2020 (2) TMI 42 - AT - Service Tax

Levy of service tax - packaging activity - activity of filing up of the bags is sub-contracted to various sub-contractors by M/s. Aspinwall Co. - period from 16/06/2005 to 31/12/2006 - extended period of limitation - HELD THAT - The appellant was admittedly a sole proprietorship and Shri. N. Chandra Mohan was the proprietor of M/s. Jaaacsons Enterprises, Mangalore. Also, during the pendency of this appeal, the sole proprietor died on 31/08/2019 in view of the death certificate placed on record. Also, the legal heirs of the sole proprietor are not continuing with the business. On the death of the sole proprietor Shri. N. Chandra Mohan, the present appeals and the demand and recovery proceedings against the appellant abate - the proceedings against the appellant abate - appeal disposed off.

Summary

Issues:
- Appeal against demand of service tax for the period 16/06/2005 to 31/12/2006.
- Appeal against demand of service tax for the period 01/01/2007 to 31/03/2009.
- Abatement of proceedings due to the demise of the sole proprietor.

Analysis:

Issue 1: Appeal against demand of service tax for the period 16/06/2005 to 31/12/2006
The appellant, a proprietorship firm, was sub-contracted by M/s. Aspinwall & Co. for stitching bags filled with fertilizer. The department alleged that this activity was a taxable service under packaging activity, demanding service tax for the mentioned period. The appellant argued that after the demise of the sole proprietor, the proceedings abate as per Rule 22 of CESTAT (Procedure) Rules, 1982 and cited relevant case laws. The Tribunal, considering the death certificate and legal heirs not continuing the business, held that the proceedings against the appellant abate, disposing of the appeal accordingly.

Issue 2: Appeal against demand of service tax for the period 01/01/2007 to 31/03/2009
Similar to the first issue, the appellant contested the demand of service tax for this period on the grounds of the demise of the sole proprietor leading to the abatement of proceedings. The Tribunal, after verifying the death certificate and lack of continuation by legal heirs, upheld the abatement of proceedings against the appellant in accordance with Rule 22 of CESTAT (Procedure) Rules, 1982 and relevant case laws.

Issue 3: Abatement of proceedings due to the demise of the sole proprietor
The main contention in all three appeals was the abatement of proceedings following the death of the sole proprietor, as argued by the appellant based on Rule 22 of CESTAT (Procedure) Rules, 1982 and supported by relevant case laws. The Tribunal, after confirming the death of the sole proprietor and lack of business continuation by legal heirs, agreed with the appellant's stance, holding that the proceedings against the appellant abate, and subsequently disposing of all three appeals in favor of the appellant.

This judgment emphasizes the legal principle that in cases of the demise of a sole proprietor, proceedings may abate as per the applicable rules and precedents, ensuring fairness and adherence to legal procedures in such situations.