Legal Heirs not liable for Deceased's Tax Obligations u/s 11A of Central Excise Act: CESTAT sets aside Order [Read Order]

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has set aside the order imposing service tax liabilities on the husband of a deceased proprietor. The case arose from the Order-in-Appeal dated 09.04.2018 passed by the Commissioner (Appeals) of CGST and Excise, Patna.

The appellant, Shri Gurudayal Singh, was subject to service tax proceedings initiated by a show-cause notice dated 26.10.2015. The appellant, a proprietorship concern, passed away during the adjudication process on 20.04.2016.

Consequently, the adjudicating authority dropped the show-cause notice against the appellant. However, the Revenue appealed the decision, and the Commissioner (Appeals) fastened the liabilities on the husband of the deceased proprietor, who was rendering services.

The appellant, represented by Tarun Chatterjee, argued that the legal proceedings could not continue against the deceased proprietor's legal heirs based on established legal principles and precedents.

The two-member bench, comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member), relied on the precedent set by the Supreme Court in the case of Shabina Abraham vs. Collector of Central Excise & Customs.

The Supreme Court had held that “what revenue is asking us to do is to stretch the machinery provisions of the Central Excise and Salt Act, 1944, on the basis of surmises and conjectures. This, we are afraid, is not possible. There is no charge to excise duty under the main charging provision of a dead person.”

The Tribunal noted the lack of provisions in the Central Excise law to continue assessment proceedings against a deceased individual.

The bench found that the proprietor of the firm had passed away during the course of proceedings on 20.04.2016. Therefore, the proceeding against the husband of the deceased proprietor is not sustainable.

The impugned order was set aside, and the appeal was allowed. J. Chattopadhyay, authorised representative for the Commissioner of CGST and Excise, Patna, appeared for the respondent.

To Read the full text of the Order CLICK HERE

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