Rejecting constitutional challenge to Section 93(1)(b), the Delhi High Court has clarified that ‘determined after his death’ covers fresh proceedings and does not require a Show Cause Notice during the deceased’s lifetime. The Court ruled that Section 93 of the CGST Act expressly permits determination of tax, interest or penalty against the legal representative of a deceased person even after death, and the provision does not require that adjudicatory proceedings must have commenced during the lifetime of the deceased.
The Court explained that the expression ‘is determined after his death’ covers both liability determined before death but remaining unpaid and liability determined thereafter, and issuance of a Show Cause Notice during the deceased’s lifetime is not a condition precedent. Thus, the constitutional challenge to Section 93(1)(b) on the grounds of discrimination and denial of meaningful defence was rejected, emphasising that the provision has a rational basis, confines payment to the estate’s capacity to meet the charge, and preserves adjudicatory safeguards including the right to be heard under Section 126(3) and the right of appeal.
The petitioner was granted four weeks to file an appeal under Section 107, which shall be entertained on merits and not rejected on limitation. The Department was separately directed to furnish a complete account of the Rs. 15.40 lakhs retained as cash security and to release any amount for which no lawful basis of retention is established.
The Division Bench comprising Justice Anil Kshetarpal and Justice Vimal Kumar Yadav observed that the construction of Section 93 and the constitutional challenge raised pure questions of law, which could be examined under Article 226 notwithstanding the availability of an alternative statutory remedy. However, factual questions concerning service of the Notice, sufficiency of material, satisfaction of Section 93(1)(b) conditions, computation of penalty, and the effect of contradictory clauses AD and AE were matters for the Appellate Authority under Section 107. The Court noted that the Writ Petition was filed within the extended limitation period under Section 107(4), and the Petitioner could seek condonation of delay after excluding the period spent prosecuting the Writ Petition.
On the merits, the Court observed that Section 93 expressly contemplates determination of tax, interest or penalty ‘after his death’ and contains no requirement that adjudicatory proceedings must have commenced during the lifetime of the deceased. The provision distinguishes between liability determined before death but remaining unpaid and liability determined thereafter, without making a notice during the deceased’s lifetime a condition precedent. Investigation and adjudication being distinct stages, the fact that investigation commenced and the husband’s statement was recorded during his lifetime did not constitute the source of the power to proceed after death. The Court clarified that Section 93 is not an independent penal provision against the legal representative; it merely enables enforcement of the substantive penalty under Section 122 through the representative, subject to the conditions prescribed therein.
Distinguishing Shabina Abraham v. Collector of Central Excise and Customs [(2015) 10 SCC 770], the Court observed that the Supreme Court had found no machinery in the Excise legislation for assessment against legal representatives, whereas Section 93 itself provides such machinery. The Court preferred the view in Kalawati Devi v. Income Tax Officer [(1981) 21 CTR (All) 62], holding that the Income Tax decisions turned on their own statutory scheme and could not be read as a rule independent of statute.
On the constitutional challenge, the Court observed that Section 93(1)(b) preserves liabilities attributable to the deceased’s lifetime conduct for lawful determination from the estate, with payment confined to the estate’s capacity to meet the charge. The provision does not deem the representative to have committed the wrong, and Section 126(3) mandates an effective opportunity of hearing, with the right of appeal preserved. Applying the presumption of constitutionality and the latitude recognised for economic legislation in R.K. Garg v. UOI [(1981) 4 SCC 675], the Court held that the statutory purpose, representative procedure, and limitation to estate assets provided a rational basis, and the provision was neither discriminatory nor manifestly arbitrary.
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Briefly, the Petitioner, Mrs. Jaiwanti, challenged a Show Cause Notice and Order-in-Original issued by the GST Department against her as the legal representative of her late husband, Ankit Dabas, who died on May 06, 2021. The proceedings stemmed from a DGGI investigation into alleged fraudulent availment and passing on of Input Tax Credit and refund of IGST on the strength of invoices without corresponding supply of goods, involving three entities, M/s P.C. International, M/s Satguru Corporation and M/s B.K. Enterprises.
During a search of the husband’s residential premises at Dwarka on July 23, 2020, cash of Rs. 15,40 lakhs were found, which the Department claimed was voluntarily submitted as security and was placed in a fixed deposit with SBI, R.K. Puram. The Department was informed of the death through a letter dated Oct 05, 2021, from the husband’s cousin. More than three years after the death, on July 31, 2024, the SCN was issued to the Petitioner proposing penalty under Section 122(3)(a) read with Section 93 of the CGST Act, along with appropriation of Rs. 15.40 lakhs.
The Petitioner did not participate in adjudication, claiming non-receipt of the Notice. The OIO contained contradictory operative clauses, where Clause AD imposed a penalty of Rs. 1.50 lakhs on the Petitioner, while Clause AE stated that no penalty was being imposed and that the cash amount should not be appropriated. The Petitioner also challenged the constitutional validity of Section 93(1)(b) of the CGST Act and sought release of the Rs. 15.40 lakhs retained by the Department.
