Three years after her husband died, the Department proposed to penalise her for what he had allegedly done

The Delhi High Court holds that Section 93 of the CGST Act lets proceedings begin after death, not merely finish — and upholds the provision. It then asks the Department to justify, rupee by rupee, the ₹15.40 lakh it has been holding since 2020.

Section 93 of the Central Goods and Services Tax Act, 2017 deals with what happens to a tax liability when the person who incurred it dies. It ends with words that carry the whole question: the legal representative is liable whether the tax, interest or penalty “has been determined before his death but has remained unpaid or is determined after his death”.

Do those last five words permit proceedings to be commenced after death — or only the completion of proceedings that had already begun while the person was alive? On 25 September 2026 a Bench of Justice Anil Kshetarpal and Justice Vimal Kumar Yadav answered it, in a judgment delivered by Justice Kshetarpal.

A search, a death, and a notice four years later

The proceedings arise from a Directorate General of GST Intelligence investigation into the allegedly fraudulent availment and passing on of Input Tax Credit and refund of IGST on invoices issued without any corresponding supply of goods. The Show Cause Notice attributes a role to the petitioner’s late husband in relation to three entities.

On 23 July 2020 his residential premises at Dwarka were searched, and cash of ₹15,40,000 was found. The Notice records that the amount was voluntarily submitted by him to the Department until completion of the investigation, as security against any tax liability that might arise, and that it was thereafter placed in a fixed deposit with the State Bank of India, R.K. Puram Branch. The petitioner disputes the legality of both the taking and the continued retention.

He died on 6 May 2021. His death was communicated to the Department by a letter of 5 October 2021 from a cousin, enclosing the death certificate and asking that any inquiry relating to the deceased be forwarded to the petitioner at her address in Gurugram.

On 31 July 2024 — more than three years after the death — the Show Cause Notice was issued to several noticees, including the petitioner. Against her it proposed a separate penalty under Section 122(3)(a) and the corresponding provisions, invoking Section 93 against her as legal representative, in respect of the “acts and deeds” of her late husband. It also proposed appropriation of the ₹15,40,000.

She did not participate in the adjudication, saying she never received the Notice; the Department relies on the modes of service under Section 169. The Adjudicating Authority proceeded ex parte. Its Order-in-Original of 1 February 2025 contains, in clause AD, a penalty of ₹1,50,000 on the petitioner — and in the immediately following clause AE, a statement that no penalty is being imposed on her, together with inconsistent language about the appropriation of ₹15,40,000.

What the Court would decide, and what it would not

The Department objected that a statutory appeal lay under Section 107. The Bench drew a line through the case rather than accepting or rejecting the objection wholesale.

The construction of Section 93 — whether proceedings may be commenced after death — and the constitutional validity of Section 93(1)(b) are pure questions of law, and a writ court may examine those notwithstanding an alternative remedy. Everything else belongs to the appeal: whether the Notice was duly served, whether the material establishes the alleged contravention, whether the requirements of Section 93(1)(b) are satisfied on these facts, the computation of the penalty, and the effect of the contradictory operative clauses. Article 226 ought not to substitute the appellate mechanism for those issues.

The Court also protected her access to that appeal. The Order is dated 1 February 2025 and the writ petition was filed on 23 May 2025 — within the three months under Section 107(1) plus the further month the Appellate Authority may condone. She was relegated to the statutory appeal for the remaining objections, with four weeks to file it and liberty to seek condonation of any delay after excluding the period spent prosecuting the writ petition.

Reading the provision

Section 93(1) makes a legal representative liable where a person liable to pay tax, interest or penalty dies: under clause (a), where the business is continued after death, the representative or other person is liable; under clause (b), where the business is discontinued whether before or after death, the representative is liable to pay out of the estate of the deceased, to the extent to which the estate is capable of meeting the charge.

Three features were significant to the Bench. The provision includes a penalty, not merely tax. It contemplates a liability determined after the death. And the nature and extent of representative liability depend on which clause applies, with clause (b) confining payment to the estate and to its capacity.

The petitioner’s construction, the Court held, would require “is determined after his death” to be read as “is determined after his death in proceedings already commenced during his lifetime”. The provision contains no such qualification. Its concluding words distinguish a liability determined before death but unpaid from one determined afterwards; they do not make a notice during lifetime a condition precedent to the latter.

Nor do the opening words — “where a person, liable to pay tax, interest or penalty under this Act, dies” — confine the section to a liability already quantified before death, since the provision itself contemplates determination thereafter. The underlying liability must of course arise from conduct attributable to the deceased under the substantive provisions; Section 93 enables that liability to be determined and, where its conditions are met, enforced through the representative.

The Bench then refused a crutch the Department had offered. The fact that the investigation had begun and the deceased’s statement had been recorded during his lifetime, it held, is not the source of the power. Investigation and adjudication are distinct stages, and it is unnecessary to treat an investigation as the commencement of penalty proceedings in order to sustain a post-death determination. The authority must be found in the statute. The material collected during the lifetime may nonetheless form part of the evidentiary record.

Equally, Section 93 was kept distinct from Section 122(3)(a), which penalises a person who aids or abets the specified offences, up to ₹25,000. Whether the deceased committed the alleged acts is one question; whether the pecuniary consequence of a proved contravention can be enforced through Section 93 is another. Section 93, the Court said, is not an independent penal provision against the legal representative.

The authorities on both sides

The petitioner relied on Shabina Abraham v. Collector of Central Excise and Customs, (2015) 10 SCC 770, where the Supreme Court found no machinery in the Excise legislation for assessment against the legal representatives of a deceased individual, and held that a provision for recovery of sums already payable could not supply that omission. The Bench read it as requiring statutory authority for determination against an estate — not as establishing that fiscal proceedings invariably abate on death. Here Section 93 supplies exactly that authority, operating alongside Section 122 for the substantive penalty, Section 126 for the hearing, and Explanation 1(ii) to Section 74 for connected proceedings.

She also relied on Commissioner of Income Tax v. Late Dr. K.C.G. Verghese, (2019) 416 ITR 155 (Mad), where penalty proceedings begun after the assessee’s death were struck down despite Section 159(2)(b) of the Income Tax Act expressly permitting any proceeding that could have been taken against the deceased to be taken against the representative. The Court acknowledged that the decision supports her submission, but declined to treat it as a rule operating independently of the statutory scheme — noting that the Allahabad High Court in Kalawati Devi v. Income Tax Officer took the opposite view on the same provision, holding that penalty proceedings for a default by the deceased may be commenced or continued against the representative.

Lal Chand Verma v. Union of India, decided by the same Court in January 2025, was distinguished on its facts: there the notice was issued in the deceased assessee’s name despite intimation of his death, and no notice had gone to the legal heir. Here the Notice identifies the petitioner and invokes Section 93 in her representative capacity — whether it was validly served being a separate question for the appeal.

The constitutional challenge

Section 93(1)(b) was assailed as arbitrary and violative of Article 14, on the footing that a representative cannot meaningfully answer allegations about matters within the personal knowledge of someone no longer alive.

The Bench rejected the challenge, and its reasoning does not dismiss the difficulty. The provision preserves liabilities attributable to the deceased’s lifetime conduct for lawful determination and satisfaction from his estate; death creates the need for someone to represent that estate; and the resulting distinction bears a direct relation to the statutory purpose. Section 93 does not deem the representative to have committed the wrong, and clause (b) confines payment to what the estate can meet.

As to the defence, the Court said plainly that the loss of the person with first-hand knowledge may seriously affect the explanation available to the representative and the weight that can fairly be attached to the evidence. Section 126(3) requires an effective opportunity of hearing: the representative must receive the relied-upon material and be permitted to contest the alleged contravention, the statutory basis and the proposed amount. And — the sentence that does the most work — inability to give a personal account of the deceased’s affairs cannot be treated as an admission.

Those safeguards answer the contention that the section confers unguided power. A particular adjudication may fail for want of evidence or a fair opportunity; that does not establish that every determination after death must be unfair. Noting the presumption of constitutionality and the latitude for economic legislation recognised in R.K. Garg v. Union of India — while making clear that neither excludes Article 14 scrutiny — the Bench held the provision neither discriminatory nor manifestly arbitrary on the grounds urged.

The money

The most immediately useful part of the judgment concerns the ₹15,40,000, and it is framed as a disclosure obligation.

Within three weeks, the respondents must give the petitioner a complete account of the sum: its present status, the particulars of the fixed deposit, the interest earned, and details of any withdrawal, appropriation, transfer or release, with supporting records. For every amount claimed to be lawfully retained or appropriated, they must identify the precise statutory provision and order relied on, the liability sought to be secured or discharged, its computation, and the basis on which it is enforceable against the estate.

And then the direction that gives it teeth: a general reference to the impugned Order shall not constitute sufficient compliance. If that Order is relied on, the Department must explain how it authorises retention or appropriation of the whole amount, and must separately address the entitlement to return of any balance with attributable interest.

The petitioner has two weeks to respond; the competent authority must then hear her and pass a reasoned decision within four weeks. Any amount for which no subsisting lawful basis of retention is established is to be released to her as legal representative within two weeks of that decision, with the interest actually earned in the fixed deposit — without prejudice to the rights inter se of the other legal heirs. The directions do not determine the effect of the contradictory clauses AD and AE, and her right to challenge the decision on the money is preserved.

The writ petition was disposed of on those terms.

What the judgment settles is narrow and will be widely cited: under the CGST Act, death does not close the file. What it leaves in place is the rest of the protection — the estate’s capacity as the ceiling, a real hearing, the relied-upon material in the representative’s hands, and no adverse inference from the one thing she cannot supply, which is the deceased’s own account of what he did.