By TIOL News Service

MUMBAI, APRIL 06, 2017: "NOTHING is certain except death and taxes." Thus spake Benjamin Franklin in his letter of November 13, 1789 to Jean Baptiste Leroy. To tax the dead is a contradiction in terms. Tax laws are made by the living to tax the living. What survives the dead person is what is left behind in the form of such person's property. [Supreme Court in Shabina Abraham & Ors 2015-TIOL-159-SC-CX ]

The facts of the case go thus -

+ An immovable property situated at MIDC, Dombivli, District Thane, has been attached on 2nd April 2014. The activities of the sole proprietary concern were carried out at this factory premises.

+ The only contention raised before the High Court is that the petitioner is the son of late Mira Agarwal who was the sole proprietress of M/s. Mira Silk Mills.

+ It is stated that after her demise on 12th May 1988, the petitioner's father Suresh Chand (husband of Mira Agarwal) was looking after the affairs of the sole proprietary concern. He was a Power of Attorney holder of the petitioner's mother. Unfortunately, he also expired.

+ Thereafter, the Central Excise officers acting in furtherance of an adjudication order were of the opinion that the dues of the Central Excise Department can be recovered by proceeding against this immovable property. Prior thereto, the adjudication order came to be challenged by the sole proprietary concern.

The High Court observed that it was not concerned with the proceedings insofar as resulting in adjudication of the central excise duties as well as the merits of the order passed against the sole proprietary concern and the only issue before it is the maintainability of the recovery proceedings and the order in that behalf .

It was further observed that the issue raised stands answered by a judgment of the Supreme Court of India in the case of Shabina Abraham 2015-TIOL-159-SC-CX .

Inasmuch as the High Court held that the attachment cannot continue since -

++ The law itself does not permit continuation of the recovery proceedings against the heirs and legal representatives of sole proprietors / proprietress who are carrying on business of manufacturing of excisable goods as a sole proprietor / proprietress.

++ Their concern, after their death, therefore, does not exist and the heirs of such deceased sole proprietor / proprietress cannot be proceeded against in the absence of a clear legal stipulation.

The High Court, however, added -

"7. …, we clarify that the Revenue can proceed by taking recourse to ordinary civil law. The Revenue can institute such legal proceedings as are permissible under the general law and upon success therein, it can enforce and execute the order / decree by even attaching the movable and immovable properties, including the subject property if otherwise permissible in law. All contentions in that regard and of both sides are kept open."

The Writ Petition was allowed and the attachment order and the warrant in that behalf were set aside.

(See 2017-TIOL-664-HC-MUM-CX)