 for FY 2017-18 and holds GST recovery from a deceased proprietor’s estate must comply with Section 93.){kind=link}
Case: Vijayan Sahadevan (Deceased) v. The Commissioner of Kerala State GST, Thiruvananthapuram
Forum: Goods and Services Tax Appellate Tribunal, Thiruvananthapuram Bench
Bench: Division Bench, Court No. I
Appeal No.: APL/19/TVP/2026
Final Order No.: 03/TVP/KERALA/2026
Coram: Shri Subramanya Rayaprol, Vice-President and Shri Ramamoorthi Sriram, Member (Technical)
Date of Hearing: 7 August 2026
Date of Order: 21 August 2026
Decision: Appeal allowed with consequential relief.
Background
The Goods and Services Tax Appellate Tribunal, Thiruvananthapuram Bench has dealt with two significant GST issues concerning the benefit of the retrospectively inserted Section 16(5) of the CGST/KGST Act and the statutory procedure for enforcing tax liabilities after the death of a sole proprietor.
The dispute arose from the delayed filing of GSTR-3B returns for the financial year 2017-18. The department proposed disallowance of Input Tax Credit of ₹1,72,430 under Section 16(4), together with interest and penalty. The adjudication culminated in an ex parte order dated 15 February 2022, and the first appellate proceedings were also decided against the taxpayer.
The proprietor subsequently died on 5 September 2024. The appeal before GSTAT was filed on 26 March 2026 by his son in the capacity of legal heir. The Tribunal therefore examined both the substantive entitlement to ITC and the consequences of Section 93 where a taxable person dies and the proprietary business stands discontinued.
Section 93: Liability of Legal Heir Limited to Estate of Deceased
The Tribunal noted that the GST registration of the deceased proprietor had already been cancelled and the business was not continued after his death.
Referring to Section 93(1)(b) of the CGST/KGST Act, the Tribunal observed that where the business of a deceased taxpayer is discontinued, the legal representative may be liable for tax, interest or penalty only out of the estate of the deceased and only to the extent that the estate is capable of meeting such liability.
In the present case, the department had neither issued any notice to the legal heir nor undertaken any inquiry to establish whether any estate of the deceased was available against which the liability could be enforced.
The Tribunal held that in the absence of proceedings against the legal heir in accordance with Section 93(1)(b), the department could not recover the disputed dues from the deceased appellant or through the legal heir without first satisfying the statutory requirements governing such recovery.
The Tribunal also referred to several High Court decisions holding that proceedings cannot simply continue against a deceased sole proprietor and that, where the department seeks to proceed against a legal representative, due notice and an opportunity of hearing are essential.
Section 16(5): ITC Available for FY 2017-18 Returns Filed Before 30 November 2021
On the substantive ITC issue, the Tribunal considered Section 16(5), inserted retrospectively with effect from 1 July 2017 by Section 118 of the Finance (No. 2) Act, 2024.
Section 16(5) overrides the limitation contained in Section 16(4) for invoices or debit notes pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21 where the relevant return under Section 39 was filed on or before 30 November 2021.
The Tribunal recorded that the returns concerning FY 2017-18 had been filed well before the statutory cut-off date. The return for March 2018 was recorded as having been filed on 16 June 2019, while the earlier returns were also filed substantially before 30 November 2021.
Accordingly, the Tribunal held that the deceased appellant was entitled to the ITC claimed for FY 2017-18 by virtue of Section 16(5), notwithstanding the earlier disallowance under Section 16(4).
GSTAT’s Ruling
The Tribunal concluded that the impugned appellate order was unsustainable on both aspects of the dispute.
First, no proceedings had been properly undertaken against the legal heir under Section 93 after the death of the proprietor, nor had the department established the existence or extent of any inherited estate against which recovery could lawfully be pursued.
Secondly, on merits, the ITC relating to FY 2017-18 was protected by the retrospectively inserted Section 16(5), since the relevant GST returns had been filed before 30 November 2021.
The Tribunal therefore set aside the impugned order and allowed the appeal with consequential relief.
Key Takeaway
The ruling highlights two important principles under GST law. The retrospective relaxation under Section 16(5) can protect ITC for FY 2017-18 to FY 2020-21 where the relevant returns were filed by 30 November 2021. Separately, where a sole proprietor dies and the business is discontinued, GST liability cannot automatically be enforced against the legal heir; the department must proceed in accordance with Section 93, and any liability of the legal representative is confined to the estate of the deceased to the extent capable of meeting the charge.