's Death
The Delhi High Court has held that GST authorities need not have issued a show cause notice during a person's lifetime before determining, after his death, a tax, interest or penalty liability that arises from his conduct. In its judgment of 25 September 2026 in Jaiwanti v. Union of India (W.P.(C) 7254/2025, neutral citation 2026:DHC:8282-DB), a Division Bench of Justice Anil Kshetarpal and Justice Vimal Kumar Yadav also rejected an Article 14 challenge to Section 93(1)(b) of the Central Goods and Services Tax Act, 2017. That clause makes a legal representative liable, out of the deceased's estate, where the business has been discontinued.
The petitioner, the widow of the deceased, was sent to the statutory appeal route, and the Department was told to account for ₹15.40 lakh in cash seized during a 2020 search.
How a 2020 search led to a 2024 notice against the widow
According to the judgment, officers searched the Dwarka residence of Ankit Dabas on 23 July 2020. The investigation concerned alleged fraudulent availment and passing of input tax credit, and refunds of IGST, on invoices with no corresponding supply of goods. Three firms figured in the investigation: M/s P.C. International, M/s Satguru Corporation and M/s B.K. Enterprises. Cash of ₹15,40,000 found in the search was, on the Department's account, handed over voluntarily pending investigation and placed in a fixed deposit with State Bank of India.
Ankit Dabas died on 6 May 2021, and the Department was informed of his death by a letter dated 5 October 2021. On 31 July 2024, more than three years after the death, the Directorate General of GST Intelligence issued a show cause notice to several parties. It proposed penalties under Section 122(3)(a) of the CGST Act against the petitioner as his legal representative. The Order-in-Original followed on 1 February 2025. The writ petition was filed on 23 May 2025, within the three-month appeal period and the further one month that can be condoned under Section 107(4).
The adjudication order itself points in two directions. Clause AD imposes a penalty of ₹1,50,000 on the petitioner under Section 122(3)(a). Clause AE says the adjudicating authority refrains from imposing any penalty and directs that the ₹15.40 lakh not be appropriated. The Bench called the two clauses apparently inconsistent and left their meaning to the appellate authority.
Why the court read Section 93 as allowing a determination after death
Section 93(1) applies where a person liable to pay tax, interest or penalty under the CGST Act dies. Under clause (a), if the business is continued after the death, the person continuing it is liable. Under clause (b), if the business is discontinued, the legal representative must pay the tax, interest or penalty out of the estate, to the extent the estate is capable of meeting the charge. This covers dues determined before the death that remained unpaid, and dues that are "determined after his death".
The petitioner argued that those closing words only allow the Department to complete proceedings already begun while the person was alive. The Bench did not accept that reading. It said the provision "contains no such qualification" and that the words do not make a notice during the deceased's lifetime a condition precedent to a later determination. It also separated two stages. Investigation and adjudication are distinct, and the court found it unnecessary to treat the investigation as the start of penalty proceedings in order to sustain a determination made after death.
On the three-year gap, the judgment says the lapse of time after death does not by itself create a bar under Section 93. It adds that the ruling confers no exemption from any limitation requirement that otherwise applies, so whether the July 2024 notice was issued in time is still open.
The legal heir is not treated as the wrongdoer
The judgment is careful about what Section 93 does not do. The Bench held that Section 93 must be kept apart from Section 122(3)(a), which penalises a person who aids or abets specified contraventions such as issuing or using fake invoices. Whether the deceased committed a contravention is one question. Whether the money consequence of a proved contravention can then be recovered through Section 93 is a different one. In the court's words, Section 93 "is not an independent penal provision against the legal representative".
That reasoning also disposed of the constitutional challenge. The petitioner said Section 93(1)(b) was arbitrary and discriminatory because an heir cannot meaningfully answer allegations about another person's conduct. The court pointed to safeguards built into the scheme:
- the underlying contravention must still be proved before the adjudicating authority;
- Section 126(3) requires an effective opportunity of hearing;
- the representative is not deemed to have committed the alleged wrong;
- liability is confined to the estate and to what the estate can bear; and
- the statutory appeal under Section 107 remains available.
On the grounds urged, the Bench held the provision to be "neither discriminatory nor manifestly arbitrary".
How the Bench placed earlier rulings
- Shabina Abraham v. Collector of Central Excise and Customs (Supreme Court, 2015): read as a case where the excise law had no machinery to assess the legal representatives of a deceased person, and not as authority that fiscal proceedings always abate on death. The CGST Act supplies that machinery through Section 93.
- Lal Chand Verma v. Union of India (Delhi High Court, 8 January 2025): distinguished because the notice there was issued in the dead assessee's own name despite intimation of death, and no notice had gone to the legal heir.
- Income tax decisions: the Bench noted the divergence between the Madras High Court in CIT v. Late Dr. K.C.G. Verghese, which did not sustain penalty proceedings started after death, and the Allahabad High Court in Kalawati Devi v. ITO, which allowed such proceedings to be commenced or continued against legal representatives.
What happens next to the appeal and the seized ₹15.40 lakh
The court did not decide the merits. It recorded that no finding was returned on service of the notice, proof of the alleged contravention, whether the conditions of Section 93(1)(b) are satisfied, computation of the penalty, or the effect of clauses AD and AE. All of these go to the appellate authority. The petitioner has four weeks from the judgment to file an appeal under Section 107, and an appeal filed within that time is not to be rejected on limitation.
On the cash, the Bench held that the Department must establish a subsisting lawful basis for keeping it, and set a timetable:
- within three weeks, the respondents must give a complete account, including the present status of the amount, fixed deposit particulars, interest earned and the statutory authority relied on;
- the petitioner may respond within two weeks after that;
- the competent authority must pass a reasoned decision within four weeks of her response; and
- any amount for which no lawful basis of retention or appropriation is shown must be released within two weeks, with the interest actually earned on it.
What heirs, firms and GST advisers should check in similar cases
For families of proprietors who were under GST investigation, this judgment means that a death does not close the file. A notice can arrive years later, addressed to the legal representative, and Section 93 will not by itself shield the estate. The defences the court kept open are the ones that matter. Was the business discontinued, so that clause (b) applies at all? Can the estate meet the charge? Was the notice properly served and issued within limitation? And can the Department prove the contravention against the deceased?
Where fraud is alleged, the Supreme Court's ruling that Section 74 notices must state the foundational facts of fraud or suppression will also be relevant when the notice is tested in appeal.
Advisers should keep proof of when the Department was told of the death and establish whether anyone continued the business, since that moves the case to clause (a) and a different liable person. An estate valuation is also needed, because recovery under clause (b) cannot exceed what the estate can bear.
In fake-invoice cases the dispute will usually turn on the conditions for claiming input tax credit under Section 16, including actual receipt of goods, which an heir may be poorly placed to prove or disprove from the deceased's records. The decision has also been covered in LiveLaw's report on the Section 93 decision. Where cash or other property was seized in the deceased's lifetime, the directions in this case show that a writ court can require the Department to justify continued retention and to return, with interest earned, whatever it cannot justify.
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