Trade Publication Article

ST - Assessment proceedings against deceased sole proprietor abate on death, as there is no statutory machinery to continue against legal heirs and demand confirmed against late Smt. Pushpa Mehta not sustainable: CESTAT

2025

Overview

Pushpa Mehta, who was engaged in manufacturing of water meters on job work basis was issued a SCN alleging liability to service tax - They claimed exemption under Notfn 25/2012-ST - However, during pendency of proceedings she expired on 08.12.2018 and Department was informed of her demise by letter dated 13.12.2018 - Despite this, Adjudicating Authority proceeded to pass O-I-O confirming tax, interest and penalty in her name - The Commissioner (A) rejected the appeal filed by her son on the grounds that pre-deposit was not made and that appeal is not maintainable against the deceased - It is argued that the OIO was void ab initio as it was passed against a dead person - It was emphasized that under Finance Act, 1994 read with the Central Excise Act, an “assessee” means the person liable to pay duty/tax, and proceedings abate on death - Tribunal observed that on death of sole proprietor during adjudication, it is incumbent upon authority to abate the proceedings - The OIO passed thereafter was a nullity and unsustainable - It is noted that Commissioner (A) also failed to appreciate the binding precedent of Supreme Court - Reference is made to Service Care Pvt Ltd, where recovery proceedings against a proprietorship after death of sole proprietor are quashed - Similarly, in J.S. Singh Engineering Contractor 2019-TIOL-2402-CESTAT-Del, Tribunal held that SCNs cannot be issued against deceased persons and such proceedings are untenable - Following these decisions, it is held that the assessment and recovery proceedings against late Smt. [...]the impugned order is also not sustainable as the proceedings had already been lapsed. Though all efforts have been made to reproduce the order correctly but the access and circulation is subject to the condition that Taxindiaonline are not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.) Credit: TIOL News Service

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