The Delhi High Court addressed a case involving Jaiwanti, the legal representative of her deceased husband, Ankit Dabas, who was implicated in fraudulent Input Tax Credit (ITC) and IGST refund activities. The Department had seized ₹15.40 lakh from Dabas's residence during an investigation, claiming it was voluntarily handed over as security for potential tax liabilities. Jaiwanti challenged the show cause notice and subsequent penalty imposed on her as Dabas's representative, asserting the Department's retention of the money was unjustified.
Read more: Gauhati High Court - Bona fide purchaser cannot be denied ITC merely because the supplier failed to deposit GST with the Government, provided the purchase transactions are genuine [Order attached]
The Court examined whether Section 93 of the CGST Act allows penalty proceedings against a deceased person's legal representative. It concluded that tax, interest, or penalties could be determined posthumously, provided the contravention is established. The legal representative's liability is limited to the deceased's estate, and they are not personally accountable for the deceased's actions. The Department must demonstrate both the contravention and conditions for representative liability.
The Court rejected claims that the provision was arbitrary, noting it serves to determine liabilities while ensuring safeguards like a fair hearing and the right to appeal. The Department was instructed to provide a detailed account of the seized money, including its fixed-deposit status, interest earned, and any withdrawals. Any amount without a lawful basis for retention should be returned to Jaiwanti, along with the interest accrued.
Order Date - 25 September 2026
Parties: Jaiwanti Vs. Union of India & Others
Facts -
- Jaiwanti, the wife and legal representative of late Ankit Dabas, approached the Delhi High Court challenging a show cause notice dated 31 July 2024 and an Order-in-Original dated 1 February 2025. The proceedings related to alleged fraudulent availment and passing on of Input Tax Credit (ITC) and IGST refunds using invoices without actual supply of goods.
- During an investigation by the Directorate General of GST Intelligence (DGGI), ₹15.40 lakh was found at Ankit Dabas's residence on 23 July 2020. According to the Department, he voluntarily handed over the cash as security against potential tax liabilities, and the amount was placed in a fixed deposit with the State Bank of India. Jaiwanti disputed the legality of the continued retention of this money.
- Ankit Dabas died on 6 May 2021, and the Department was informed of his death in October 2021. Subsequently, on 31 July 2024, the Department issued a show cause notice proposing penalties against Jaiwanti as his legal representative for alleged acts connected with three entities: P.C. International, Satguru Corporation and B.K. Enterprises.
- The Order-in-Original imposed a penalty of ₹1.50 lakh on Jaiwanti under Section 122(3)(a) of the CGST Act. However, its operative clauses contained contradictory statements about whether a penalty was imposed and whether the ₹15.40 lakh could be appropriated. Jaiwanti also contended that she had not received the show cause notice and had consequently not participated in the adjudication proceedings.
Issue -
- Whether Section 93 of the CGST Act permits the Department to initiate GST penalty proceedings against the legal representative of a deceased person?
Order -
- The Court interpreted Section 93 of the CGST Act to mean that tax, interest or penalty may be determined even after the death of the person concerned. The provision does not require a show cause notice to have been issued during the deceased person's lifetime, although the underlying contravention must still be established through adjudication.
- Where the deceased person's business has been discontinued, Section 93(1)(b) limits the legal representative's liability to the extent that the deceased's estate can meet the charge. The provision does not make the legal representative personally responsible for the alleged wrongdoing, and the Department must establish both the underlying contravention and the conditions for representative liability.
- The Court rejected the challenge alleging that the provision was arbitrary or discriminatory under Article 14 of the Constitution. It observed that the law serves the legitimate purpose of determining liabilities arising from the deceased person's conduct, while preserving safeguards such as an effective hearing, access to relied-upon material and the right to appeal.
- The Court directed the Department to furnish a complete account of the amount, including its fixed-deposit status, interest earned and any withdrawals or appropriations, along with the precise legal authority for retaining it. Any amount for which no continuing lawful basis is established must be returned to Jaiwanti, together with the interest actually earned on the fixed deposit.
