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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 July. Before his death, a demand of tax and interest had been determined but remained unpaid. His son Karthik, as legal representative, discontinued the business immediately after the death. Which statement correctly describes Karthik's liability under the CGST Act?

Karthik is liable to pay the dues only out of the deceased's estate, to the extent the estate can meet the charge. Because the business was discontinued, his liability is limited to the estate, and it covers amounts determined either before or after the death.

  1. AHe is liable to pay the dues out of the estate of the deceased, only to the extent the estate is capable of meeting the chargeCorrect
  2. BHe is personally liable for the full dues, irrespective of the value of the estate
  3. CHe is not liable, because a demand determined before death lapses on the death of the proprietor
  4. DHe is liable only for dues determined after the death, not for those determined before it

Explanation

Where the business is discontinued, whether before or after death, the legal representative must pay the tax, interest or penalty out of the estate, limited to what the estate can meet. This applies whether the amount was determined before death and remained unpaid or is determined after death. Personal unlimited liability applies only where the business is continued by the representative or another person.

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