RK GST Helper

🚨 GSTN IMS Enhancement!!

A new separate tab has now been provided in Outward IMS to display Rejected Credit Notes etc. - where liability is required to be added back in GSTR-3B

👉 Earlier, we had to manually check all IMS entries to identify such cases.

゚
RK GST Helper
Adv Rajan Pandey
096705 00090

🚨 GST Cancellation? Don’t Ignore ITC Reversal — It’s Mandatory! ⚠️

If your GST registration is being cancelled — whether voluntarily or by the department

— remember:

You are legally required to reverse ITC under Section 29(5) of the CGST Act read with Rule 44.

You must reverse ITC on:

✅ Inputs lying in stock
✅ Inputs contained in semi-finished goods
✅ Inputs contained in finished goods
✅ Capital goods (ITC reduced @ 5% per quarter, i.e., over 5 years)

📌 Critical Compliance Points (2026 Ready)
🔹 Calculation must be done as on the day immediately preceding the date of cancellation
🔹 Amount payable is treated as output tax liability
🔹 Can be paid via Electronic Credit Ledger or Cash Ledger
🔹 File Final Return – GSTR-10 within 3 months from date of cancellation order (Section 45 + Rule 81)

Failure to comply may trigger:
Demand notices
Interest liability
Recovery proceedings

⚖️ Important Judicial Relief
Recent High Court rulings (including Andhra Pradesh HC) indicate:
If the GST cancellation order is later set aside or revoked, the consequential ITC reversal demand may not survive.

However, this depends on facts of each case — proper legal follow-up is essential.

💡 Practical Advice Before Applying for Cancellation
✔ File all pending returns
✔ Reconcile ITC with stock register
✔ Compute capital goods reversal correctly
✔ Maintain working papers for future audit
✔ Take professional advice before submitting REG-16

GST cancellation is not just a formality — it has financial consequences.

Have you handled ITC reversal during cancellation recently?
Share your experience below 👇
゚

**Death Sent Him to Heaven,

But the System Sent His Family a GST Demand**

A Conversation That Stayed With Me

Yesterday, a young man came to meet me.

There was exhaustion in his eyes.
Fear in his voice.
And confusion in every word.

He said:

“Sir…
My father passed away a few days ago.
Even the rituals are not over yet…
And a GST Demand Order has arrived in his name.”

He paused.

Then softly added:

“I don’t know anything about my father’s business.
I never managed it.
I don’t intend to continue it either.

This GST mess…
How do I get out of it?”

At that moment, it was clear—

👉 This is not just his problem.
👉 This is the problem of hundreds of families
who lose a loved one—and then are forced to fight notices instead of grieving.

That is why this article.

Where Does the Problem Begin?

The story is almost always the same:

🔥 A sole proprietor passes away
🔥 The family is in mourning
🔥 But the GST registration remains active

And then—

📩 Show Cause Notices
📄 Demand Orders

Issued in the name of a person who is no longer alive.

Naturally, families ask:

❓ Who will reply?
❓ Who will attend hearings?
❓ From whom will recovery be made?

And the department often gives one standard answer:

“Section 93 is applicable.”

But the real question is—

👉 What does Section 93 actually say?
👉 And is the department using it correctly?

Section 93 of the CGST Act — Truth vs Misconception

Section 93 provides that:

If a taxable person dies—

1️⃣ If the business is continued,
the person who continues it becomes fully liable.

OR

2️⃣ If the business is discontinued,
the legal heir is liable only to the extent of the estate inherited.

So far, so good.

But here is the most ignored and most important point:

⚠️ Section 93 is a recovery provision.
⚠️ It is NOT an adjudication or assessment provision.

Meaning—

✔️ It explains from whom tax can be recovered
❌ It does NOT explain against whom proceedings can be initiated

So the real legal questions are:

❓ In whose name can a notice be issued?
❓ Who must be heard?
❓ In whose name can an order be passed?

These questions go to the root of legality.

When Courts Were Asked to Decide
1️⃣ Rajvanti Devi vs State of U.P.

Writ Tax No. 142 of 2026
Allahabad High Court | 29.01.2026

In this case:

The department passed an order in the name of a deceased person

And attempted recovery from the legal representative

The Court clearly held:

👉 Section 93 talks about liability,
👉 But it does not permit adjudication against a dead person

Therefore:

🔥 Any SCN or order issued in the name of a deceased person is invalid.

The Court further ruled:

✔️ If the department wants to hold a legal representative liable,
✔️ They must issue notice to that legal representative
✔️ And grant proper opportunity of hearing

This is not a formality—
It is a mandatory legal requirement.

2️⃣ Baratham Satish vs JC of Central Tax

Writ Petition No. 6029 of 2025
Andhra Pradesh High Court | 24.12.2025

The Court went even further and clarified:

👉 Proceedings cannot continue against a dead person.

However—

✔️ Tax dues can be determined afresh
✔️ By involving the legal representative

But with one strict limitation:

❌ Personal income or personal assets of the legal heir cannot be touched
✔️ Recovery is limited only to the estate inherited

In Simple Words

You cannot issue notices
to someone who can no longer hear.
You cannot demand explanations
from someone who no longer exists.

Law does not permit
convenience at the cost of justice.

Who Is a “Legal Representative”?

Not decided by:

❌ Relationship alone
❌ Name in records

It is decided by reality:

✔️ Who inherited the assets
✔️ Who received the estate

That person—and only that person—can be treated as a legal representative.

What Families Should Do After Death of a Sole Proprietor

1️⃣ Immediately submit the Death Certificate to the department

2️⃣ If the business is continued

Change authorised signatory

Transfer ITC using ITC-02

3️⃣ If the business is discontinued

Inform the department

Apply for GST cancellation

4️⃣ In all communications:

Mention the relationship clearly

Use the term “legal representative” cautiously

5️⃣ If you inherit assets,

You inherit responsibility only to that extent

6️⃣ Remember—
This is a digital ecosystem
Banks, GST portal, property records—all are interconnected
Every decision must be taken consciously

The Principle Is Simple

Whoever inherits the estate,
answers to the demand—
only to that extent.

Whoever inherits nothing,
owes nothing.

Disclaimer

⚠️ This article is for general awareness only
⚠️ Creative narration is used for easier understanding
⚠️ Do not take tax or legal decisions solely based on this article
⚠️ Always consult your Tax Consultant or Legal Advisor
゚