2019 (5) TMI 224 - AT - Service Tax

Legal Ruling: Recovery from Deceased Proprietor's Legal Heirs Limited

The Tribunal held that the demand confirmed against a proprietorship concern cannot be recovered from the legal heirs of a deceased proprietor, citing the ... Recovery proceedings against dead person’s legal heirs - Section 11 of CEA, 1944 - HELD THAT:- The provisions of Section 11 of Central Excise Act, 1994 and provisions of Section 87 of Finance Act, 1994 are pari meteria - the ruling of Hon’ble Supreme Court in the case of Shabina Abraham is squarely applicable in the present case, where it was held that in the absence of machinery provisions for proceeding against dead person’s legal heirs, duty and other sums do not become payable to apply recovery provisions under Section 11 of Central Excise Act, 1944. The demand confirmed cannot be recovered from the legal heirs of Shri Kailash Nath Singh - Appeal allowed - decided in favor of appellant. Issues:1. Death of the proprietor before passing of the Order-in-Original.2. Initiation of recovery proceedings against the proprietorship concern.3. Applicability of the ruling by the Hon'ble Supreme Court in the case of Shabina Abraham.4. Interpretation of recovery provisions under Section 87 of the Finance Act, 1994.Analysis:1. The judgment addresses the issue of the death of the proprietor, Shri Kailash Nath Singh, before the Order-in-Original was passed. It is noted that the fact of the proprietor's death was not brought to the knowledge of the Original Authority, resulting in an ex parte order against the proprietorship concern. The Commissioner (Appeals) set aside the penalties but confirmed the demand of duty. The appellant contested this decision, citing the ruling by the Hon'ble Supreme Court in the case of Shabina Abraham, which highlighted the absence of machinery provisions for proceeding against a deceased person's legal heirs. The Tribunal held that the demand confirmed cannot be recovered from the legal heirs of the deceased proprietor.2. The judgment delves into the initiation of recovery proceedings against the proprietorship concern following the passing of the Order-in-Original. Despite the sustained recovery proceedings before the Commissioner (Appeals), the penalties were set aside. The Tribunal's decision to allow the appeal was based on the application of the ruling by the Hon'ble Supreme Court, which clarified the limitations on recovery provisions in cases involving deceased persons.3. The judgment extensively discusses the applicability of the ruling by the Hon'ble Supreme Court in the case of Shabina Abraham to the present case. The Tribunal acknowledged that the ruling established that in the absence of specific provisions for proceeding against a deceased person's legal heirs, recovery provisions under the relevant acts do not apply. By aligning the facts of the present case with the principles outlined in the Supreme Court ruling, the Tribunal concluded that the demand confirmed in the impugned orders cannot be enforced against the legal heirs of the deceased proprietor.4. Lastly, the judgment provides a detailed analysis of the interpretation of recovery provisions under Section 87 of the Finance Act, 1994, in comparison to the provisions of Section 11 of the Central Excise Act, 1944. The Tribunal equated the two sets of provisions, emphasizing their similarity and indicating that the ruling by the Hon'ble Supreme Court in the case of Shabina Abraham is directly applicable to the present case. This alignment of legal principles led to the Tribunal's decision to allow the appeal and prevent the recovery of the confirmed demand from the legal heirs of the deceased proprietor.This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal, the legal principles applied, and the ultimate decision rendered in favor of the appellant based on the interpretation of relevant laws and precedents.