2022 (7) TMI 140 - HC - Central Excise

Court allows appeal and substitution application, dismisses legal heir substitution, clarifies law on deceased persons.

The Court condoned the delay in preferring the appeal and allowed it. The delay in filing the substitution application was also condoned, and the ... Maintainability of substitution of legal heirs - abatement of proceedings on death - definition of 'assessee' in taxing statutes - continuation of appeal as continuation of proceedings - interpretation of taxing statutes-no implication or intendmentMaintainability of substitution of legal heirs - abatement of proceedings on death - definition of 'assessee' in taxing statutes - Substitution of the legal heirs of the deceased director in the revenue appeal is not maintainable and the deceased should be expunged from the array of parties. - HELD THAT: - The Court applied the binding decision of the Hon'ble Supreme Court in Shabina Abraham (supra), holding that taxing enactments use the present tense in defining an 'assessee' and therefore refer to a living person; there is no statutory machinery under the Central Excise regime to continue assessment or proceedings against a dead person by substituting legal heirs. Reliance on general definitions of 'person' or machinery provisions cannot be used to read into a taxing statute a power to proceed against legal representatives where the statutory language does not so provide. The Court noted settled principles of interpretation of tax statutes-nothing is to be implied and words must be read fairly-cited precedents approving that legal heirs who are not the persons chargeable under the Act cannot be brought within its ambit by stretched construction. Although the original adjudication had concluded and an appeal continued, that continuation does not sustain substitution where the statute and binding authority preclude proceedings against deceased persons through their legal heirs. A contrary decision on certificate proceedings was distinguished as inapplicable to the liability of a director of a company and did not override the Supreme Court's ruling.GA/5/2022 (substitution) dismissed; GA/3/2022 (prayer to expunge deceased party) allowed; late Shankar Lal Agarwal deleted from array of parties and tribunal's relief in his name stands affirmed; revenue may proceed only against the first respondent company.Final Conclusion: The application for substitution of the deceased director's legal heirs is dismissed; the deceased is expunged from the cause title and the tribunal's relief in his name is affirmed, leaving the revenue to pursue the appeal only against the company. Issues:1. Condonation of delay in preferring the appeal.2. Condonation of delay in filing substitution application.3. Substitution of legal heirs of deceased second respondent.4. Interpretation of provisions under the Central Excise and Salt Act regarding proceedings against deceased persons.5. Applicability of legal precedents in similar cases.6. Liability of legal representatives in tax matters.Analysis:1. Condonation of Delay in Preferring the Appeal:The Court condoned the delay in preferring the appeal after considering the reasons given in the application for condonation of delay under Section 5 of the Limitation Act, 1963. The delay was deemed to be condoned, and the appeal was allowed.2. Condonation of Delay in Filing Substitution Application:An application was filed by the revenue to condone a delay of 1013 days in filing a substitution application. The Court accepted the reasons provided in the affidavit, stating that the delay was not attributable to the department. The delay was condoned, and the application was allowed.3. Substitution of Legal Heirs of Deceased Second Respondent:The revenue filed an application to substitute the legal heirs of the deceased second respondent, who was a director of a company. The Court heard arguments from both sides, where the revenue sought to bring on record the legal heirs, while the respondent opposed the prayer for substitution. The Court referred to a Supreme Court decision and concluded that the prayer for substitution made by the revenue was not maintainable. Consequently, the second respondent was deleted from the array of parties, and the relief granted by the tribunal to the deceased person was affirmed.4. Interpretation of Provisions under the Central Excise and Salt Act Regarding Proceedings Against Deceased Persons:The Court extensively discussed the provisions of the Central Excise and Salt Act in light of a Supreme Court decision. It was noted that there is no separate machinery provided under the Act to proceed against a deceased person for tax assessment. The definition of 'assessee' under the Act was compared to that under the Income Tax Act, highlighting that the person referred to must be a living person. The Court rejected arguments by the revenue that sought to apply principles differently for the Central Excise and Salt Act, emphasizing the need to interpret taxing statutes based on the language used.5. Applicability of Legal Precedents in Similar Cases:The Court referred to various legal precedents, including decisions of the Supreme Court and High Courts, to support its interpretation of the law regarding proceedings against deceased persons in tax matters. The judgments cited were analyzed to establish the correct application of the law in the present case.6. Liability of Legal Representatives in Tax Matters:Arguments were presented regarding the liability of legal representatives in tax matters, specifically in the context of the Central Excise and Salt Act. The Court relied on legal principles and precedents to determine the extent of liability of legal heirs or representatives in such cases, ultimately dismissing the application for substitution and affirming the relief granted to the deceased person by the tribunal.