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

Ramesh Agarwal, a sole proprietor registered under GST, died on 10 June leaving unpaid tax of ₹3,00,000 for earlier periods. His son Mahesh continued the same business after his death. Which statement is correct as per the CGST Act, 2017?

Mahesh is liable to pay the tax, interest and penalty due from his father, because he continued the business after the death. The estate-only limit applies when the business is discontinued, and liability applies whether the amount was determined before or after death.

  1. AMahesh is liable to pay the tax, interest or penalty due from Ramesh, because he continued the businessCorrect
  2. BMahesh is liable only to the extent of the estate inherited, even though the business is continued
  3. CNo one is liable, because the liability of a registered person ends on death
  4. DLiability arises only if the tax was determined before the death of Ramesh

Explanation

Under section 93(1)(a), if the business is continued after death by the legal representative or any other person, that person is liable for the tax, interest or penalty due from the deceased. The liability covers amounts determined before or after death. The estate-limited liability applies only where the business is discontinued, so option B is wrong.

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