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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 unpaid tax and interest of Rs 4,00,000 for earlier periods. His son Karthik, as legal representative, continued the business after his death. Which statement correctly describes Karthik's liability for the dues of Ramesh?

Karthik is liable to pay the tax and interest due from Ramesh, because the business was continued after death by the legal representative. The estate-limited liability applies only when the business is discontinued, and the liability covers dues determined before or after death.

  1. AKarthik is liable to pay the tax and interest due from Ramesh because he continued the businessCorrect
  2. BKarthik is liable only to the extent of the estate of Ramesh, because the dues arose before death
  3. CKarthik is not liable, as the liability of a proprietor ends on his death
  4. DKarthik is liable only for dues determined before the death, not those determined afterwards

Explanation

Where the business of a deceased person is continued by his legal representative or another person, that person is liable to pay the tax, interest or penalty due from the deceased. It applies whether the dues were determined before death or after. The estate-limited liability applies only if the business is discontinued, so option 2 is wrong.

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