Allowing an appeal in Shabina Abraham & Ors v Collector of Central Excise & Customs, a two-judge bench of the Supreme Court reiterated that tax statutes have to be interpreted in the light of what is clearly expressed and anything that is not expressed cannot be implied.
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The court held that legal heirs cannot be made liable for duty and other sums owed by a deceased person under the Central Excises and Salt Act, 1944 as, unlike the Income Tax Act, 1961, the act does not provide rules for working out the charge to be imposed.
George Varghese was the sole proprietor of a tread rubber manufacturing concern, which closed down in 1985. In June 1987, Varghese received a notice for unpaid excise duties. Varghese died in 1989 and subsequently his legal heirs – his wife and four daughters, who stated that they had no personal association with his proprietary business – were issued a follow-up notice. They challenged the notice as being without jurisdiction as the proceedings initiated against Varghese abated on his death under the Central Excises and Salt Act, but had no success.
The heirs then filed a writ petition before Kerala High Court. The petition was granted by a single judge but denied by a division bench on appeal. Before the Supreme Court, the heirs argued that a reading of sections 2(f), (3), 4(3)(a), 11 and 11A of the Central Excises and Salt Act, as they stood at the relevant time, showed that the act did not contain a machinery provision to enable assessment proceedings against a dead individual. Under the act an assessee is the person who is liable to pay the excise duty, and excise duty that is owed can only be recovered from the person who is chargeable and not their legal heirs.
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
