TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Continuation of Section 73 demand proceedings against deceased assessee ruled impermissible; Order-in-Original and recovery set aside</h1> Dominant issue: Whether a demand proceeding under Section 73, Chapter V, Finance Act, 1994 can continue and culminate in an Order-in-Original against a ... Abatement of assessment proceedings on death of the assessee - Strict construction of taxing statutes - failure to levy service tax on value of taxable service at applicable rate - abatement of proceedings on death of assessee - expression “person liable to pay the service tax” - Interpretation of 'includes' in definition - continuation of proceedings - machinery provisions not to create substantive liability - invoke extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India - Whether proceeding under Section 73 of Chapter-V of the Finance Act, 1994 initiated by issue of the Demand-cum-Show Cause Notice can proceed further culminating in passing of Order-in-Original in the name of the service provider-assessee on his death? - HELD THAT:- Section 65(7) reveals that the “assessee” is a “person” and said term includes “his agent”. It is also well-settled that in order to determine whether the word ‘includes’ has that enlarging effect. One of the legal heirs of the deceased service provider in the status of “individual” can neither be construed as a “person liable to pay service tax” nor is he/she treated to be “his agent”. The proceeding under Section 73 of the Act, 1994 could not, therefore, have been completed after the death of the service provider and the Order-in-Original being issued in the name of a dead person, namely Atal Bihari Senapati, cannot be held to be tenable in the eye of law. There is no other view permissible than to hold that the proceeding for recovery of service tax determined under Section 73, though initiated by service of notice dated 30.12.2020 on the “person” alleged to be “chargeable with the service tax”, the same could not be continued after 04.06.2021, i.e., on the death of such “person”/service provider, an individual. The Order-in-Original dated 30.08.2024 (Annexure-5) passed by the Assistant Commissioner, GST and Central Excise, Bhubaneswar-II Division, Bhubaneswar in the name of a person, who is no more, is faulted with. The discussions that “legal heir” cannot fall within ken of Section 65(7) of Chapter-V of the Finance Act, 1994 so as to proceed further to determine service tax under Section 73 of said Act after the death of service provider. In other words, on the death of the service provider, in absence of statutory provision empowering the authority to continue further, the proceeding under Section 73 would abate. The Hon’ble Supreme Court of India in the case of Shabina Abraham Vrs. Collector of Central Excise and Customs [2015 (7) TMI 1036 - SUPREME COURT] that in absence of provision to continue with the proceeding after the death of service provider, it is, hence, held the Order-in-Original could not be passed against the dead person. Fact on record vide copy of certificate of death issued by the Department of Health and Family Welfare (Annexure-3) and intimation of the legal heir of Atal Bihari Senapati to the Assistant Commissioner, GST and Central Excise, Bhubaneswar-II Division submitted on 05.06.2024 (Annexure-4) and the Order-in-Original dated 30.08.2024 (Annexure-5) persuades this Court to hold that the contemplated action for initiation of recovery proceeding under Section 87 of Chapter-V of the Finance Act, 1994 vide Letter dated 30.05.2025 indicating the demand of Rs. 17,92,354/- and penalty of Rs. 18,12,354/-, cannot be held to be valid. There is no scope left for this Court but to set aside Order-in-Original dated 30.08.2024 (Annexure-5) by the Assistant Commissioner, GST and Central Excise, Bhubaneswar-II Division, Bhubaneswar as also in consequence thereto the direction contained in the Letter dated 30.05.2025 (Annexure-6). With the aforesaid observation, the writ petition is allowed. Issues: Whether proceedings for recovery of service tax initiated by issue of a Demand-cum-Show Cause Notice can be continued and an Order-in-Original under Section 73 of the Finance Act, 1994 be passed in the name of an individual assessee after his death in the absence of any statutory provision empowering continuation against legal heirs.Analysis: The applicable legal framework includes the charging and procedural provisions of Chapter V of the Finance Act, 1994, in particular the definition of 'assessee' in Section 65(7), the machinery and recovery provisions in Sections 69, 73, 75, 77, 78 and Section 87, and the saving and interpretation provisions in Section 65(121). Principles governing interpretation of taxing statutes require strict construction of charging provisions and that nothing should be implied into a taxing statute which is not expressed. Definitions of 'person' in the General Clauses Act and the legal distinction between an 'agent' and a 'legal heir' are relevant to the question whether legal heirs can be treated as persons chargeable under the Act. Precedent establishes that where the statute does not expressly provide for continuation of assessment or recovery proceedings against a deceased person or his legal representatives, proceedings initiated against the deceased abate on death. The facts show that the Demand-cum-Show Cause Notice was issued in the lifetime of the service provider, the death of the individual was communicated to the authority well before passing of the Order-in-Original, and no statutory provision in Chapter V authorises continuing the Section 73 proceeding against legal heirs or treating them as the 'assessee' or as the deceased's 'agent.' Given the absence of any express legislative provision to continue the assessment or to fasten liability on legal heirs, the Order-in-Original issued after the death in the name of the deceased is vitiated and recovery steps based on that order cannot be validly taken.Conclusion: The proceeding under Section 73 abated on the death of the individual service provider and the Order-in-Original dated 30.08.2024 and consequent recovery action are quashed; decision is in favour of the assessee.
TaxTMI 
TaxTMI 
