Background: The petitioner, son of a deceased registered dealer under the Finance Act, 1994, challenged recovery proceedings and property attachment initiated by tax authorities to recover service tax dues assessed against his late father. The father had appealed the assessment orders but died during the pendency of the appeal. Subsequently, the petitioner was served with a demand notice and his property was attached for recovery of the outstanding dues.
Legal Issue: The central question before the Andhra Pradesh High Court was whether, in the absence of an express statutory provision, the legal heirs of a deceased assessee could be held liable for the recovery of service tax dues under the Central Excise Act, 1944, or by invoking provisions of the GST Act.
Submissions: The petitioner argued that there was no provision in the Central Excise Act making legal heirs liable for the tax dues of a deceased assessee. The respondents contended that the GST Act’s recovery provisions could be applied to recover the dues from the petitioner as legal heir, superseding earlier procedures under the Central Excise Act.
Court’s Reasoning: The Court examined relevant precedents, including the Supreme Court’s decision in Shabina Abraham v. Collector of Central Excise and Customs, which held that assessment proceedings pending against a deceased assessee could not be continued against legal representatives. While the Supreme Court did not address whether recovery proceedings based on completed assessments could continue against legal heirs, the High Courts of Delhi and Madras had held, in the context of the Customs Act, that in the absence of a specific statutory provision, such recovery was not permissible.
The Andhra Pradesh High Court noted that the Central Excise Act, 1944, similarly lacks any provision authorizing recovery of dues from legal heirs of a deceased assessee. The Court found itself in respectful agreement with the reasoning of the Delhi and Madras High Courts, holding that the absence of a statutory mechanism precludes such recovery.
Decision: The Court allowed the writ petition, setting aside both the demand notice and the order of attachment issued against the petitioner. It further directed the authorities not to initiate any recovery proceedings, including coercive steps, for the dues of the deceased assessee against the petitioner. The Court made no order as to costs and closed all pending miscellaneous applications.
Significance: This decision clarifies that, under the Central Excise Act, 1944, and in the absence of an express statutory provision, legal heirs cannot be made liable for the tax dues of a deceased assessee. The ruling reinforces the principle that tax recovery proceedings must be grounded in clear legislative authority and cannot be extended to legal heirs by implication.
Case Reported at:
Case Name: K. Prasad Babu Kalyanam v. Union of India and Ors.
Case Citation: (2026) taxcode.in 724 HC
