Retired Partner Not Liable for Excise Duty Dues of Partnership Firm: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the retired partner is not liable for excise duty dues of the partnership firm.

On a confirmed demand of duty against a partnership firm namely K.J. Vakharia and Company. The department issued notice for demand of dues of said partnership firm to the appellant Shri Jawahr K. Vakahria along with the partnership firm K. J. Vakharia and company and other two persons.

The Commissioner of Appeal held that there is no infirmity in the letter (notice of demand to defaulter) dated 14.02.2005 issued by the Deputy Commissioner of Central Excise and Customs Division and the appeal was rejected.

Shri Mukund Chauhan, appeared on behalf of the appellant submitted that the recovery notice dated 14.02.2005 was issued to the appellant, against the dues adjudged into Orders. It was submitted that as regards the OIO dated 28.01.2000 the period involved was April-1994 to August-1994. Whereas, the present appellant Shri Javahar K Vakharia took retirement from the partnership firm on August- 1993, which is much before the period for which duty demand is involved.

Shri, R. K. Agarwal, Superintendent (AR), appeared on behalf of the revenue and reiterated the findings of the impugned order.

It was found that the Commissioner (Appeal) merely by reproducing in section 11 held that there is no infirmity in the ‘notice of demand to defaulter dated 14.06.2004’. However, the Commissioner of Appeal has not examined the vital facts of the case that during the period, for which the demand was confirmed, which is sought to be recovered from the present appellant what was the status of the appellant.

The two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) held that “since the appellant had resigned as a partner from the partnership firm in August 1993, the demand is not valid.”

Further set aside the impugned order and remanded the matter to the commissioner appeal for reconsidering the appeal before him by following the principle of natural justice.

To Read the full text of the Order CLICK HERE

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