Legal heir GST liability clarified: Key update for taxpayers
The focus keyphrase legal heir GST liability is at the centre of a crucial legal clarification that affects thousands of families dealing with tax notices after the death of a business owner. According to recent case law and statutory interpretation, a legal heir is not liable for GST dues of a deceased person if the business is not continued by the heir.
This clarification not only reduces unnecessary tax disputes but also provides peace of mind to grieving families.
What does the law say?
As per Section 93 of the CGST Act, 2017, liability of a taxable person in case of death gets transferred to the legal representative only if:
- The business continues after the taxpayer’s death
- The legal heir or representative actively carries on the business
If there’s no business continuity, GST dues cannot be recovered from legal heirs.
Key case: [Mahadeo Construction Company v. Union of India (Jharkhand High Court)]
In this 2023 case, the High Court held:
- Legal heirs are not “deemed taxable persons” under GST unless they continue the business
- GST liability does not pass automatically to heirs like it does in income tax (Section 159 of IT Act)
- No provision exists in GST law to make heirs liable for past dues without active involvement
👉 Read the judgment summary here
Practical Impact: What should families know?
✅ If the deceased was a sole proprietor and the business stopped after death, legal heirs:
- Do not need to pay any pending GST dues
- Should file for cancellation of GST registration due to death (via Form GST REG-16)
- Must ensure proper documentation (death certificate, declaration of non-continuance)
❌ If the heir continues the business, they inherit both the assets and liabilities, including GST dues.
How is GST different from Income Tax in this regard?
| Aspect | GST | Income Tax |
|---|---|---|
| Legal heir liable? | Only if business is continued | Yes, for tax dues of deceased |
| Law applicable | Section 93, CGST Act | Section 159, IT Act |
| Automatic liability transfer? | No | Yes |
Expert View: CA Perspective
“This judgment brings relief for families struggling with post-death tax demands. Legal heirs should proactively cancel GST registration of the deceased to avoid future notices,” says CA Praveen Kumar, Indirect Tax Expert.
Step-by-Step: How to cancel GST registration due to death
- Log in to GST portal
- Go to Services > Registration > Application for Cancellation
- Select reason: Death of the proprietor
- Upload death certificate and declaration
- Submit using DSC/e-sign
📌 Use Form REG-16 within 30 days of death.
Summary
Legal heirs are not liable for GST dues of a deceased person if they do not continue the business, as clarified by the Jharkhand High Court in 2023 under Section 93 of CGST Act. Cancel GST registration using Form REG-16 with required documents.
FAQs
Q1. Do legal heirs have to pay GST if the business shuts after death?
No, liability doesn’t transfer if the business is not continued.
Q2. What form is used to cancel GST after a person’s death?
Form GST REG-16.
Q3. What documents are needed to cancel GST due to death?
Death certificate, PAN, declaration of non-continuance.