2017 (11) TMI 1585 - HC - Customs

Penalty u/s 112 of CA - demand of penalty from widow of late V.M.G.Srinivasa Vandayar, the petitioner - case of petitioner is that in terms of Section 112 of the Customs Act, 1962 the liability is personal in nature and cannot be recovered against the estate of the deceased - Held that - if proceedings are to be initiated against the petitioner, then liability should have been fixed on the petitioner, for which proper procedure was required to be followed, more so, when it is the case of the Department that the petitioner is liable in terms of Section 112 of the CA. Thus, the present attempt of the first respondent to make good the loss of Revenue after the demise of the petitioner s husband cannot be permitted - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Challenge to notice demanding payment of penalty after a significant delay.
2. Interpretation of liability under Section 112 of the Customs Act, 1962.
3. Failure to explain the delay in taking action to recover the amount from the deceased's estate.
4. Procedure for fixing liability on legal heirs.

Analysis:
1. The petitioner, widow of the deceased, filed a writ petition to challenge a notice demanding payment of a penalty of ?50,000, which was originally imposed on her late husband in 1986. The petitioner argued that the sudden demand after 20 years, following the husband's demise, was unjust and unsustainable.

2. The legal issue raised by the petitioner pertained to the personal nature of liability under Section 112 of the Customs Act, 1962. The petitioner contended that such liability cannot be imposed on the estate of the deceased, emphasizing the personal nature of the obligation.

3. The court noted the absence of any counter affidavit from the respondent and highlighted the lack of explanation for the failure to take action to recover the amount from 1986 until the husband's demise in 2001. The court inferred that the claim was time-barred and could not be enforced against the legal heirs due to the unexplained delay.

4. Furthermore, the court emphasized the necessity of following proper procedures to fix liability on the legal heirs, especially when the Department claimed the petitioner's liability under Section 112 of the Customs Act. The court found the attempt to recover the amount from the deceased's legal heirs post his demise impermissible.

Conclusion:
The High Court allowed the writ petition, quashing the impugned order demanding payment of the penalty. The court did not impose any costs and closed the connected miscellaneous petition. The judgment emphasized the need for timely action, proper procedure, and adherence to legal principles in matters involving the recovery of liabilities from deceased individuals' estates.