2025 (3) TMI 265 - AT - Service Tax

Tax proceedings against deceased proprietor cannot continue against legal heirs without proper succession documentation

Shri Nadeem Akhtar Versus Commissioner of Central Excise & Service Tax, Lucknow

CESTAT Allahabad dismissed an appeal filed by legal heir of deceased proprietor challenging tax demand proceedings. Court held that tax proceedings ... Proceedings for demand of tax against a deceased proprietor, to be continued against his legal heirs or not - legal heir has the locus standi to challenge the impugned order or not - HELD THAT:- All the proceedings for demand of tax etc are alive till the proprietor is alive and will die with him, as has been held by Hon’ble Supreme Court in the case of M/s Shabina Abraham [2015 (7) TMI 1036 - SUPREME COURT]. As the death certificate of the proprietor is available in the file, there are o merits for entertaining this appeal. The proceedings initiated against the deceased proprietor of proprietorship firm could not have been continued against his legal heir. In terms of Section 22, if legal heir or any person intends to make a claim against this appeal he should have file an appeal under Rule 22 and that was possible only when the appeal was filed before the date of death of proprietor and in this case that is not so. Hence, the appeal is dismissed as not maintainable as Shri Nadeem Akhtar, appellant could not produce the documents as observed by first Appellate Authority evidencing that he has taken over the proprietor ship concern of his father. Conclusion - The proceedings initiated against the deceased proprietor of proprietorship firm could not have been continued against his legal heir. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the proceedings for demand of tax against a deceased proprietor can be continued against his legal heirs.Whether the legal heir has the locus standi to challenge the impugned order in the absence of documentary evidence establishing him as the legal heir.Whether the provisions of the Central Excises and Salt Act allow for the continuation of assessment proceedings against a deceased person's legal heirs.ISSUE-WISE DETAILED ANALYSIS1. Continuation of Proceedings Against Deceased ProprietorRelevant legal framework and precedents: The judgment heavily relies on the precedent set by the Supreme Court in the case of M/s Shabina Abraham, which held that proceedings for demand of tax are only alive as long as the proprietor is alive and cannot be continued against the legal heirs after the proprietor's death.Court's interpretation and reasoning: The Tribunal interpreted that the legal framework does not provide for the continuation of proceedings against the legal heirs of a deceased proprietor. The Court emphasized that the liability to pay excise duty is personal and does not extend to the legal heirs unless explicitly provided for by statute.Application of law to facts: The Tribunal noted that the death certificate of the proprietor was available, and thus, the proceedings initiated against the deceased could not legally continue against his son or any other legal heir.Treatment of competing arguments: The Tribunal dismissed the revenue's argument that the proceedings should continue against the legal heir, citing the absence of statutory provisions to support such an action.Conclusions: The Tribunal concluded that the appeal could not be maintained as the proceedings against the deceased proprietor could not be continued against his legal heir.2. Locus Standi of the Legal HeirRelevant legal framework and precedents: The Tribunal referred to the requirement of documentary evidence to establish the locus standi of the legal heir in challenging the order.Court's interpretation and reasoning: The Tribunal observed that the appellant, Shri Nadeem Akhtar, failed to provide any competent authority's order or documentary evidence establishing him as the legal heir of the deceased proprietor.Application of law to facts: In the absence of evidence proving that Shri Nadeem Akhtar was the legal heir, the Tribunal found no basis for his locus standi to challenge the impugned order.Conclusions: The Tribunal dismissed the appeal on the grounds that the appellant lacked the necessary legal standing to contest the order.SIGNIFICANT HOLDINGSThe Tribunal upheld the principle that tax proceedings against a deceased individual cannot be continued against their legal heirs unless explicitly provided for by statute.The Tribunal emphasized the requirement for clear documentary evidence to establish legal heirship and locus standi in tax proceedings.The appeal was dismissed as not maintainable due to the lack of evidence proving the appellant's status as the legal heir and the absence of statutory provisions allowing the continuation of proceedings against him.Verbatim Quotes of Crucial Legal Reasoning:'I find that all the proceedings for demand of tax etc are alive till the proprietor is alive and will die with him, as has been held by Hon'ble Supreme Court in the case of M/s Shabina Abraham.''The proceedings initiated against the deceased proprietor of proprietorship firm could not have been continued against his legal heir.'The Tribunal's decision underscores the necessity for explicit statutory provisions to extend tax liabilities to legal heirs and the importance of documentary evidence to establish legal standing in tax disputes.