GST Department Issues Penalty Notice Three Years After Taxpayer’s Death and Proceeds Against Widow; Delhi High Court Says Proceedings Can Begin After Death
Can GST Penalty Proceedings Begin After Taxpayer Dies? Delhi High Court Says Yes, but Liability Against Legal Heir Is Statutorily Limited
Facts
The case arose from a DGGI investigation concerning alleged fraudulent availment and passing of Input Tax Credit and refund of Integrated GST on invoices allegedly issued without corresponding supply of goods. The allegations attributed a role to the petitioner Jaiwanti’s husband, late Ankit Dabas, in relation to M/s P.C. International, M/s Satguru Corporation and M/s B.K. Enterprises. JAIWANTI
On 23 July 2020, DGGI searched Ankit Dabas’s residence in Dwarka and found ₹15.40 lakh in cash. According to the Show Cause Notice, the amount was voluntarily deposited as security against any possible tax liability and was subsequently placed in a fixed deposit. The petitioner disputed the legality of its taking and continued retention. JAIWANTI
Ankit Dabas died on 6 May 2021. The Department was informed of his death in October 2021.
More than three years later, on 31 July 2024, the Department issued a Show Cause Notice to several persons, including his widow Jaiwanti, invoking Section 93 of the CGST Act and proposing penalties concerning the “acts and deeds” of her deceased husband. The notice also proposed appropriation of the ₹15.40 lakh. JAIWANTI
An Order-in-Original dated 1 February 2025 followed. Its operative portion contained an apparent contradiction: one clause imposed ₹1.50 lakh penalty upon Jaiwanti, while the immediately succeeding clause stated that no penalty was being imposed upon her. JAIWANTI
She approached the Delhi High Court.
Issues
The principal question was whether the words “is determined after his death” in Section 93 permit the GST Department to initiate fresh proceedings after a taxpayer has already died, or merely permit completion of proceedings that began during his lifetime.
The Court also considered:
- whether Section 93(1)(b) is unconstitutional under Article 14;
- whether a widow/legal representative can be subjected to liability based on the deceased’s conduct;
- the legality of retaining ₹15.40 lakh after his death; and
- whether the petitioner should instead pursue the statutory appeal under Section 107.
Petitioner’s Arguments
Jaiwanti argued that fresh penalty proceedings could not be initiated more than three years after her husband’s death. In her submission, Section 93 permits only completion of proceedings that had already commenced during his lifetime.
She argued that aiding and abetting under Section 122(3)(a) concerns the personal conduct of the alleged wrongdoer. A legal representative cannot meaningfully answer allegations involving facts exclusively within the deceased person’s knowledge.
On this basis, she challenged Section 93(1)(b) as arbitrary and violative of Article 14. She also disputed service of the notice and continued retention of ₹15.40 lakh. JAIWANTI
Respondents’ Arguments
The Department argued that Section 93 expressly contemplates tax, interest or penalty being determined after death and contains no requirement that adjudication must have commenced while the person was alive.
It emphasized that the investigation had commenced during Ankit Dabas’s lifetime and his statement had already been recorded.
The Department also characterized the Section 122 penalty as civil liability and argued that criminal-law principles concerning abatement upon death did not apply. It additionally relied upon the alternative remedy of appeal under Section 107. JAIWANTI
Analysis of the Law
The High Court interpreted Section 93(1)(b) according to its plain language.
The provision expressly covers tax, interest or penalty that “is determined after his death.” According to the Court, nothing in the section says that such determination is permissible only where a Show Cause Notice had already been issued before death.
Reading such a condition into Section 93 would add words that Parliament did not use. JAIWANTI
The Court therefore held that fresh adjudicatory proceedings can commence after the taxpayer’s death.
However, this does not mean that the legal representative personally committed the deceased’s alleged wrongdoing.
Under Section 93(1)(b), where the business has been discontinued, the legal representative’s liability is restricted to the estate of the deceased and only to the extent that the estate is capable of meeting the charge. JAIWANTI
The Court specifically clarified that Section 93 is not an independent penal provision against the legal representative. The underlying contravention by the deceased must first be established under the substantive provisions of the CGST Act. JAIWANTI
Precedent Analysis
The petitioner relied upon Shabina Abraham v. Collector of Central Excise and Customs, where the Supreme Court found no statutory machinery permitting assessment against the legal representatives of a deceased assessee.
The Delhi High Court distinguished it because the CGST Act contains Section 93, which itself expressly authorizes determination after death and identifies the representative and source from which liability can be satisfied. JAIWANTI
The Court also considered Commissioner of Income Tax v. Late Dr. K.C.G. Verghese, which supported the petitioner’s position concerning post-death penalty proceedings, and Kalawati Devi v. Income Tax Officer, which had taken a different view.
The Court held that the answer ultimately depends upon the language of the governing statute. Under the CGST Act, Section 93 expressly permits a liability attributable to the deceased’s conduct to be determined after death. JAIWANTI
Court’s Reasoning
The Court rejected the constitutional challenge to Section 93(1)(b).
It emphasized that the provision does not deem the legal representative to have committed the deceased’s contravention. It merely preserves a liability attributable to the deceased and provides a mechanism for satisfying that liability from his estate.
At the same time, the Court recognized the practical difficulty faced by a legal representative who may have no personal knowledge of the deceased’s transactions.
Therefore, the representative must receive the material relied upon by the Department and be given an effective opportunity to contest the allegations. Importantly:
The legal representative’s inability to personally explain the deceased’s affairs cannot be treated as an admission.
The Court found that these safeguards, together with the limitation of liability to estate assets, provided a rational statutory framework. The Article 14 challenge therefore failed. JAIWANTI
₹15.40 Lakh Retained by the Department
The High Court dealt separately with the ₹15.40 lakh found during the 2020 search.
It held that even accepting the Department’s case that the money had been voluntarily deposited pending investigation, such a deposit does not create a right of indefinite retention.
The Department must demonstrate a subsisting lawful basis for continuing to hold or appropriate the money and must account for the principal amount as well as the interest earned on the fixed deposit. JAIWANTI
Conclusion
The Delhi High Court held that a GST Show Cause Notice is not without jurisdiction merely because it was issued after the alleged wrongdoer’s death. Section 93 permits liability attributable to the deceased to be determined after death, subject to its statutory conditions.
The Court also rejected the constitutional challenge to Section 93(1)(b).
However, it did not hold that Jaiwanti was actually liable or that the alleged abetment had been proved. Questions concerning service of notice, proof of contravention, applicability of Section 93(1)(b), computation of penalty and the contradictory portions of the Order-in-Original were left open. JAIWANTI
Jaiwanti was given four weeks to file an appeal under Section 107, with a direction that an appeal filed within that period would not be rejected on limitation. JAIWANTI
Separately, the Department was ordered to provide a complete account of the ₹15.40 lakh, including the fixed deposit and interest, and identify the precise statutory authority supporting every amount retained or appropriated. Any amount for which no lawful basis exists must ultimately be released to the petitioner with the interest actually earned on the fixed deposit. JAIWANTI JAIWANTI
Case Details
Case: Jaiwanti v. Union of India & Ors.
Court: Delhi High Court
Case No.: W.P.(C) 7254/2025
CNR: DLHC010336622025
Judges: Justice Anil Kshetrapal and Justice Vimal Kumar Yadav
Reserved: 10 September 2026
Pronounced: 25 September 2026 JAIWANTI
Result: Writ petition disposed of; post-death proceedings under Section 93 held legally permissible, constitutional challenge rejected, statutory appeal preserved, and Department directed to account for ₹15.40 lakh and justify its continued retention.
