2019 (8) TMI 97 - HC - Customs

Continuation of proceedings against the legal heirs of a deceased - Realization of government dues owed by five concerns/firms of which the Petitioner s deceased father was either a proprietor or a partner - HELD THAT - The issue in Shabina Abraham v. Collector of Central Excise and Customs 2015 (7) TMI 1036 - SUPREME COURT was whether a show-cause notice under the Central Excise and Salt Tax Act, 1944 could be issued to the legal heirs of a sole proprietor after his death, against whom a show-cause notice had been issued raising a demand of excise duty. The Supreme Court agreed with the Appellant in the abovementioned case that there was no machinery provision under the CE Act which enabled the continuation of such proceedings against the legal heirs of a deceased Assessee. In the present case also, no machinery provision in the Customs Act, 1962 has been brought to the notice of this Court which enables the Customs Department to proceed against the legal heirs of a deceased notice/assessee against whom there may be proceedings for recovery of customs duty. Petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Validity of summons issued to the petitioner based on government dues owed by concerns/firms of the petitioner's deceased father.
2. Whether the petitioner, as a director of a private limited company, can be summoned for dues owed by concerns/firms not related to his company.
3. Interpretation of machinery provision in the Customs Act for recovery of dues from legal heirs of deceased notice/assessee.

Analysis:
1. The judgment addressed the validity of summons issued to the petitioner concerning government dues owed by concerns/firms of the petitioner's deceased father. The summons were issued based on a letter from the Joint Commissioner (Customs) regarding realization of dues. The court noted that the liabilities of the concerns/firms associated with the petitioner's deceased father were not transferred to the petitioner's company. Thus, the court emphasized the need for a proper exercise by the department before summoning the petitioner for evidence related to his company, which is not linked to the concerns/firms in question.

2. The court compared the present case to the decision in Shabina Abraham v. Collector of Central Excise and Customs, highlighting the issue of proceeding against legal heirs of a deceased assessee. The court noted that there was no machinery provision in the Customs Act enabling recovery from legal heirs of a deceased notice/assessee. The respondent argued that a show-cause notice had been issued to the petitioner's deceased father before his death, but the court reiterated the absence of a provision for recovery from legal heirs of a proprietary concern or partnership firm.

3. The judgment concluded that there was no machinery provision in the Customs Act allowing recovery from legal heirs of a deceased proprietor/partner of a concern/firm. Despite the pending adjudication of a show-cause notice issued to the petitioner's deceased father, the court emphasized the lack of legal basis for seeking recovery from the petitioner. Consequently, the court quashed the summons issued to the petitioner and allowed the petition in favor of the petitioner, disposing of the application accordingly.