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CA Final · Indirect Tax Laws · Liability to Pay in Certain Cases

Mr. Dev, a registered proprietor, died on 5 May and his business was discontinued on that date. His legal representative, his wife Meera, inherited an estate worth ₹6 lakh. Tax and interest of ₹9 lakh due from Dev were determined in July. What is Meera's liability under the CGST Act?

Meera is liable for ₹6 lakh. Where the business is discontinued, the legal representative pays the deceased's tax and interest only out of the estate, to the extent the estate can meet the charge, even though dues are ₹9 lakh.

  1. A₹9 lakh in full, from her personal assets
  2. BNil, because the business was discontinued
  3. C₹9 lakh, but only if she registers afresh
  4. D₹6 lakh, being payable out of the estate to the extent it can meet the chargeCorrect

Explanation

If the business is discontinued, whether before or after death, the legal representative is liable to pay out of the deceased's estate, to the extent the estate can meet the charge. The estate is ₹6 lakh against dues of ₹9 lakh, so liability is limited to ₹6 lakh. Full personal liability applies only in the continuation case.

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