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

Ramesh Iyer, a sole proprietor registered under GST, died on 10 August leaving tax of Rs 4,00,000 unpaid for earlier periods. His son Karthik, who is his legal representative, continued the same business after his death. Who is liable for the unpaid tax under the CGST Act?

Karthik is liable for the whole tax, interest or penalty due from Ramesh, because he continues the business after the death. The liability covers amounts determined before or after death. The estate-limited liability applies only if the business is discontinued.

  1. AKarthik, as the person continuing the business, is liable for the tax, interest or penalty due from RameshCorrect
  2. BKarthik is liable only to the extent of the estate and only if the business is discontinued
  3. CNo one is liable, because the liability of a proprietor ends on his death
  4. DKarthik is liable only for tax determined before Ramesh's death, not for tax determined afterwards

Explanation

Where the business of a deceased person is continued by the legal representative or any other person, that person is liable for the tax, interest or penalty due from the deceased. This applies whether the amount was determined before or after death. The estate-limited liability applies only when the business is discontinued, so option 2 is wrong.

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