Fiscal liability must be pursued against the actual legal person; demand against a non-independent unit was quashed.

A service tax demand against a petitioner-unit failed because the unit was not an independent legal person but only a unit of the Church of South India Trust Association. The High Court noted that the certificate of incorporation and memorandum of association showed the Trust Association, not the unit, owned the relevant properties and was the proper person against whom any fiscal proceedings had to be taken. An order issued on the wrong legal basis was therefore unsustainable and was quashed. The constitutional challenge to the service tax provisions was not examined because it did not survive after the foundational demand order was set aside.

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Issues: Whether the petitioner-unit was a separate legal entity amenable to service tax proceedings, and whether the demand order could be sustained when proceedings were initiated against the unit instead of the owning trust association.

Analysis: The certificate of incorporation and the memorandum of association showed that the petitioner was only a unit of the Church of South India Trust Association and not an independent legal person. On the Revenue's own concession, if any action was to be taken, it had to be against the Trust Association, which owned the immovable properties and was the actual person concerned with the taxable activity. In that situation, the impugned order proceeded on a wrong premise and could not be maintained. The challenge to the vires of the service tax provisions did not require adjudication because it did not survive once the foundational order was quashed.

Conclusion: The order fastening service tax liability on the petitioner-unit was unsustainable and was quashed; the proceedings, if any, had to be considered against the Trust Association in accordance with law.

Final Conclusion: Relief was granted in part by setting aside the demand order against the unit, while leaving the constitutional challenge open.

Ratio Decidendi: Proceedings for fiscal liability must be initiated against the actual legal person liable in law, and an order passed against a non-independent unit is liable to be quashed.

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