TaxTMI 
TaxTMI 
2026 (1) TMI 899
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....e afore-noted writ petition craving to invoke extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India with the prayer(s) to grant following relief(s): "Under the above mentioned facts and in the circumstances of the case, this Hon'ble Court may graciously be pleased to: (i) Admit this writ petition and to issue show cause to the opposite parties as to why the Adjudication Order passed under Annexure-5 dated 30.08.2024 shall not be quashed in the interest of justice; (ii) If the opposite parties fail to show appropriate cause or show insufficient cause, then writ shall be issued quashing the Order dated 30.08.2024 under Annexure-5; (iii) Pass such other order/orders, direction/directions, as this Hon'ble Court may deem just and proper under the facts and circumstances of the case, in the interest of justice; And for this Act of kindness, the petitioner, as in duty bound, shall ever pray." Case of the petitioner: 2. Late Atal Bihari Senapati, the husband of petitioner (Smt. Kanakalata Senapati, the wife of the deceased) was carrying on business in the name and style "Senapati Palace" and engaged in the busi....
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....ed and Section 70 for failure to file statutory half-yearly returns in Form ST-3/ST-3A as required under Rule 7 of the Service Tax Rules, 1994. 2.4. The opposite party No. 2 issued Demand-cum-Show Cause Notice dated 30.12.2020 (for short, "SCN") wherein, the non-payment of service tax including cess has been proposed for recovery under the provisions of Section 73 of the Act along with applicable rate of interest under Section 75 of the Act. This apart, it was proposed to impose penalties under Sections 77 and 78 thereof. 2.5. During the pandemic situation that engulfed entire world, the noticee-husband of the petitioner died on 04.06.2021. In connection with above SCN, enclosing copy of certificate of death to an application, said fact was made known to the Assistant Commissioner of Central Goods and Services Tax and Central Excise, Bhubaneswar-II Division, Bhubaneswar, which is stated to have been acknowledged on 03.06.2024. 2.6. Notwithstanding such information, conspicuously around four years from the date of issue of SCN the successor-in-office (the Assistant Commissioner of Central Goods and Services Tax and Central Excise, Bhubaneswar-II Division, Bhubaneswar) passe....
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....e tenable in the eye of law. The Authority concerned could have otherwise appreciated that the receipts during the periods in question was not amenable to levy of service tax as the taxable value of service provided is less than the taxable limit. 4.2. It is sought to be explained by Sri Rudra Prasad Kar, learned Senior Advocate for the petitioner that Section 65(105)(zzzzw) of Chapter-V of the Finance Act, 1994, enumerates the "taxable service" provided "to any person by a hotel, inn, guest house, club or campsite, by whatever name called, for providing accommodation for a continuous period of less than three months". The purpose of above section is to levy service tax on "taxable service" specified therein. No finding of fact is returned by the Assistant Commissioner, GST and Central Excise to demonstrate that the service provider at any time received amount towards service provided for "a continuous period of less than three months". While income from services provided may attract liability under the Income Tax Act, 1961; nevertheless, service tax liability cannot be fastened ex hypothesi under the Act, 1994, particularly in the absence of material on record falling within th....
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....ng 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? 7. Before delving into the merit of the matter to examine whether death of an assessee stops the clock ticking to proceed further to assess liability, and thereafter raise and recover the demand notwithstanding the fact that at the stage of issue of Demand-cum-Show Cause Notice he was alive, a fortiori, to have regard to Shabina Abraham Vrs. Collector of Central Excise, (2015) 10 SCC 770 Equivalent citation: (2015) 34 GSTR 146 = (2015) 83 VST 450. Paragraphs 32 to 34 of said reported judgment need to be quoted: "32. The impugned judgment in the present case has referred to Ellis C. Reid case, 1930 SCC OnLine Bom 58 = AIR 1931 Bom 333 but has not extracted the real ratio contained therein. It then goes on to say that this is a case of short-levy which has been noticed during the lifetime of the deceased and then goes on to state that equally therefore legal representatives of a manufacturer who had paid excess duty would not by the self-sa....
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....t explicit cannot be construed to be implicit in the provisions of the statute. Rudimentary principles of taxation is reflected in Mineral Area Development Authority Vrs. Steel Authority of India, (2024) 7 SCR 1549 [nine-Judge Bench of the Hon'ble Supreme Court of India] with the following observations: "182. Conceptually, a tax has four elements- (i) the nature of the tax which prescribes the taxable event attracting the levy; (ii) the person who is liable to pay tax; (iii) the rate at which the tax is paid; and (iv) the measure or value to which the rate will be applied for computing the liability. [Govind Saran Ganga Saran Vrs. CST, (1985) Supp. SCC 205 (6); Mathuram Agrawal Vrs. State of M.P., (1999) 8 SCC 667 (12); Union of India Vrs. Mohit Minerals (P) Ltd., (2022) 10 SCC 700 (97)]. 183. The subject matter of taxation has been exhaustively enunciated in the Union and State Lists in the Seventh Schedule of the Constitution. [Chhotabhai Jethabhai Patel and Co. Vrs. Union of India, (1962) Supp 2 SCR 1 (68)]. The occurrence of the taxable event creates or attracts the liability to tax. [Goodyear India Ltd. Vr....
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....om the aforesaid angle, the field of legislation for exigibility of Service Tax can be traced out to Entry 97 of List-I of Seventh Schedule appended to the Constitution of India in pursuance of Article 246 of the Constitution of India^1. The taxable event, measure of tax and rate of tax are spelt out in Section 66 to Section 66F read with Section 67 and Section 67A. However, the taxable person is defined by providing the meaning of "assessee" in Section 65(7) of the Act, 1994. 7.3. In State of Telangana Vrs. Tirumala Constructions, (2023) 15 SCR 141 it is stated thus: "3. The pre-Amendment constitutional scheme had a vision of taxation of goods and services supplied within India. Excise and customs duty and excise on manufacture were within the scope of the legislative powers of the Union Parliament^2, under the Seventh Schedule. No separate entry for Service Tax existed in the Constitution at the time it was enacted. In Tamil Nadu Kalyana Mandapam Assn. Vrs. Union of India, 2004 Supp (1) SCR 169 = (2004) 5 SCC 632 this court held that service tax as a subject matter was within the "residuary power" of the Union; nevertheless, Entry 92C was introduced into the Union Lis....
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.... contemplating action to be taken in terms of Section 87 of the Act, 1994 in the event of failure to deposit the Government dues/arrears of service tax within the period specified therein. The learned Junior Standing Counsel made valiant attempt to justify the action of the opposite parties by advancing argument that the son of the petitioner having participated in the proceedings cannot turn around and say that the proceedings could not continue as the noticee was a dead person. Finding force in the submission of the learned Senior Advocate it can be observed that the son of the assessee (dead) cannot be said to have participated in the proceedings in any manner for he had informed the Assessing Officer about the noticee, an individual service provider, that he was dead and gone. Such intimation to the Assessing Officer cannot be termed as participating in the proceedings. Such argument of the learned Junior Standing Counsel could have held water had the legal heir filed returns. This Court would have been in a position to accept the argument that having participated in the proceedings, the outcome of the proceeding could not have been objected to. 8.2. From the above factual m....
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....rated or referred to such an interpretation is given to it for the purposes of that Act alone.', Macbeth Vrs. Chislet, (1910) A.C. 220, 223.' When the word to be construed is used in a taxing statute or a notification issued thereunder it should be understood in its commercial sense." 8.5. In the case of Collector of Customs, Bombay Vrs. Swastic Woollens Pvt. Ltd., (1988) Supp. 2 SCR 370 the observation made is as follows: "We are of the opinion that when no statutory definition is provided in respect of an item in the Customs Act or the Central Excises Act, the trade understanding, meaning thereby the understanding in the opinion of those who deal with the goods in question is the safest guide." 8.6. In Union of India Vrs. G.S. Chatha Rice Mills, (2020) 14 SCR 571 it has been laid down as follows: "44. In Kolhapur Canesugar Works Ltd. Vrs. Union of India (UOI), AIR 2000 SC 811, Constitution Bench of this Court had to decide, inter alia, if Rules 10 and 10-a of the Central Excise Rules could be considered a 'Central Act' as defined in Section 3(7) of the General Clauses Act. This decision of the Court, albeit subsequently questioned for its interpre....
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....A person, who in urgent circumstances acts for the benefit of another, there being no opportunity of communicating with that other. 8.8. To conceive the meaning of "agent", if one turns to Section 182 of the Contract Act, the term "agent" has been defined as being a person employed to do any act for another, or to represent another in dealings with a third person. Section 186 lays down that the authority of the agent may be expressed or implied. Section 187 lays down that an authority is said to be expressed when it is given by the words spoken or written, while it is implied when it is to be inferred from the circumstances of the case and things spoken or written or the ordinary course of dealings. It will, thus, be seen that under the Contract Act, an agent may be authorised expressly by the principal to do a particular act or his power to do such act may be implied from other circumstances. It is not the case of the opposite parties that the deceased service provider engaged his legal heirs as agents in his business. 8.9. It may be pertinent to take note of the following observations found in Mahavir Prasad Amrit Lal Vrs. Commissioner of Sales Tax, (1977) 39 STC 531 (All):....
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....ham Edition-Vol.1, at page 193, Article 345, where the positions of an agent, a servant and independent contractor are thus distinguished: 'An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor. A servant acts under the direct control and supervision of his master and is bound to conform to all reasonable orders given him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result. An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal. An agent as such is not a servant, but a servant is generally for some purposes his masters implied agent, the extent of the agency depending upon the duties or position of the servant." 8.10. This Court, thus, finds that the word "agent" as found in the definition of the term "assessee" vide Section 65(7) of the Act, 1994, it cannot b....
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.... made thereunder, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise: Explanation.- For the purposes of this section, taxable service includes any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration: Provided that the provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint." 8.14. In the context of whether an assessment proceeding under the Central Excises and Salt Act, 1944, can continue against the legal representatives/estate of a sole proprietor/manufacturer after he is dead, in the case of Shabina Abraham Vrs. Collector of Central Excise and Customs, (2015) 10 SCC 770 it is held as follows: "26. A reading of the ratio of the majority decision contained in Murarilal Mahabir Prasad Vrs. B.R. Vad, (1975) 2 SCC 736 would lead to the conclusion that the necessary machinery provisions were already contained in the Bombay Sales Tax Act, 1953 which were good enough to bring into the tax net persons w....
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....ion 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. The interpretation and purport of "includes" in definition clause being referred to a three-Judge Bench of the Hon'ble Supreme Court of India, in the case of Ramala Sahkari Chini Mills Ltd. Vrs. Commissioner of Central Excise, Meerut-I, Meerut, Civil Appeal No. 3976 of 2007, decided on February 19, 2016 it has been held that: "We have heard the learned counsels for the parties. We have also read and considered the order dated 29th November, 2010 of this Court referring the matters to a larger bench for a decision on the question as to whether the definition of the term "input" in Rule 2(g) of the CENVAT Credit Rules, 2002 is to be understood to include items beyond the six items mentioned specifically in Rule 2(g). The answer to the question referred, according to us, is self-contained in the order of reference which has referred, inter alia, to a three judge bench decision of this Court in Regional Director, Employees' State Insurance Corporation Vrs. High Land Coffee Works of P.F.....
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....s enacted. Thus in Hemens (Valuation Officer) vs. Whitsbury Farm and Stud Ltd., (1988) 1 All ER 72 (HL), in construing Section 2(3) of the Rating Act, 1971 which defines 'Livestock' to include any mammal or bird kept for the production of food or wool or for the purpose of its use in the farming of land, the word livestock was not given the wide meaning (in contradiction to deadstock) to include any animal whatsoever and was held not to extend to thorough bred horses not kept for use in the farming of land. 29. Similarly, in South Gujarat Roofing Tile Manufacturers Association Vrs. State of Gujarat AIR 1977 SC 90 (vide pp. 93-94) and Hindustan Aluminium Corporation Vrs. State of UP, AIR 1981 SC 1649, the inclusive definition was given a restrictive meaning. As observed by Wanchoo, J. in Vanguard Fire and General Insurance Co. Ltd., Madras Vrs. Fraser & Ross, AIR 1960 SC 971, the Court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning; intended to be conveyed by the use of the words under the circumstances. No doubt, because of the inclusive definition the meaning....
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....his office within 5 days of receipt of this letter otherwise Arrear Recovery action in terms of Section 87 of the Finance Act, 1994 will be initiated against you." 8.22. As the "assessee" is dead and gone, the actions contemplated under Section 87 of the Act, 1994 cannot be taken inasmuch as the Order-in-Original itself is vitiated in view of discussions made herein above and on the ratio of Shabina Abraham (supra). 9. A cursory reading of Demand-cum-Show Cause Notice dated 30.12.2020 issued in the name of deceased Atal Bihari Senapati, depicts that service tax amounting to Rs. 17,92,354/- including cesses is sought to be recovered from the service provider for the following reason: "It, thus, appears that the notice have consciously concealed the rendering of taxable service and non-payment of service tax thereof from the Department. It is only after initiation of investigation based on data received from CBDT (Central Board of Direct Taxes) that the matter came to light. *** Further, in an era of self-assessment regime, it appears to be the responsibility of the noticee to determine and assess their correct tax liability and intimate the Department by way of statut....
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....ted by the learned Junior Standing Counsel. 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. Conclusion: 10. It is, thus, deduced from the above 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. 10.1. In the light of legal position set forth by the Hon'ble Supreme Court of India in the case of Shabina Abraham Vrs....
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....es of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), and the Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as the repealed Acts) are hereby repealed. (2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (32 of 1994) (hereafter referred to as 'such amendment' or 'amended Act', as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not- (a) revive anything not in force or existing at the time of such amendment or repeal; or (b) affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts: Provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or (d) affect any duty, tax, surcharge,....