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2018 (7) TMI 1124 - AT - Service TaxRefund of service tax deposited after the death of proprietor - Penalty on successor - non-existent firm - proprietor of the firm expired due to cancer on 18/04/2005 before adjudication of the case and the proprietary firm ceased to exist from 18/04/2005 - Held that - It is a fact that Shri M.B. Lingadalli who was the proprietor of the firm died on 18/04/2005 and that too before the case was a adjudicated. It is also a fact that service tax registration was surrendered vide letter dt. 19/05/2005 and the said letter is on record. In view of the death of the sole proprietor, no recovery proceedings can be initiated against the appellant in view of the judgment of the Hon ble Supreme Court in the case of Shabina Abraham 2015 (7) TMI 1036 - SUPREME COURT No penalty - refund allowed - decided in favor of appellant.
Issues:
1. Validity of penalty imposed under Section 76 of the Finance Act, 1994 after the death of the proprietor. 2. Liability of service tax for a proprietary concern after the death of the proprietor. 3. Refund of the amount deposited by the appellant. Analysis: Issue 1: Validity of penalty under Section 76 The appellant challenged the penalty imposed under Section 76 of the Finance Act, 1994, arguing that it was not sustainable in law due to the death of the proprietor before adjudication. The appellant contended that the proprietary firm ceased to exist after the proprietor's death, rendering the assessment and recovery proceedings void. Citing judicial precedents like Shabina Abraham Vs. CCE&C and others, the appellant argued that recovery proceedings against a non-existent proprietary firm are invalid. The Tribunal, after considering the submissions and relevant case law, agreed with the appellant's arguments. The Tribunal found that no recovery proceedings could be initiated against the appellant following the death of the sole proprietor, in line with the judgment of the Hon'ble Supreme Court. Consequently, the Tribunal set aside the penalty imposed under Section 76. Issue 2: Liability of service tax post proprietor's death The question of liability to service tax for a proprietary concern after the death of the proprietor was a crucial issue in the case. The Commissioner (Appeals) had previously set aside the service tax demand, ruling that the liability would not arise for a proprietary concern after the proprietor's death. The Tribunal upheld this decision, emphasizing that the death of the proprietor extinguished any liability for service tax. Additionally, the Tribunal noted that an appeal by the Department seeking restoration of penalty under Section 78 had been dismissed under the Litigation Policy. Therefore, the Tribunal affirmed that no liability for service tax existed post the proprietor's demise. Issue 3: Refund of deposited amount Regarding the refund of the amount deposited by the appellant, the Tribunal ordered that the appellant was entitled to a refund of the sum of &8377; 7,43,139/-, which was deposited while filing the appeal. The Tribunal directed the Department to refund this amount within two months from the date of the order. This decision was based on the finding that there was no liability for tax, interest, or penalty, given the circumstances of the case. The Tribunal's directive ensured the appellant's right to the refund of the deposited sum. In conclusion, the Tribunal allowed the appeal, setting aside the impugned order passed in revision and directing the refund of the deposited amount to the appellant. The judgment clarified the non-existence of liability for service tax post the proprietor's death and emphasized the invalidity of recovery proceedings against a non-existent proprietary firm.
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