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

Mr. Raghunath Iyer, a sole proprietor registered under GST, died on 10 June. His son, Karthik, continued the same business from 1 July under the same trade name. A demand of tax and interest for earlier periods, relating to Raghunath's supplies, is determined in September. Who is liable to pay the tax and interest under the CGST Act?

Karthik is liable. When a taxable person dies and the business is continued by his legal representative or another person, that person must pay the tax, interest or penalty due from the deceased, whether determined before or after the death. The estate-limited liability applies only to discontinued businesses.

  1. AKarthik, as the legal representative or other person continuing the business, is liable for the tax and interest due from RaghunathCorrect
  2. BNo one, because liability under GST ends on the death of the proprietor
  3. CKarthik is liable only to the extent of the estate and only if the business is discontinued
  4. DThe proper officer must first recover from Raghunath's former suppliers

Explanation

Where a liable person dies and the business is continued by the legal representative or any other person, that person is liable to pay the tax, interest or penalty due from the deceased. This applies whether the amount was determined before or after death. The option limiting liability to the estate applies only if the business is discontinued.

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