Section 93 of CGST Act, 2017 – Special Provisions Regarding Liability to Pay Tax, Interest or Penalty in Certain Cases

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📘 Section 93 of CGST Act, 2017 – Special Provisions Regarding Liability to Pay Tax, Interest or Penalty in Certain Cases

Act: Central Goods and Services Tax Act, 2017
 Chapter: Chapter XVI – Liability to Pay in Certain Cases
 Section Covered: Section 93
 Effective From: 01st July 2017

🔎 Introduction

Section 93 of the CGST Act, 2017 provides special provisions regarding liability to pay tax, interest or penalty in situations where:

  • A taxable person dies, or

  • A partnership firm is dissolved, or

  • An association of persons (AOP) or body of individuals (BOI) is dissolved.

This section ensures that GST liability does not lapse merely because of death or dissolution of the taxable entity.

📜 Bare Provision – Section 93

Section 93 provides that where a taxable person liable to pay tax, interest or penalty under this Act:

  1. Dies – then his legal representative shall be liable to pay such dues out of the estate of the deceased;

  2. Is a partnership firm and the firm is dissolved – then every partner shall jointly and severally be liable to pay such dues;

  3. Is an association of persons or body of individuals which is dissolved – then every member shall jointly and severally be liable to pay such dues.

✅ Meaning in Simple Words

If a registered taxpayer:

• Dies, or
• Closes partnership by dissolution, or
• Dissolves an association/body,

Then:

👉 GST dues (tax, interest, penalty) will still be recoverable.
👉 The liability shifts to legal heirs, partners, or members as the case may be.

This prevents escape from tax liability due to legal termination of the person or entity.

📌 Situations Covered Under Section 93

1️⃣ Death of a Taxable Person

Where a sole proprietor dies:

✔ GST dues can be recovered from the legal representative.
✔ Recovery is limited to the estate inherited by the legal representative.
✔ Legal heir is not personally liable beyond inherited assets.

2️⃣ Dissolution of Partnership Firm

If a registered partnership firm is dissolved:

✔ All partners are jointly and severally liable.
✔ Recovery can be made from any one or all partners.
✔ Liability includes tax, interest and penalty.

3️⃣ Dissolution of Association of Persons (AOP) / Body of Individuals (BOI)

If an AOP or BOI is dissolved:

✔ Every member becomes jointly and severally liable.
✔ GST dues can be recovered from any member.

💼 Nature of Liability

The liability under Section 93 includes:

✔ Tax payable under CGST
✔ Interest on delayed payment
✔ Penalty imposed under GST law
✔ Any other amount payable under the Act

The recovery provisions under GST apply accordingly.

📊 Practical Illustrations

Illustration 1 – Death of Proprietor

Mr. A, a sole proprietor registered under GST, dies leaving unpaid GST dues of ₹5,00,000.

His son inherits business assets worth ₹8,00,000.

➡ The GST department can recover dues from the inherited estate.
➡ Recovery cannot exceed value of inherited property.

Illustration 2 – Dissolution of Partnership Firm

A partnership firm has unpaid GST liability of ₹10,00,000 at the time of dissolution.

There were three partners.

➡ The department may recover full amount from any one partner.
➡ That partner may later recover proportionate share from others.

⚖️ Judicial Principles & Case Law References

Although Section 93 is specific to GST, similar principles have been upheld under earlier indirect tax and income tax laws.

1️⃣ Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. (2000) 5 SCC 694

The Supreme Court held that statutory dues can survive dissolution where law specifically provides for recovery.

👉 Principle: Statutory liability does not automatically extinguish on dissolution.

2️⃣ CIT v. Amarchand N. Shroff (1963) 48 ITR 59 (SC)

The Court held that legal representatives are liable only to the extent provided by statute.

👉 Principle: Liability of legal heirs arises strictly under statutory provision like Section 93.

3️⃣ State of Punjab v. Jullundur Vegetables Syndicate (1966) 17 STC 326 (SC)

Tax liability must arise strictly from statute.

👉 Since Section 93 clearly creates such liability, recovery is legally sustainable.

🎯 Objective of Section 93

The main objectives are:

✔ To prevent tax evasion through dissolution or death
✔ To safeguard government revenue
✔ To ensure continuity of tax recovery
✔ To fix responsibility on partners/members/legal heirs

📌 Important Points to Remember

• Legal heir liability is limited to estate inherited
• Partners’ liability is joint and several
• Dissolution does not wipe out GST dues
• Section applies to tax, interest and penalty
• Recovery proceedings can continue even after dissolution

🔄 Section 93 Compared with Earlier Sections

SectionCoversLiability Of
Section 91Minor/incapacitated personGuardian/Trustee
Section 92Court/Receiver managementReceiver/Manager
Section 93Death/Dissolution casesLegal heir/Partners/Members

❓ Frequently Asked Questions (FAQs) – Section 93 CGST

Q1. Does GST liability end on death of proprietor?

No. Liability continues and can be recovered from legal heir to extent of inherited estate.

Q2. Are partners personally liable after dissolution?

Yes. Partners are jointly and severally liable.

Q3. What does “joint and several liability” mean?

Department can recover full amount from any one partner or member.

Q4. Is legal heir personally liable beyond inherited assets?

No. Liability is limited to estate inherited.

Q5. Does this apply to private limited companies?

No. Company liability is governed separately under Section 89.

Q6. Can recovery proceedings start after dissolution?

Yes. Dissolution does not bar recovery.

Q7. Does this apply to penalty also?

Yes. Tax, interest and penalty are covered.

Q8. What if partnership deed provides otherwise?

Private agreement cannot override statutory liability.

Q9. Is fresh registration required after death?

If business continues, legal heir may obtain new registration as per GST provisions.

Q10. What is purpose of Section 93?

To ensure GST dues are not extinguished due to death or dissolution.

📝 Conclusion

Section 93 of the CGST Act, 2017 is a crucial recovery provision ensuring that GST liability survives death of a taxable person or dissolution of firms and associations.

It protects government revenue and prevents misuse of legal closure as a method to escape tax liability. By imposing liability on legal heirs, partners and members, the Act maintains accountability and continuity in tax enforcement.

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