2019 (7) TMI 1417 - AT - Service Tax

Issuing show cause notice to deceased void; tax liability not transferable to legal heirs.

M/s J.S. Singh Engineering Contractor Versus Commissioner of Central Goods and Service Tax (Appeals)

The tribunal held that issuing a show cause notice to a deceased person was void ab initio, as there were no specific provisions for recovery of tax dues ... Validity of SCN issued to a dead person - whether the SCN can be issued in the name of a dead person–proprietor, and whether the adjudication order has got any legal sanctity? - HELD THAT:- The issue of show cause notice in the name of deceased person under the provisions of Finance Act, 1994, is ab initio void in view of the ruling of the Hon’ble Supreme Court in the case of SHABINA ABRAHAM AND OTHERS VERSUS COLLECTOR OF CENTRAL EXCISE & CUSTOMS [2015 (7) TMI 1036 - SUPREME COURT] . There is no specific provision or machinery provision for recovery of tax dues, after death of the proprietor. In the facts and circumstances of the case, Section 87 (c) of the Finance Act is not applicable. Appeal allowed - decided in favor of appellant. 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.