Son’s Bank Account Can’t Be Frozen for Father’s GST Dues Due to Similar Trade Name | Biz Flow Kit

The Bombay High Court recently made a decision stating that GST officials cannot block a son’s bank account just to collect unpaid taxes from his late father’s business. This ruling came about because the son and father used the same business name, but the court determined that this was not enough reason to take such action.

The case arose when the GST department issued a communication to Navin Vishwanathan (applicant) under Sections 79 and 93 of the CGST Act, directing the bank to recover dues of more than Rs. 4.15 crores from the bank account of the applicant. 

These dues were of the deceased father of the applicant, who was operating a business in the name “M/s. Oriental Facility.” The bank account of the applicant was frozen without any prior notice. 

The applicant mentioned that he was operating his own business with a different GST registration and a different place of business, even though he utilised the same trade name. He mentioned that no proceedings were begin u/s 93 to attach any obligation on him, and no SCN or hearing was furnished before freezing his account. 

The bench of Justice G.S. Kulkarni and Justice Farhan P. Dubash stated that both the applicant and his father had separate GST registrations and are considered as different taxable persons under the GST law.

The court mentioned that recovery u/s 79 can take place merely after liability is decided, and Section 93 needs an appropriate determination before fixing liability on a legal heir.

“The designated officer needs to undertake an exercise to determine in what manner the Petitioner would become liable to discharge the tax dues of his deceased father’s business. It would be difficult to accept a proposition that merely because there is similarity of trade name, this alone would authorise automatic recovery from the Petitioner who is an indirect registered taxable person, that too without any prior adjudicatory process”

The Court mentioned that the department froze the bank account without providing notice or a chance of hearing, which is against the principles of natural justice.

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The High Court, concerning this, set aside the communication on 21 March 2025 and ordered the bank to de-freeze the applicant’s account within 1 week.

The Court stated that the department can start proper legal proceedings if they wish to decide the liability of the applicant u/s 93 of the GST Act.