2015 Supreme(SC) 743

SUPREME COURT OF INDIA
A.K. Sikri, R.F. Nariman, JJ.
SHABINA ABRAHAM & ORS. – APPELLANTS
VERSUS
COLLECTOR OF CENTRAL EXCISE & CUSTOMS – RESPONDENT
CIVIL APPEAL NO.5802 OF 2005
Decided On : 29-07-2015

IMPORTANT POINTS
Central Excises and Salt Act, 1944 does not contain any separate machinery to proceed against a dead person for assessing him to tax.
Assessee in section 4(3)(a) applies to living person only. ‘Agent’ of the assessee cannot be extended to include legal heirs.
Use of ‘means and includes’ in the definition makes the definition exhaustive, leaving no scope to read anything further into the said definition.
Notice under section 11A can be served on assessee, a living person only.
In absence of machinery provisions for assessment in the hands of the estate of a dead person, duty and other sums do not become “payable” section 11 will not be attracted.
‘Person’ u/s 3(42), General Clauses Act, 1897 does not include legal representatives of deceased persons.
Provisions of the Central Excises and Salt Act cannot be stretched to bring legal heirs within its ambit.
Taxing statute cannot be interpreted on equitable considerations, presumptions, assumptions, conjectures or surmises.

Headnote:(a) Central Excises and Salt Act, 1944 – Section 11 and 11A r/w Rule 2(3) and Rule 7, Central Excises Rules, 1944 – Assessment – Assessee dying – No separate machinery to proceed against a dead person for assessing him to tax. (Para 8)

       A.I.R. 1931 Bombay 333; [1963] 48 I.T.R. 59; [1964] 51 I.T.R. 345; A.I.R. 1935 Bombay 167 – Referred

       (b) Central Excises and Salt Act, 1944 – Section 4(3)(a) – Assessee – Use of present tense in definition – Applies to living person only – Includes ‘agents’ – Cannot be extended to legal heirs. (Para 17)

       A.I.R. 1931 Bombay 333 – Cited with approval

       (c) Interpretation of statute – Definition clause – Use of means and includes – Makes the definition exhaustive – Leaving no scope to read anything further into the said definition. (Para 17)

       (d) Central Excises and Salt Act, 1944 – Section 11A – Notice under – Can be served on assessee, a living person only. (Para 18)

       (e) Central Excises and Salt Act, 1944 – Section 11 – No mention of dead person – Applicable only to recovery of sums payable to Central Government – In absence of machinery provisions for assessment in the hands of the estate of a dead person, duty and other sums do not become “payable” – Section 11 not attracted. (Para 19)

       (f) Central Excises and Salt Act, 1944 – Section 11A – Notice under – Excise duty – A tax on goods – Assessment on deceased – No machinery provisions to assess and collect sales tax from a deceased person – All proceedings against such deceased person/dissolved firm abate. (Para 21)

       [1966] 2 S.C.R. 457; (1967) 19 STC 381; (1968) 21 STC 263 – Relied upon

       (1975) 2 SCC 736 – Distinguished

       (g) General Clauses Act, 1897 – Section 3(42) – Person – Does not include legal representatives of deceased persons. (Para 28)

       (h) Central Excise Act – Section 6 – Silent about manner of continuing assessment of a dead person in respect of excise duty that may have escaped assessment. (Para 28)

       AIR 1967 SC 135: (1966) Suppl. SCR 419; AIR 1961 SC 609: (1961) 2 SCR 765; AIR 1975 SC 1871: (1975) 4 SCC 745; (2005) 2 SCC 695 – Distinguished

       (i) Interpretation of statute – Central Excises and Salt Act – Provisions of the Act cannot be stretched to bring legal heirs who are not the persons chargeable to duty under the Act within the ambit of the Act. (Para 30)

       2012 (281) E.L.T. 64 (Karnataka) – Cited with approval

       (j) Administration of Justice – Judicial propriety – High Court giving reasons without referring to any provision of law – Invoking morality – Approach disapproved – Interpretation of taxing statute. (Para 31, 32, 33)

       (1869) LR 4 HL 100; (1921) 1 KB 64; [1961] 2 SCR 189 – Relied upon

       Facts of the case:

       The precise question that arises in the present case is 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. The facts of the case are as follows.

       One Shri George Varghese was the sole proprietor of Kerala Tyre and Rubber Company Limited. By October 1985, this proprietary concern had stopped manufacture and production of tread rubber.

       By a show cause notice dated 12.6.1987, for the period January 1983 to December 1985, it was alleged that the assessee had manufactured and cleared tread rubber from the factory premises by suppressing the fact of such production and removal with an intent to evade payment of excise duty. Duty amounting to Rs.74,35,242/-was sought to be recovered from the assessee together with imposition of penalty for clandestine removal.

       On 14.3.1989, the said Shri George Varghese died.

       Thereafter, 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. By their reply dated 25.10.1989, the said legal heirs of the deceased stated that none of them had any personal association with the deceased in his proprietary business and were not in a position to locate any business records. They submitted that the proceedings initiated against the deceased abated on his death in the absence of any provision in the Central Excises and Salt Act to continue assessment proceedings against a dead person in the hands of the legal representatives. The said show cause notice was, therefore, challenged as being without jurisdiction.

       As the Central Excise Authorities posted the matter for hearing and refused to pass an order on the maintainability of the show cause notice alone, the legal heirs approached the High Court by filing a Writ Petition in January, 1990.

       The single Judge of the High Court quashed the proceedings against the legal heirs.

       Against this, revenue went in appeal. The Division Bench of the High Court reversed the single Judge’s judgment.

       Finding of the Court:

       Impugned judgment cannot be sustained.

       Result: Appeal allowed.