Proceedings under Central Excise Act get abated on the death of assessee

Brief of the case: The Hon’ble Supreme Court in the case of Shabina Abraham & others held that the estate of a dead person cannot be attached for recovery of excise duty payable because there is no enabling provision in the Act to do so. Thus, assets of deceased inherited upon the legal heirs cannot be attached under the Act.

Facts of the case:

• The assessee Mr. George Varghese was the sole proprietor of Kerala Tyre& Rubber Co.
• A show cause notice was issue to assessee alleging that it has cleared tread rubber from the factory without payment of duty.
• The SCN was adjudicated and a demand of duty with equivalent penalty was raised on assessee.
• The sole proprietor died before the payment of duty. As a result of his death, a second show cause notice was issued on 18.10.1989 to his wife and four daughters asking them to make submissions with regard to the demand of duty made in the show cause notice dated 12.6.1987.
• The legal heirs challenged the validity of proceedings that on death of assessee the proceedings of the case got abated.
• The Division Bench of Kerala HC held in the favour of revenue by stating that the recovery of tax can be made from the estate of a dead person as per Sec 11 of the Central Excise Act.

Contention of the Assessee:

• There is no machinery provision in the Central Excise Act for continuing assessment proceedings against a dead individual. The definition of assessee as provided in the Act means “the person” who is liableto pay the duty of excise under this Act.
• Duty can only be recovered only from a person who is chargeable with the duty that has been not paid.
  

Contention of the Revenue:

• Sec 11 provides that the sums payable under the Act can be recovered from the assessee by way of attachment of his property.
• A dead man’s property can also be attached and sold and proceeded against. As such there is an enabling provision to recover the dues by attaching properties inherited by legal heirs.

Held by Hon’ble Supreme Court:

• There is no separate enabling provision in Central Excise Act to recover the excise duty from the legal heirs of a dead person. The definition of assessee as contained in Sec 4(3)(a) of the Central Excise Act provides that an assessee means “the person who is liable to pay the duty of excise under this Act.The present tense being used, it is clear that the person referred to can only be a living person.
• Such use of present tense indicate that the one of modes of recovery as provided in sec 11 by way of attachment of estate of the assessee is possible only when the assessee is living person , after death of assessee even if his estate are available cannot be so attached. Thus, the legal heirs inheriting the estate of deceased person cannot be make liable to pay duty as payable by the assessee during his life.
• The court in support of its interpretation quoted that “In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.”