The Bombay High Court ruled that GST dues of a deceased individual cannot be recovered from a legal heir without proper adjudication, notice, and proof of business continuation. This decision came in the case of Navin Vishwanathan, who managed a separate proprietorship under the same trade name but with a different GST registration and location, after his father's death. The authorities sought to recover GST dues owed by his deceased father by freezing Navin's bank account without prior notice or hearing, prompting him to seek legal recourse.
The Court addressed whether GST authorities could recover a deceased person's dues from a legal heir by attaching their bank account without prior adjudication or notice. It concluded that separate GST registrations denote independent taxable entities, and a shared trade name does not imply business continuity. The Court highlighted that liability under Section 93 must be properly determined before any recovery actions are taken.
Read More: Madras High Court: Demanding tax u/s 76 of CGST cannot be invoked when tax collected is fully remitted to the Government, even if routed through another GST registration of the same entity [Order attached]
Furthermore, the Court noted that recovery under Section 79 requires a pre-determined liability, which was not established in this case. The Court emphasized that freezing a bank account without a show cause notice violates principles of natural justice and Article 300A, which protects against deprivation of property without due process. It stressed that coercive measures like attachment should be based on tangible evidence and proper satisfaction, rather than assumptions based on shared trade names.
Order Date - 15 April 2026
Parties : K Line India Pvt. Ltd. Vs Union of India & Ors.
Facts -
- K Line India Pvt. Ltd., engaged in shipping services, made zero-rated supplies to an SEZ unit and paid IGST, later filing a refund claim in August 2018.
- The department rejected the refund ex-parte in September 2019 without issuing a deficiency memo or granting a hearing, though the order was physically served.
- The petitioner, trying to correct the situation, filed a fresh refund application in February 2020, upon which a deficiency memo was issued but never concluded.
- Later, on advice, the petitioner filed an appeal in March 2023, but it was dismissed as time-barred under Section 107 of the CGST Act.
Issue -
- Whether a time-barred appeal can defeat a refund claim when the original rejection order itself is void for violation of procedure?
Order -
- The Court noted that Rule 92 mandates issuance of a deficiency memo and opportunity of hearing before rejecting a refund. In this case, both were absent, making the rejection procedurally defective and legally unsustainable.
- It emphasized that an order passed in violation of mandatory procedure is “void ab initio”, meaning it has no legal existence. Therefore, such an order cannot create a valid limitation barrier against the taxpayer.
- The Court observed that the petitioner was actively pursuing the remedy, including filing a fresh application before the COVID-19 disruption, and thus cannot be accused of negligence or delay in asserting rights.
- Importantly, since the department itself entertained the second refund application and issued a deficiency memo, it must logically complete that process instead of relying on technical limitation grounds.
