2014 (10) TMI 11 - HC - Customs

Successor s liability - Demand notice sent - Death of sole proprietor - Held that - Statutory, liability which accrued to a proprietorship concern cannot be said to have evaporated because of the action of the erring parties. There is more strong reasons in support of the above that the entire assets belonging to the proprietorship concern came to be vested in the partnership firm and, therefore, even if, a separate Excise registration number is provided to a partnership concern it cannot escape from its liability towards the excise duty imposed on the said proprietorship firm. Admittedly, the proceeding was initiated after the introduction of the proviso in the year 2007 though for a earlier period. The proprietor who was alive at that point of time did not take any such plea. Nor this Court, has been apprised of such fact when an appeal by one of the sons who is also the partner of the partnership firm to be aforesaid plea in an appeal filed before the Tribunal. Since the appeal abates it necessarily implies that the original order stood affirmed. Court, therefore, does not find any ambiguity in an action of the respondent authorities and, therefore the writ petition is devoid of merit. The same is hereby dismissed. There shall be no order as to costs. - Decided against the appellant.

Summary

Issues:
1. Validity of notice of demand against a partnership firm for the dues of a dissolved proprietorship concern.
2. Interpretation of Section 142(1)(c)(ii) of the Customs Act, 1962 in relation to successor liability.
3. Applicability of judgments in the State of Punjab v. M/s. Jullundur Vegetables Syndicate and Commissioner of Central Excise, Bangalore-I v. Press Fab. Precision Components (P) Ltd. to the present case.

Analysis:
1. The petitioner challenges a notice of demand issued by the Assistant Commissioner of Central Excise against a partnership firm for the dues of a dissolved proprietorship concern. The petitioner argues that the notice is invalid as the proprietorship concern ceased to exist after the death of the proprietor and the formation of the partnership firm with a separate assessee number. However, the department contends that the assets of the proprietorship concern vested in the partnership firm, making them liable for the excise duty.

2. The petitioner relies on the Supreme Court judgment in the State of Punjab v. M/s. Jullundur Vegetables Syndicate and the Karnataka High Court judgment in Commissioner of Central Excise, Bangalore-I v. Press Fab. Precision Components (P) Ltd. to support their claim. The petitioner argues that the assessment proceeding cannot continue against a dissolved firm and that the proviso to Section 142(1)(c)(ii) of the Customs Act cannot be invoked against the successor prior to a specific date. However, the department argues that the petitioner's claim is not valid as the proprietorship concern continued as a partnership firm.

3. The High Court distinguishes the facts of the present case from the judgments cited by the petitioner. The court notes that the assets of the dissolved proprietorship concern were transferred to the partnership firm, making them liable for the excise duty. The court finds that the demand was made after the introduction of the relevant provision and dismisses the writ petition, stating that there is no ambiguity in the actions of the respondent authorities. The court also refuses the petitioner's request for a stay of the order and directs the issuance of a certified copy of the order to the parties upon application.