Show cause notice issued to deceased proprietor invalidated; adjudication set aside, revenue may pursue legal heir for escaped tax

Issuance of a show cause notice in the name of a deceased proprietor was held void ab initio because statutory provisions did not provide machinery to recover tax dues after death; accordingly adjudication and demand confirmed against the deceased were set aside. The tribunal found absence of specific post death recovery provisions and rejected applicability of the cited recovery provision, but noted facts on record regarding services and payments. Appeals were allowed and orders set aside; Revenue was granted liberty to proceed against the legal heir only if tax on services supplied by the heir had escaped assessment, in accordance with law.

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Issues:
1. Show cause notice issued in the name of a deceased person - validity.
2. Legal sanctity of an adjudication order in such cases.

Analysis:
1. The case revolved around the issuance of a show cause notice in the name of a deceased person, the late Jata Shankar Singh, who was a proprietor of a business. The appellant, who was the legal heir, argued that serving a notice on a deceased person and subsequently adjudicating and recovering dues was impermissible. The appellant relied on the ruling of the Hon’ble Supreme Court in the case of Shabina Abraham vs. Collector of C. Ex. The appellant contended that the provisions of the Finance Act did not have any specific provision or machinery for recovery of tax dues after the death of the proprietor. The tribunal agreed with the appellant's argument, holding that issuing a notice to a deceased person was void ab initio. The tribunal also observed that Section 87(c) of the Finance Act was not applicable in such cases, setting aside the impugned orders.

2. The adjudication orders had confirmed the demand for service tax along with interest and penalties on the late Jata Shankar Singh, even though the notice was served after his demise. The tribunal found that there was no rebuttal from the assessee's side regarding the details of services provided and payments received. However, the tribunal held that in the absence of specific provisions for proceeding against a deceased person's legal heirs, the duty and other dues did not become payable. Therefore, the tribunal allowed the appeals and set aside the impugned orders. The Revenue was granted liberty to proceed against Sanjay Singh, the legal heir, if services provided by him had escaped tax liability, in accordance with the law.

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