Supreme Court of India
SHABINAABRAHAM & ORS.versusCOLLECTOR OF CENTRAL EXCISE & CUSTOMS
- Citation
- 2015 INSC 528
- Decided
- 29 July 2015
- Disposal
- Appeal(s) allowed
- Bench
- A K SIKRI
Holding
The Central Excises and Salt Act, 1944 contains no machinery to assess a dead person; the definition of "assessee" is exhaustive and applies only to a living person, so assessment cannot proceed against the legal heirs.
Summary
The case concerned a show‑cause notice issued under the Central Excises and Salt Act, 1944 for alleged short levy of excise duty by a sole proprietor who died in 1989. The legal heirs challenged the notice, arguing that the Act contains no provision to continue assessment against a dead person’s estate. The Supreme Court examined the definition of "assessee" in s.4(3)(a) of the Act, the scope of s.11 and s.11A, and the definition of "person" in the General Clauses Act, 1897. It held that the definition of "assessee" is exhaustive and applies only to a living person, and that the Act provides no machinery to assess a deceased individual or his legal representatives. Consequently, the assessment cannot be pursued against the heirs. The Court allowed the appeal, restoring the single‑judge High Court decision that quashed the proceedings.
Issues considered
- Can an assessment under the Central Excises and Salt Act, 1944 be continued against the legal representatives or estate of a deceased sole proprietor?
- Does the definition of "assessee" in s.4(3)(a) of the Act include a dead person or his heirs?
- Do s.11 and s.11A of the Act furnish any machinery to recover duty from a deceased assessee?
- Does the definition of "person" in the General Clauses Act, 1897 encompass legal representatives of a deceased person?
- Should principles from the Income Tax Act be applied to the Central Excises and Salt Act in this context?
Legislation cited
- Bombay Sales Tax Act, 1953s. 14(3), s. 15(1), s. 15A
- Bombay Sales Tax Act, 1959s. 19(3)
- Central Boards of Revenue Act, 1963
- Central Excises and Salt Act, 1944s. 11, s. 11A, s. 4(3)(a)
- General Clauses Act, 1897s. 3(42)
- Income Tax Act, 1922
- Income Tax Act, 1961s. 159, s. 168
- Income Tax (Second Amendment) Act, 1933
Subjects
excise dutyassessmentdeceasedlegal heirsstatutory interpretationdefinition of assesseeCentral Excise Acttax law
Judgment
[2015] 8 S.C.R. 151
SHABINAABRAHAM & ORS. A
v.
COLLECTOR OF CENTRAL EXCISE & CUSTOMS·
(Civil Appeal No. 5802 of 2005)
8
JULY29, 2015
[A. K. SIKRI AND R. F. NARIMAN, JJ.]
Central Excises and Salt Act, 1944 - s. 4(3)(a) -
Assessment under - Whether can continue against the legal c
representatives/estate of the sole proprietor/ manufacturer
after he is dead - Held: There is no separate machinery
provided by the Act to proceed against a dead person for ,
assessing him totax under.the Act- In view of definition of
assessee u/s. s.4(3)(a), ati 'assessee' can only be a living D
person - The definition being exhaustive in nature, nothing
else can be read in the definition - Even the definition of
''person" in the General Clauses Act does not include legal
representatives of persons since deceased- By interpreting
the provisions of the Act, the legal heirs who are not E
chargeable to duty under the Act, cannot be brought within
the ambit of the Act by stretching its provisions - Income Tax
Act, 1922 - General Clauses Act, 1897 ~ s.3(42) -
Interpretation of Statutes.
F
Words and Phrases:
'Jl\ssessee" - ·Meaning of, in the context of Central
Excises andSalt Act, 1944.
"Person" - Meaning of, in the context of s.3(42) of G
General Clauses Act, 1897.
Allowing the appeal, the Court ·
HELD: 1.1 There is no separate machinery H
151
152 SUPREME COURT REPORTS [2015) 8 S.C.R.
A provided by the Central Excises and Salt Act, 1944 to
proceed against a dead person when it comes to
assessing him to tax under the Act. [Para 8) [163-0)
1.2 The position under the Income Tax Act, 1922
B was also the same until Section 248 was introduced by
the Income Tax (Second Amendment) Act of 1933. The
definition of "assessee" contained in Section 4(3)(a) of
the Central Excises and Salt Act is similar to the definition
of assessee contained in the Income Tax Act, 1922.
C Under that Act, an assessee means "a person by whom
income tax is payable." Under the Central Excises and
Salt Act, an assessee means "the person who is liable
to pay the duty of excise under this Act". The present
tense being used, it is clear that the person referred to
D can only be a living person. Further, the only extension
of the definition of "assessee" under the Central Excises
and Salt Act is that it would also include an assessee's
agent, which has nothing to do with the facts of the
present case. A "means and includes" definition is
E exhaustive in nature and there is no scope to read
anything further into the said definition. The notice that
is served under Section 11A is only on the person
chargeable with excise duty, i.e. "assessee" as defined.
F It cannot be said that the principles applied in the case
of the Income Tax Act should not be applied to the Central
Excises and Salt Act as the latter Act is a tax on
manufacture of goods and not on persons. [Paras 9, 17,
18 and 20) [163-E; 172-D-H; 173-A; 174-A-B]
G 1.3 It is not correct to say that the insertion of the
proviso to Section 11 by an Amendment Act of 2004 so
as to provide that if a person from whom some recoveries
are due, transfers his business to another person, then
H the excisable goods in the possession of the transferee
can also be attached and sold. It also cannot be said
SHABINAABRAHAM & ORS. v. COLLECTOR OF 153
CENTRAL EXCISE & CUSTOMS
that the Legislature's need to add the proviso shows that A
nothing can be read into the Central Excises and Salt
Act by implication. Section .11 deals with an entirely
different situation and the addition of the proviso therein
is not of much significance as far as the question which
is required to be answered in the present case. Section B
11 is limited only to recovery of sums that are due to the
Government. If such sums are not "payable" then the
provisions of the Section do not get attracted at all. The
Act contains no machinery provisions for proceeding C
against a dead person's legal heirs. Therefore, duty and
other sums do not become "payable" without such
machinery provisions. Further, Section 11 deals with
modes of recovery of tax payable and does not deal with
the subject matter in .the present case - namely
0
machinery provisions for assessment in the hands of
the estate of a dead person. [Para 19] [173-B-E]
1.4 Section 3 (42) of General Clauses Act, 1897,
which defines 'person', does not include legal
representatives of persons who are since deceased. E
Equally, Section 6 of the Central Excises Act, which
prescribes a procedure for registration of certain
persons who are engaged in the process of production
or manufacture of any specified goods mentioned in the F
schedule to the said Act does not throw any light on the
question for consideration in the present case, as it says
nothing about how a dead person's assessment is to
continue after his death in respect of excise duty that
may have escaped assessment. [Para 28] [183-C-F] G
Commissioner of Income Tax, Bombay City I v.
Amarchand N. Shroff (1963) 48 I. T.R. 59;
Commissioner of Income Tax, Bombay v. James
Anderson (1964) 51 l.T.R. 345; State of Punjab v. Mis
H
Jul/under Vegetables Syndicate (1966) 2 S.C.R. 457;
154 SUPREME COURT REPORTS [2015] 8 S.C.R.
A Khushi Ram Behari Lal & Co. v. Assessing Authority,
Sangrur (1967) 19 STC 381; Additional Tahsildar,
Raipur v. Gene/ala/ (196.8) 21 STC 263 - relied on.
Yeshwantrao v. The Commissioner of Wealth Tax,
B Bangalore AIR 1967 SC 135:(1966) Suppl. SCR 419;
Abraham v. The Income-Tax Officer, Kottayam &Anr.
. AIR 1961 SC 609: (1961) 2 SCR 765; The State of
Tamil Nadu v. M.K. Kandaswami & Ors. Air 1975 SC
1871: (1975) 4 sec 745: 1976 (1) scR 38;
c Commissioner of Sales Tax, Delhi & Others v. Shri
Krishna Engineering Co. & Ors. (2005) 2 SCC 695;
Girja Nandini Devi &Ors. v. Bijendra Narain Choudhury
(1967) 1 SCR. 93; Shri Rameshwar Manjhi (deceased)
Through his son Shri Lakhiram Manjhi v. Management
D of Sangramgarh Colliery & Ors. {1994) 1 SCC 292:
1993 (3) Suppl. SCR 668; Mis. Murarilal Mahabir
Prasad and others v. Shri B.R. Vaci and Ors. (1975) 2
sec 736 - distinguished.
E Commissioner of Income Tax, Bombay v. Ellis C. Reid,
A.l.R. 1931 Bombay 333; Commissioner of Income
Tax, Bombay v. Darabsha Nasarwanji Mehta A.l.R. 1935
Bombay 167 - referred to.
F 2. While interpreting the provisions of the Central
Excises and Salt Act, legal heirs who are notthe persons
chargeable to duty under the Act cannct be brought
within the ambit of the Act by stretching its provisions.
[Para 30] [184-G]
G
Commissioner of Central Excise; Bangalore - Ill v.
Dhiren Gandhi 2012 (281) E.L.T. 64 (Karnataka);
Commissioner of Sales Tax Commissioner, Uttar
Pradesh v. Modi Sugar Mills 1961 (2) SCR 189- relied
H on.
SHABINAABRAHAM & ORS. v. COLLECTOR OF 155
CENTRAL EXCISE & CUSTOMS
•
Partington v. A.G. (1869) LR 4 HL 100; Cape Brandy A
Syndicate v. /RC (1921) 1 KB 64 - referred to.
Case Law Reference
A.l.R.1931Bombay333 referred to Para 9
B
(1963) 48 I. T.R. 59 relied on. Para 11
" 345
(1964) 511.T.R. relied on. Para 12
A.l.R. 1935 Bombay 167 referred to. Para 13
(1966) 2 S.C.R. 457 relied on.. Para 20 c
(1967) 19 STC 381 relied on. Para 21
(1968) 21 STC 263 relied on. Para 21
(1975) 2 sec 736 distinguished. Para 22
D
(1966) Suppl. SCR 419 distinguished. Para 28
(1961) 2 SCR 765 distinguished. Para 28
1976 ( 1 ) SCR 38 distinguished. Para 28
(2005) 2 sec 695 distinguished. Para 28 E
(1967) 1 S.C.R. 93. distinguished. Para 29
1993 (3) Suppl. SCR 668 distinguished. Para 29
2012 (281) E.L.T. 64 ·relied on. Para 30
F
(1869) LR 4 HL 100 referred to Para 31
(1921) 1 KB 64 referred to Para 31
1961 (2) SCR 189 relied on. Para.33
CIVILAPPELLATE JURISDICTION : Civil Appeal No. G.
5802 of 2005.
From the Judgment and Order dated 10. 06.2003 of the
High Court of Kerala in Writ Appeal 613of1997.
H
156 SUPREME COURT REPORTS [2015] 8 S.C.R.
A Rajshekhar Rao, Atul ShankarVinod, Varun Mishra, M.
P. Vinod, fortheAppellants.
A K. Panda, Rajiv Nanda, B. Krishan Prasad, Surendra'
Kumar Gupta, Disha Singh, for the Re·spondent.
B
The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. "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
C 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. This appeal raises
questions as to whether the dead person's property, in the form
of his or her estate, can be taxed without the necessary
0
machinery provisions in a tax statute. The precise question
that arises in the present case is whether an assessment
proceeding under the Central Excises and SaltAct, 1944, can
continue against the legal representatives/estate of a sole
E proprietor/manufacturer after he is dead. The facts of the case
are as follows.
2. One Shri George Varghese was the sole proprietor
of Kerala Tyre and Rubber Company Limited. By October
F 1985, this proprietary concern had stopped manufacture and
production of tread rubber. By a show cause notice dated
12.6.1987, for the period January 1983 to December 1985, it
was alleged that the assessee had manufactured and cleared
tread rubber from the factory premises by suppressing the fact
G of such production and removal with an intent to evade payment
of excise duty. The provisions of Section 11A, as they then
stood, of the Central Excises and Salt Act were invoked and
duty amounting to Rs.74,35,242/-was sought to be recovered
from the assessee together with imposition of penalty for
H clandestine removal.
SHABINAABRAHAM & ORS. v. COLLECTOR OF 157
CENTRAL EXCISE & CUSTOMS [R F. NARI MAN, J.)
3. On 14.3.1989, the said St)ri George Varghese died. A
As a result of his death, a second show cause notice was
issued on 18.10.1989 to his wife and four daughters asking
them to make submissions with regard to the demand of duty
made in the show cause notice dated 12.6.1987. By their
reply dated 25.10.1989, the said le~al heirs of the deceased B
stated that none of them had any personal association with
the deceased in his proprietary business and were not in a
position to locate any business records. They submitted that
the proceedings initiated against the deceased abated on his
death in the absence of any provision in the Central Excises C
and Salt Act to continue assessment proceedings against a
dead person in the hands of the legal representatives. The
said show cause notice was, therefore, challenged as being
without jurisdiction.
D
4. As the Central Excise Authorities posted the matter
for hearing and refused to pass an order on the maintainability
of the show cause notice alone, the legal heirs approached
the High Court under Article 226 of the Constitution by filing a
Writ Petition in January, 1990. The learned single Judge of E
the High Court quashed the proceedings against the legal heirs
stating that the Central Excises and Salt Act did not contain
any provisions for continuing assessment proceedings against
a dead person. Against this, revenue went in appeal. The F
Division Bench of the High Court of Kerala reversed the single
Judge's judgment.
5. Shri Rajshekhar Rao, learned counsel appearing for
the legal heirs made submissions before us with great clarity
and persuasiveness. He submitted that a reading of Sections G
2(f), (3), Section 4(3)(a), Section 11 and 11Aas they stood at
the relevant time would show that unlike the provisions of the
Income Tax Act, there is no machinery provision in the Central
Excises and Salt Act for continuing asse:>sment proceedings H
against a dead individual. He stressed the fact that an
158 SUPREME COURT REPORTS [2015] 8 S.C.R.
A assessee under the said Act means "the person" who is liable
to pay the duty of excise under this Act and further stressed
the fact that in cases ot,short levy, such duty can only be
recovered from a person who is chargeable with the duty that
has been short levied. He further invited our attention to the
B Central Excise Rules and Rules 2(3) and 7 in particular to
buttress his submission that there is no machinery provision
contained either in the Act or in the Rules to proceed against a
dead person's legal heirs. He cited certain judgments before
us which we will advert to later on in this judgment.
c
6. ShriA.K. Panda, learned senior advocate appearing
on behalf of the revenue contended that a close reading of
Section 11 of the Central Excises and Salt Act will indicate
that sums are recoverable from an assessee by an attachment
D and sale of excisable goods belonging to such assessee and
further that if the amount so recoverable falls short, it can be
recovered from the person himself as an arrear of land revenue.
Inasmuch as a dead man's property can be attached and sold
and proceeded against, it is clear that the necessary machinery
E is contained in the Central Excises and Salt Act. His further
submission is th~t Section 11Aofthe i;aidAct is a machinery
provision and, therefore, the rule to be applied is that that
construction should be preferred which makes a machinery
F Section workable. He also referred us to the definition of
"person" in Section 3(42) of the General Clauses Act to buttress
his submission that a legal representative would be included
within a "person" as so defined. He referred us to Section 6 of
the said Act dealing with registration and argued that
G registration of a person makes him a legal entity liable to be
assessed as such. His other submission is that the general
principle, namely, that a cause of action abates when a person
who institutes a proceeding dies is not applicable in the present
case and cited various judgments before us in support of the
H said principle. He also submitted that the position under the
SHABINAABRAHAM & ORS. v. COLLECTOR OF 159
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.]
Income Tax Act would be entirely different as income tax is a A
tax leviable on a person whereas a duty of excise is leviable
on manufacture of goods. He also cited a number of decisions
which will be dealt with in the course of this judgment.
7. We have heard learned counsel for the parties. B
Before entering into a discussion on the merits of th( :ase, it
is necessary to set out the statutory provisions contained in
the Central Excises and Salt Act.at the relevant time, which
are given below:- ··
c
2(f) "manufacture" includes any process incidental or
ancillary to the completion of a manufactured product;
and
(i) In relation to tobacco includes the preparation of
D
cigarettes, cigars, cheroots, biris, cigarette or pipe
or hookah tobacco, chewing tobacco or snuff,
(ia) in relation to manufactured tobacco, includes the
labeling or re-labelling of containers and repacking
from bulk packs to retail packs or the adoption of E
any other treatment to render the product marketable
to the consumer.
(ii) In relation to salt, includes collection, removal,
preparation, steeping, evaporation, boiling, or any F
one or more of these processes, the separation or
purification of salt obtained in the manufacture of
saltpeter, the separation of salt from earth or other
substance so as to produce elementary salt, and the
excavation or removal of,natural saline deposits or G
efflorescence; ~"'
(iii) In relation to patent of.Wroprietary medicines, as
defined in Item No. 14-E of the first Schedule and in
relation to cosmetics and toilet preparatio'ns as H
160 SUPREME COURT REPORTS [2015] 8 S.C.R.
A defined in Item No.14-F of that Schedule, includes
the conversion of powder into tablets or capsules,
the labeling or relabeli[lg of containers intended for
consumers and repacking from bulk packs to retail
packs or the adoption of any other treatment to
B render the product marketable to the consumers;
(iv) In relation to goods comprised to Item No.18-A of
the First Schedule, includes sizing, beaming,
warping, wrapping, winding or reeling, or any one or
C more of these processes, or the conversion of any
form of the said goods into another form of such
goods;
And the word "manufacturer" shall be construed
o accordingly and shall include not only a person who
employs hired labour in the production or
manufacture of excisable goods, but also any person
who engages in their production or manufacture on
his own account."
E
3. Duties specified in the First Schedule to be levied.
(1) There shall be levied and collected in such manner
as may be prescribed duties of excise on all excisable
goods other than salt which are produced or
F manufactured in India and a duty on salt manufactured
in, or imported by land into, any part of India as, and at
the rates set forth in the First Schedule.
4. Valuation of excisable goods for purposes of charging
of duty of excise. - ~~
G
(1) Where under this Act, the duty of excise is chargeable
on any excisable goods with reference to value, such
value shall, subject to the other provisions of this section
be deemed to be -
H
SHABINAABRAHAM & ORS. v. COLLECTOR OF 161
CENTRAL EXCISE & CUSTOMS [R. F. NARI MAN, J.]
(a) the normal price thereof, that is to say, the price at A
which such goods are ordinarily sold by the assessee to
a buyer in the course of wholesale trade for delivery at
the time and place of remov~. where the buyer is not a
related person and the price"is the sole consideration
for"the sale:" '' • B
'
(4) For the purposes of this section, -
(a) "assessee" means the person who is liable to pay
the duty of excise under this Act and includes his agent;" c
11. Recovery of sums duetoGovernment. - In respect of
duty and any other sums of any kind payable to the Central
Government under any of the provisions of this Act or of
the rules made thereunder, the officer empowered by
D
the Central Board of Excise and Customs constituted
under the Central Boards of Revenue Act, 1963, to levy
such duty or require the payment of such sums may
deduct the amount so payable from any money owing to
the person from whom such sums may be recoverable E
or due which may be in his hands or under his disposal
or control, or may recover the amount by attachment and
sale of excisable goods belonging to such person; and if
the amount payable is not so recovered he may prepare
a certificate signed by him specifying the amount due F
from the person liable to pay the same. and send it to the
Collector of the district in which such person resides or
conducts his business and the said Collector, on receipt
of such certificate, shall proceed to recover from the said
person the amount specified therein as if it were an arrear G
of land revenue.
,.
11A. Recovery of duties ri9.t levied or not paid or short
levied or short paid or erron~ously refunded. -
H
162 SUPREME COURT REPORTS [2015] 8 S.C.R.
A (1) When any duty of excise has not been levied or paid
or has been short-levied or short-paid or erroneously
refunded, a Central Excise Officer may, within six months
from the relevant date, serve notice on the person
chargeable with the duty which has not been levied or
B paid or which has been short-levied or short-paid or to
whom the refund has erroneously been made, requiring
him to show cause why he should not pay the amount
specified in the notice:
c Provided that where any duty of excise has not been levied
or paid or has been short-levied or short-paid or
erroneously refunded by reason of fraud, collusion or any
wilful misstatement or suppre·ssion of facts, or
contravention of any of the provisions of this Act or of the
D rules made thereunder with intent to evade payment of
duty, by such person or his agent, the provisions of this
sub-section shall have effect, as if for the words "six
months", the words "five years" were substituted."
E Rule 2(3) and Rule 7 of the Central Excises Rules, 1944,
read as under:
"2. Definitions.-ln these rules, unless there is anything
repugnant in the subject or context-
F
(3) "assessee" means any person who is liable for
payment of duty assessed and also includes any
producer or manufacturer of excisable goods or a
registered person of a private warehouse in which
excisable goods are stored; _
G
7. Recovery of duty.- Every person who produces,
cures or manufactures any excisable goods, or who
stores such goods in a wareh'ouse, shall pay the duty or
duties leviable on such goods, at such time and place
H
SHABINAABRAHAM & ORS. v. COLLECTOR OF 163
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.]
and to such persons as may be designated, in, or under A
authority of these rules, whether the payment of such duty
or duties is secured by bond or otherwise.
""'
Provided that nothing contained in.this rule shall apply to
molasses produced in a khandseri sugar factory. B
Provided further that in respectif{ goods falling under
.
Chapter 62 of the First Schedule to the Central Exci~~
Tariff Act, 1985 (5of1986), manufactured on job-work,
the provisions of these rules shall apply subject to the c
provisions of rule 7AA." · .., "
8. On a reading of the aforesaid provisions, it is clear
that Shri Rajshekhar Rao, learned cc:iunsel appearing on behalf
of the appellants is correct - there is ·in fact no separate
0
machinery provided by the Central Excises and Salt Act to
proceed against a dead person when it comes to assessing
him to tax under the Act.
9. The position under the Income Tax Act, 1922 was
also the same until Section 24B was introduced by the Income E
Tax (Second Amendment) Act of 1933. Prior to the introduction
of the aforesaid Section, the Bombay High Court had occasion
to deal with a similar question in Commissioner of Income
Tax, Bombay v. Ellis C. Reid, A.l.R. 1931 Bombay 333. A F
Division Bench of the Bombay High Court noticed the definition
of"assessee" contained in Section 2(2) of the 1922Actwhich
definition stated that "'assessee' means a person by whom
income tax is payable". The Division Bench went on to say
that the words "or by whose estate" are conspicuous by their G
absence in the saiq definition. The Division Bench then went
on to say that there appears to be nothing in the charging
Section to suggest that a man whd,~~s one€ become liable to
tax can avoid payment of tax by dying before such tax has
been assessed or paid. However, the Act has to contain H
164 SUPREME COURT REPORTS (2015] 8 S.C.R.
A appropriate provisions for continuing an assessment and
collecting tax from the estate of a deceased person which was
found to be absent in the 1922 Act before it was amended by
insertion of Section 24B. Having noticed various provisions
of th6 said Act, the Division Bench went on to say:-
B
"These are, I think, the only material provisions, of the
Act. It is to be noticed that there is throughout the Act no
reference to the decease of a person on whom the tax
has been originally charged, and it is very difficult to
c suppose the omission to have been unintentional. It must
have been present to the mind of the legislature that
whatever privileges the payment of Income-tax may
confer, the privilege of immortality is oot amongst them.
Every person liable to pay tax must necessarily die and
D in practically every case, before the last installment has
been collected, and the legislature has not chosen to
make any provisions expressly dealing with assessment
of, or recovering payment from, the estate of a deceased
person. In order that the Government may succeed and
E the assessment made in this case may be held legal I
think, one must do a certain amount of violence to the
language of Section 23(4); I think one must either do a
certain amount of violence - I should say a considerable
amount of violence - to the language of Section 27, or
F
else hold that the privilege conferred on a living person
assessed under Section 23(4) of getting the assessment
set aside is not to be enjoyed by the estate of a deceased
person - a distinction for which I can see no logical reason.
G One must also construe Section 29 so as to give to the
word "assessee" one meaning in one place and another
meaning in another place.
'
In my judgment, in construing a taxing Act the Court is not
justified in straining the language in order to hold a
H
SHABINAABRAHAM & ORS. v. COLLECTOR OF 165
CENTRAL EXCISE & CUSTOMS [R. F. NARI MAN, J.]
subject liable to tax. If the legislature intends to assess A
the estate of a deceased person to tax charged on the
deceased in his lifetime, the legislature must provide
proper machinery and not leave it to the Court to endeavor
to extract the appropriate machinery out of the very
unsuitable language of the statute. We are not concerned B
with the case which may arise of the death of a person
after assessment but before payment." (at page 335)
10. Given the aforesaid decision of the Bombay High
Court, the legislature was quick to amend the Income Tax Act, C
1922 by inserting Section 248 which reads as follows:-
Section 248 : Tax of deceased person payable by
representative-
D
(1) Where a person dies, his executor, administrator or
other legal representative shall be liable to pay out of the
estate of the deceased person to tht:l extent to which the .
estate is capable of meeting the charge the tax assessed
as payable by such person, or any tax which would have E
been payable by him underthisActif he had not died.
(2) Where a person dies before the publication of the
notice referred to in sub-section (1) of section 22 or before
he is served with a notice under sub-section (2) of section
F
22 or section 34, as the case may be, his executor,
administrator or other legal representative shall, on the
serving of the notice under sub-section (2) of section 22
or under section 34, as the case may be, comply
therewith, and the Income-tax Officer may proceed to G
assess the total income of the deceased person as if
such executor, administrator or other legal representative
were the assessee.
(3) Where a person dies, without having furnished a
H
166 SUPREME COURT REPORTS (2015) 8 S.C.R.
A return which he has been required to furnish under the
provisions of section 22, or having furnished a return
which the Income-tax Officer has reason to believe to be
incorrect or incomplete, the lncome-!ax Officer may make
an assessment of the total income of such person and
B determine the tax payable by him on the basis of such
assessment, and for this purpose may, by the issue of
the appropriate notice which would have had to be served
upon the deceased person had he survived, require from
the executor, administrator or other legal representative
c of the deceased person any accounts, documents or
other evidence which he might under the provisions of
sections 22 and 23 have required from the deceased
person."
D 11. This judgment of the Bombay High Court has been
affirmed in two judgments of this Court. In Commissioner of
Income Tax, Bombay City Iv. Amarchand N. Shroff; (1963)
48 I. T.R. 59, this Court referred with approval to Ellis C. Reid
and held:-
E
"The correct position is that apart from section 248 no
assessment can be made in respect of the income of a
person after his death. See Ellis C. Reid v. Commissioner
of Income-tax. In that case, and that was a case before
F section 248 was enacted, a person was served with a
notice under section 22(2) of the Income-tax Act but no
return was made within the period specified and he died.
It was held that no assessment could be made under
section 23(4) of the Act after his death. At p.106 it was
G observed:-
"lt is to be noticed that there is throughout the Act no
reference to the decease of a per&on on whom the tax
has been originally charged, and it is very difficult to
H suppose the omission to have been unintentional. It must
SHABINAABRAHAM & ORS. v. COLLECTOR OF 167
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.]
have been present in the mind of the legislature that A
whatever privileges the payment of income-tax may
confer, the privilege of immortality is not amongst them.
Every person liable to pay tax must necessarily die and,
in practically every case, before the last instalment has
been collected, and the legislature h'as not chosen to B
make any provisions expressly dealing with assessment
of, or recovering payment from the estate of a deceased
person".
The individual assessee has ordinarily to be a living c
person and there can be no assessment on a dead
person arid the assessment is a charge in respect of the
income of the previous year and not a charge in respect
of the income of the year of assessment as measured
by the income of the previous year. Wallace Brothers & D
Co. Ltd. v Commissioner of Income-tax. By section 24B
the legal representatives have, by fiction of law, become
assessees as provided in that section but that fiction
cannot be extended beyond the object for which it was
enacted. As was observed by this ·court in Bengal E
Immunity Co. Ltd. v. State of Bihar legal fictions are only
for a definite purpose and they are limited to the purpose
for which they are created and should not be extended
beyond that legitimate field. In the present case the fiction
F
is limited to the cases provided in the three sub sections
of section 24B and cannot be extended further than the
liability for the income received in the previous year." (at
page 66)
12. Similarly, in Commissioner of Income Tax, G
Bombayv. James Anderson, [1964] 51l.T.R.345, this Court
referred with approval to the judgment in Ellis C. Reid's case
and further held that even after Section 248 was enacted tax
cannot be assessed on receipts on the. footing that it is the H
168 SUPREME COURT REPORTS [2015] 8 S.C.R.
A personal income of the legal representative. This Court held:-
"lt was then urged that apart from section 24B, the legal
representatives of a deceased person also represent
his estate in the matter of taxation of income and it is
B competent to the taxing authorities to assess them on
income received on behalf of the estate. Counsel did not
rely upon any specific provision ofthe Act in support of
the contention, and merely asserted that the Act seeks
to tax all assessable incomes, and income received by
c a legal representative of the estate of a deceased person
should not be permitted to escape tax to the detriment of
public revenue. But if the Legislature has failed to set up
the procedure to assess such income, the Courts cannot
supply it. The expression "assessee" in section 2(2) as
D substituted by the Indian Income Tax (Amendment) Act,
(25 of 1953), with effect from April 1, 1952, means a
person by whom income-tax or any other sum of money
is payable under the Act, and includes every person in
respect ofwhom any proceeding and this Act has been
E taken for the assessment of his income or of the loss
sustained by him or of the amount of refund due to him.
By section 3 where income-tax is chargeable for any year
at any rate or rates prescribed by the Act of the Central
Legislature, tax at that rate shall be charged for that year
F
in accordance with and subject to the provisions of the
Act in respect of the total income of the previous year of
every individual, Hindu undivided family, cqmpany and
local authority, and of every firm and other association of
G persons or the partners of the firm or the members of the
association individually. The charge to income-tax has
therefore to be in accordance with and subject to the
provisions of the Act, and the Legislature has not
provided that the income received by a legal
H representative which would, but for the death of the
SHABINAABRAHAM & ORS. v. COLLECTOR OF 169
CENTRAL EXCISE & CUSTOMS [R. F. NARI MAN, J.]
deceased, have been received by such deceased A
person, is to be regarded forthe purpose of assessment
as the personal income of the legal representative. To
assess tax on such receipts on the footing that it is the
personal income of the legal representative is to charge
tax not in accordance with the provisions of the Act." (at B
page 352)
13. In Commissioner of Income Tax, Bombay v.
Darabsha Nasarwanji Mehta, A.LR. 1935Bombay167, the
Bombay High Court held that Section 24B of.the 1922 Act C
was not retrospective and stated that asAvabai N. Mehta died
before the said Act came into force and before she had made
any return, her estate was not liable to be assessed to tax
particular regard being had to the opening words of Section
24B which state "where a person dies" which are words in the D
present tense.
14. Pursuant to the 12'" Law Commission Report, a
new Income Tax Act was passed in 1961 which contained
elaborate provisions for assessment of deceased persons E
after they die. The anomalies left by Section 24B of the 1922
Act, as pointed out in the two Supreme Court judgments
referred to above, were sought to be rectified in the new
provisions contained in the 1961 Act. Sections 159 and 168
of the Act are apposite in this regard and read as follows:- F
"159. (1) Where a person dies, his legal representative
shall be liable to pay any sum which the deceased would
have been liable to pay if he had not died, in the like
manner and to the same extent as the deceased. G
(2) For the purpose of making an assessment (including
an assessment, reassessment or recomputation under
section 147) of the income of the deceased and forthe
purpose of levying any sum in the hands of the legal H
170 SUPREME COURT REPORTS (2015] 8 S.C.R.
A representative in accordance with the provisions of sub-
section (1),-
(a) any proceeding taken against the deceased before
his death shall be deemed to have been taken against
B the legal representative and may be continued against
the legal representative from the stage at which it stood
on the date of the death of the deceased;
(b) any proceeding which could have been taken against
c the deceased if he had survived, niay be taken against
the legal representative; and
(c) all the provisions of this Act shall apply accordingly.
(3) The legal representative of the deceased shall, for
D the purposes of this Act, be deemed to be an assessee.
(4) Every legal representative shall be personally liable
for any tax payable by him in his capacity as legal
representative if, while his liability for tax remains
E undischarged, he creates a charge on or disposes of or
parts with any assets of the estate of the deceased, which
are in, or may come into, his possession, but such liability
shall be limited to the value of the asset so charged,
disposed of or parted with.
F
(5) The provisions of sub-section (2) of section 161,
section 162, and section 167, shall, so far as may be
and to the extent to which they are not inconsistent with
the provisions of this section, apply in relation to a legal
G representative.
(6) The liability of a legal representative under this section
shall, subject to the provisions of sub-section (4) and sub-
section (5), be limited to the extent to which the estate is
H capable of meeting the liability."
SHABINAABRAHAM & ORS. v. COLLECTOR OF 171
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.]
"168. (1) Subject as hereinafter provided, the income of A
the estate of a deceased person shall be chargeable to
tax in the hands of the executor,-
(a) if there is only one executor, then, as if the
executor were an individual; or B
(b) ifthere are more executors than one, then, as ifthe
executors were an association of persons;
and for the purposes of this Act, the executor shall be
deemed to be resident or non-residen~ according as the c
deceased person was a resident or non-resident during
the previous year in which his death took place.
(2) The assessment of an executor under this section
shall be made separately from any assessment that may D
be made on him in respect of his own income.
(3) Separate assessments shall be made under this
section on the total income of each completed previous
year or part thereof as is included in the period from the E
date of the death to the date of complete distribution to
the beneficiaries of the estate according to their several
interests.
(4) In computing the total income of any previous year F
under this section, any income of the estate of that
previous year distributed to, or applied to the benefit of,
any specific legatee of the estate during that previous
year shall be excluded; but the income so excluded shall
be included in the total income of the previous year of G
such specific legatee."
15. It will be noticed that under Section 159(2), for the
purpose of making any assessment, any proceeding taken
against the deceased before his death is by deeming fiction H
172 SUPREME COURT REPORTS (2015) 8 S.C.R.
A deemed to have been taken against his legal representative
and may be continued against the legal representative from
the stage at which it stood on the date of the death of the
deceased. Further, the legal representative under sub-section
(3) of 159 is again by deeming fiction deemed to be an
B assessee himself. However, the liability of such representative
is limited only to the extent to which the estate left by the
deceased is capable of meeting the tax liability subject to the
contingencies mentioned in sub-sections (4) and (5) QfSection
159.
c
16. Similarly, under Section 168, where the assessee
has left a Will, the income of the estate of the deceased person
becomes chargeable in the hands of the executor of .such will.
This is made clear by Section 168.
D
17. It will be seen that the definition of "assessee"
contained in Section 4(3)(a) of the Central Excises and Salt
Act is similar to the definition of assessee contained in the
Income Tax Act, 1922. Under that Act, as we have already
E seen, an assessee means "a person by whom income tax is
payable." Under the Central Excises and Salt Act, an assessee
means "the person who is liable to pay the duty of excise under
this Act". The present tense being used, it is clear that the
person referred to can only be a living person as was held in
F Ellis C. Reid (supra). Further, the only extension of the definition
of"assessee" under the Central Excises and SaltAct is that it
would also include an assessee's ageht, which has nothing to
do with the facts of the present case. It is well settled that a
"means and includes" definition is exhaustive in nature and
G that there is no scope to read anything further into the said
definition.
18. As has been correctly pointed out by learned counsel
for the appellants, the notice that is served under Section 11A
H is only on the person chargeable with excise duty, which takes
SHABINAABRAHAM & ORS. v. COLLECTOR OF 173
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.)
..
us back to "assessee" as defined. A
19. Learned counsel for the revenue relied upon Section
11 of the Act, which, according to him, indicates that an
attachment and sale of excisable goods can belong to a dead
person and such attachment and sale can continue B
notwithstanding the death of such person. Apart from the fact
that there is nothing about dead persons in Section 11, Section
11 is limited only to recovery of sums that are due to the
Government. The very opening words in Section 11 show that
duty and other sums must first be payable to the Central C
Government under the Act or the rules. If such sums are not
"payable" then the provisions of the Section do not get attracted
at all. We have seen that the Act contains no machinery
provisions for proceeding against a dead· person's legal heirs, ·'
such as are contained in the Income Tax Act. Obviously, D
therefore, duty and other sums do not become "payable"
without such machinery provisions. Further, Section 11 deals
with modes of recovery of tax payable and does not deal with
the subject matter at hand - namely machinery provisions for
assessment in the hands of the estate of a dead person and, E
therefore, does not have much bearing on the matter in issue
in the present case. The argument, therefore, as to the insertion
of the proviso to Section 11 by an Amendment Act of 2004 so
as to provide that if a person from whom some recoveries are F
due transfers his business to another person, then the excisable
goods in the possession of the transferee can also be attached
and sold again leads us nowhere. In fact learned counsel for
the appellants also relied on this proviso to argue that the
Legislature's need to add the proviso shows that nothing can G
be read into the Central Excises and Salt Act by implication.
As has been stated above, Section 11 deals with an entirely
different situation and the addition of the proviso therein is not
of much significance as far as the question we have to answer
is concerned. H
'
174 SUPREME COURT REPORTS [2015] 8 S.C.R.
A 20. Learned counsel for the revenue, however, contended
that the principles applied in the case of the Income Tax Act
should not be applied to the Central Excises and Salt Act as
the latter Act is a tax on manufacture of goods and not on
persons. We are afraid this argument cannot be countenanced
B in view of this Court's judgment in State of Punjab v. M/s
Jullunder Vegetables Syndicate, [1966) 2 S.C.R. 457. In
that judgment, the question before this Court was whether a
dissolved firm could be assessed to sales tax under the East
Punjab General Sales Tax Act, 1948, with respect to its pre-
C dissolution turn over. After analyzing the East Punjab General
Sales Tax Act, this Court held;-'
' "The scheme of the Act is a simple one. A firm is a dealer;
the said dealer is assessable to tax on its turnover, if its
D turnover exceeds the prescribed limit. It cannot do
business while being liable to pay tax under the Act without
getting itself registered and possessing a registration
certificate. It is assessed to tax under Section 11 of the
Act in the manner prescribed thereunder. If it discontinues
E its business, it shall within the specified time inform the
prescribed authority accordingly. A dealer and its partners
are jointly and severally responsible to pay the tax
assessed on the dealer. But there is no provision
expreesly empowering the assessing authority to assess
F
a dissolved firm in respefil of its turnover before its
dissolution. The question is whether such a power can
be gathered by necessary ]qiplication from the other
provisions of the Act." (at page 461)
G The Court went on to say:
"Though under the partnership law a firm is not a legal
entity but only consists of individual partners for the time
being, for tax law, income~taXoas well as sales-tax, it is a
legal entity. If that be so, on dissolution, the firm ceases
H
to be a legal entity. Thereafter, on principle, unless there
SHABINAABRAHAM & ORS. v. COLLECTOR OF 175
CENTRAL EXCISE & CUSTOMS [R. F. NARI MAN, l]
is a statutory provision permitting the assessment ofa A
dissolved firm, there is no longer any soope for assessing
the firm which ceased to have' a legal existence. As in
the present case, admittedly~ the firm was dissolved ·
before the order of assessment was made, the said order
wasbad."(atpage462) B
The Court went on to consider various High Court decisions
~
and ultimately concluded as follows:-
"Strong reliance was placed upon two judgments of this c
Court. This Court in C.A. Abraham v. Income-tax Officer,
Kottayam, speaking through Shah, J., held that S.44 of
the Income-tax Act set up a machinery for assessing the
tax liability of firms which""have discontinued their
business. This was followed by this Court again in D
Commissioner of Income-tax, Madras v. S.V. Angidi
Chettiar. These two decisions are of no help to the
Revenue in the present case.,lndeed, in a sense they
are against it. The Income-tax Act contains an express
provision for assessing a dissolved firm. Indeed, but for E
that provision no assessment could be made under that
Act on dissolved firms.
For the foregoing reasons we hold that the High Court
was right in holding that the assessment order ooJhe F
dissolved firm could not be supported under the
provisions of the Act. The High Court has given a correct
answer to the question propounded for its decision." (at
page 464)
G
21. This judgment is a complete answer to the
contention of learned counsel for the revenue inasmuch as on
a parity of reasoning, sales tax is not a personal tax t?.ut a tax
on the sale of goods. Nevertheless, this Court held that in the
absence of any machinery provisions to assess and collect H
' .1-.)J "'
176 SUPREME COURT REPORTS [2015] 8 S.C.R.
A sales tax from a deceased person - in that case it was a
dissolved partnership firm"- all proceedings against such
deceased person/dissolved firm abate. The aforesaid
judgment has been followed by this Court in Khushi Ram
Behari Lal & Co. v. Assessing Authority, Sangrur, (1967)
B 19 STC 381 and in Additional Tahsildar, Raipurv. Gendalal,
(1968) 21STC263.
22. Learned counsel for the revenue, however, sfrongly
relied upon M/s. Murarilal Mahabir Prasad and others v.
C Shri B.R. Vad and others, (1975) 2 SCC 736, a case arising
under the Bombay Sales Tax Act, 1953. Since this judgment
has been relied upon as the sheet anchor of the revenue's
case, it is important to deal with it in some detail.
o 23. The question that arose in the aforesaid case was
whether a dissolved firm could be re-assessed to sales tax in
respect of its pre-dissolution turnover, By a two to one (2: 1),
decision, this Court held that the Bombay Act contained the
necessary provisions to re-assess such a dissolved firm in
E resJject of its pre-dissolution turnover. The majority judgment
referred to the definition of "dealer" in the Bombay Act of 1953
and referred to this Court's judgment in State of Punjab v. M/
s Jullunder Vegetables Syndicate (supra). We find that
the majority judgment of this Court relied heavily on the fact
F that dishonest persons may dissolve a firm in order to escape
liability to assessment of taxes legitimately due from them but
which have escaped assessment. In paragraph 19, the majority
held: '
G "It is plausible that a distinction ought to be made between
the.death of an individual and the dissolution of a firm.
Human beings, as assessees, are not generally known
to court death to evade taxes. Death, normally, is not
volitional and it is understandable that on the death of an
H individual, his liability to be assessed to tax should come
SHABINAABRAHAM & ORS. v. COLLECTOR OF 177
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.)
to an end unless the statute provides to the contrary. With A
firms it is different, because a fi~m which incurs during its
existence a liability to pay sales-tax may, with a little
ingenuity, evade its liability by the voluntary act of
dissolution. The dissolution of a firm could therefore be... B
viewed differently from the deatti'of an individual and the
partners could be denied the advantage of their own
wrong. But we do not want to strike this new path because
the Jullundur case (supra) and the two cases which follow
it have likened the dissolutioni of a firm to the death of an
individual. Let us therefore proceed to examine the other c
provisions of the 1953 Act."
It then went on to quote Section 15(1) of the Bombay Sales
Tax Act, 1953 and then arrived at this conclusion:
D
• "22. Section 15(1) contains an important ciause that
action thereunder can be taken by the Collector after
giving a notice to the assessee under Section 14(3) of
the Act within the prescribed period. Once such a notice
is given, the Collector gets the jurisdiction to assess or E
re-assess the amount of tax due from the dealer and all
the provisions of the Act "shall apply accordingly as if the
notice were a notice served under" Section 14(3).
Section 14(3) speaks of the power of the Collector to
assess the amount of tax due from the dealer after g[ving F
....
notice to him, if the Collec\Q!', is not satisfied that the
returns furnished are correet and complete. The
jurisdiction to assess or reassess which is conferred
by section 15(1} is thus equated with the original
jurisdiction to assess the dealer under section 14. Bythis G
method. the continuity of the legal personality of the
assessee is maintained in order to enable the
assessment of turnover which has escaped assessment.
It is no answer to a notice· under section 15 that the
H
partners having dissolved the -firm, the assessment
178 SUPREME COURT REPORTS [2015] 8 S.C.R.
A cannot be reope~ed. It puts a premium on one's credulity
to accept that having created a special jurisdiction to
assess or reassess an escaped turnover. the Legislature
permitted that salutary jurisdiction to be defeated by the
device of dissolution. The argument of the appellants
B really comes to this: suppress the.turnover. evade the
sales-tax. dissolve the firm and earn your freedom from
taxation."
The Court then went on to add:
c
"24. Section 15A confers on the Collector analogous
powers to asses or re-ass.ess a dealer for taxes due prior
to November 21, 1956 when the States were
reorganised, if either no assessment was made for the
D prior period or if any turnover had escaped assessment.
This provision, like the one contained in Section 15, is of
general application and makes no exception in favour of
dissolved firm. Therefore, if a firm was not assessed prior
to the re-organisation of States or if any part of its turnover
E had escaped assessment, it is competent to the Collector
to assess or re-assess the firm notwithstanding its
subsequent dissolution. This is the necessary implication
of Section 15A. It must follow as a corollary that the power
to rectify a mistake apparent from the record can be
F exercised by the Collector under Section 35 of the Act of
1953 even after the dissolution of an assessed firm,
though on conditions specified in the section. The section
contains a compelling imp!!J;:ation that evident errors can
be corrected no matter whether the firm is in existence
G or is dissolved. Dissolution is not a panacea for liability
to pay sales-tax."
It also added in paragraph 32:
H "It is indisputable that the first appel!ant firm was liable to
SHABINAABRAHAM & O"~' v. COLLECTOR OF 179
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.]
be charged to sales tax on its business turnover. The A
charging provisions are contained " in Chapter 111 of the
?! ..
Act of 1953 and Chapter·o;of the Act of 1959. In this
appeal, we have to construe•lthe ,, ..
~~,
machinery provisions of
those Acts. In accordance with the view taken in the cases
cited above, the machinery, sections ought Ji be B
construed so as to effectuate the charging sections-: The
l""'C:
construction which we have placed on the mach·inery
provisions of the 1953 Act will give meaning and content
to the charging sections, in tbe sense that our construction
will effectuate the provision contained in the charging c
sections. The resourcefulness and ingenuity which go into
well-timed dissolution of firms ought not to be allowed to
be used as convenient instruments of tax evasion. As
observed by Lord Dunedin in Whitney v. Commissioners
D
of Inland Revenue:
"A statute is designed to be workable, and the
interpretation thereof by a court should be to secure
that object, unless crucial omission of clear direction
makes that end unattainable." E
Far from there being any crucial omission or a clear
direction in the present case which would make the end
unattainable, the various pr9visions to which we have
drawn attention leave it in no doubt that a dissolved firm F
can be assessed on its pre-dissolution turnover:;"''
V(,.G1
24. It is clear that on a
conjoint reading of these
paragraphs this Court fauna that the machinery provisions
contained in the Bombay Sales Tax Act, 1953, were sufficient G
to reassess a dissolved firrfi'in respect of income'that had
escaped assessment before its dissolution. A distinction was
drawn between an individual who dies and a firm that is
dissolved as a device to evade tax. The Court laid great stress
on the provision contained in Section 15( 1) of the said Act by H
180 SUPREME COURT REPORTS [2015) 8 S.C.R.
A which the jurisdiction to assess or reassess under Section
15(1) is equated with the original jurisdiction to assess the
dealer under Section 14. By this method, the Court found the
continuity of the legal personality of the assessee is maintained
in order to enable the assessment of turnover which has
B escaped assessment. The crucial difference, therefore,
between Section 15(1) of the Bombay Sales Tax Act, 1953
and Section 11A of the Central Excises and Salt Act is that
Section 11A does not contain any· such provision as is
contained in Section 15(1) which equates the jurisdiction to
C assess or reassess with the original jurisdiction to assess the
dealer in the very first place. Further, this Court also construed
Section 19 of the Bombay Sales Tax Act, 1959 which would
throw light on the earlier Bombay Sales Tax Act, 1953, as
containing the necessary machinery provisions to assess
0
dissolved firms in respect of escaped turnover pre-dissolution.
Hence, this Court added:
"35. It is relevant, though we did not refer to this aspect
while dealing with the provisions of the 1953 Act, that
E section 19(3) of the 1959 Act contains a clear indication
that the legislature intended that a dissolved firm could
be assessed under the 1953 Act also. Section
19(3) speaks of the liability of partners for the tax due
from a dissolved firm and provides that they shall be jointly
F
and severally liable to pay the tax due from the firm under
the Act of 1959 or "under any earlier law", whether such
tax has been assessed before or after dissolution.
Section 2(12) of the 1959 Act defines "earlier law" to
G mean, inter alia, the Bombay Sales Tax Act, 1953. Thus,
one of the postulates of section 19(3) at any rate is that a
dissolved firm could be assessed under the 1953 Act.
Such a postulate accords with the principle that if the
legislature provided for a charge of sales-tax, it could
H not have intended to render that charge ineffective by
SHABINAABRAHAM & ORS. v. COLLECTOR OF 181
CENTRAL EXCISE & CUSTOMS [R. F. NARI MAN, J.)
. permitting the partners to dissolve the firm, an easy A
enough thing to do. Nothing, in fact, would be easier to
evade a tax liability than to declare that the firm,
.admittedly liable to pay tax, has been dissolved. Section
19(3) of the 1959 Act not only makes clear what was
necessarily implied in the 1953 Act, but it throws B
additional light on the true construction of the earlier law.
But we thought it advisable to keep section 19(3) of the
· 1959 Act apart while construing the 1953 Act because it
is the courts, not the legislature, who have to construe the
laws of the land authoritatively. As said in Craies on c
Statute Law:
Except as a parliamentary exposition, subsequent
Acts are not to be relied on as an aid to the construction
ofpriorunambiguousActs. (6th Ed., p. 146). D
The limited use which may be made of the language of
section 19(3) of the 1959Act, though such a course is
unnecessary, is for saying that it serves to throw some
light on the Act of 1953, in case the argument is that the E
Act of 1953 is ambiguous.
36. Section 19(3) being quite clear and explicit, it is
unnecessary to dwell on the other provisions of the Act of
1959 in order to show that a dissolved firm can be F
assessed under it. We may only point out that the Act of
1.959 contains provisions similar to those in sections 15,
15Aand 35 of the Act of 1953 on which we have dwelt at
some length. Those provisions can be found in sections
35, 35Aand 62 of the Act." G
25. A reading of the ratio of the majority decision
contained in Murarilal's case (supra) would lead to the
conclusion that the necessary machinery provisions were
already contained in the Bombay Sales Tax Act, 1953 which H
182 SUPREME COURT REPORTS (2015] 8 S.C.R.
A were good enough to bring into the tax net persons who wished
to evade taxes by the expedient of dissolving a partnership
firm. The fact situation in the present case is entirely different.
In the present case an individual proprietor has died through
natural causes and it is nobody's case that he has maneuvered
B his own death in order to evade excise duty. Interestingly, in
the written submissions filed by revenue, revenue has argued
as follows:-
"It is pertinent to mention that in the present case, Shri
c George Varghese (predecessor in interest of the
appellants herein) was doing business in the name of
manufacturing unit namely M/s. Kerala Tyre & Rubber
Company and after the death of Shri George Varghese,
his legal representatives (appellants herein) might have
o been in possession of the plant, machinery, stock etc.
and continuing the same business, but might be in some
other name in order to avoid the excise duty chargeable
to the previous manufacturing unit."
E 26. It is clear on a reading of the aforesaid paragraph.
that what revenue is asking us to do is to stretch the machinery
provisions of the Central Excises and Salt Act, 1944 on the
basis of surmises and conjectures. This we are afraid is not
possible. Before leaving the judgment in Murarilal's case
F (supra), we wish to add that so far as partnership firms are
concerned, the Income Tax Act contains a specific provision
in Section 189(1) which introduces a fiction qua dissolved firms.
It states that where a firm is dissolved, the Assessing Officer
shall make an assessment of the total income of the firm as if
G no such dissolution had taken place and all the provisions of
the Income Tax Act would apply to assessment of such
dissolved firm. Interestingly enough, this provision is referred
to only in the minority judgment in Mis. Murarilal's case
(supra).
H
SHABINAABRAHAM & ORS. v. COLLECTOR OF 183
CENTRAL EXCISE & CL.JSTOMS [R. F. NARIMAN, J.]
27. The argument that Section 11A of the Central A
Excises and Salt Act is a machinery provision which must be
construed to make it workable can be met by stating that there
is no charge to excise duty under the main charging provision
of a dead person, which has been referred to while discussing
Section 11A read with the definition of "assessee" earlier in B
this judgment.
28. Learned counsel for the revenue also relied upon
the definition of a "person" under the General Clauses Act,
1897. Section 3(42) of the said Act defines "person as under:- C
"(42) "Person" shall include any company or
association or body of individuals whether
incorporated or not."
D
It will be noticed that this definition does not take us any
further as it does not include legal representatives of
persons who are since deceased. Equally, Section 6 of
the Central Excises Act, which prescribes a procedure
for registration of certain persons who are engaged in E
the process of production or manufacture of any specified
goods mentioned in the schedule to the said Act does
not throw any light on the question at hand as it says
nothing about how a dead person's assessment is to
continue after his death in respect of excise duty that may F
have escaped assessment. Also, the judgments cited
on behalf of revenue, namely, Yes~wantrao v. The
Commissioner of Wealth Tax, Bangalore, AIR 1967
SC 135 at pages 140, 141 para 18: (1966) Suppl. SCR
419 at 429 A-8; C.A. Abraham v. The Income-Tax G
Officer, Kottayam &Another.AIR 1961SC609 at612
para 6: (1961) 2 SCR 765 at page 771, The State of
Tamil Nadu v. M.K. Kandaswami & Others, Air 1975 ·
SC 1871 (para 26): (1975) 4 SCC 745 (para 26),
Commissioner of Sales Tax, Delhi & Others v. Shri H
184 SUPREME COURT REPORTS [2015] 8 S.C.R.
A Krishna Engineering Co. & Others, (2005) 2 SCC
695, page 702, 703 paras 19 to 23, all enunciate
principles dealing with tax evasion in the context of
construing provisions which are designed to prevent tax
evasion. The question at hand is very different- it only
B deals with whether the Central Excises and Salt Act
contains the necessary provisions to continue
assessment proceedings against a dead man in respect
of excise duty payable by him after his death, which is a
question which has no .relation to the construction of
c provisions designed to prevent tax evasion.
29. Learned counsel for the revenue also cited Girja
Nandini Devi & Ors. v. Bijendra Narain Choudhury, [1967]
1 S.C.R. 93 at paragraph 15, and Shri Rameshwar Manjhi
D (deceased) Through his son Shri Lakhiram Manjhi v.
Management of Sangramgarh Colliery & Ors., (1994) 1
sec 292 at paragraph 12, in support of the general principle
that an action begun in a court of law by a person does not
cease with his death. The context of both decisions was very
E different. The first decision was in the context of proceedings
in relation to partition of a joint family whereas the second was
under the Industrial Disputes Act. Neither judgment has any
direct bearing on the controversy before us.
F 30. It remains to consider a judgment cited by learned
counsel for the appellants, namely, Commissioner of Central
Excise, Bangalore- Ill v. Dhiren Gandhi, 2012 (281) E.L.T.
64 (Karnataka). This judgment is correct in its conclusion that
while interpreting the provisions of tlie Central Excises and
G Salt Act, legal heirs who are not the persons chargeable to
duty under the Act cannot be brought within the ambit of the
Act by stretching its provisions. To the extent that this judgment
holds what is set out hereinbelow, it is correct:-
H "We do not find any provision in the Act which foists any
SHABINAABRAHAM & ORS. v. COLLECTOR OF 185
CENTRAL EXCISE &CUSTOMS [R. F. NARI MAN, J.]
such liability in the case of intestate succession. In other A
words, there is no provision which empowers the
authorities to recover due from a deceased assessee
by proceeding against his legal heirs. The way section
11and11Aare worded, it is amply clear, the legislature
has consciously kept away the legal heirs from answering B
to liabilities under the Act." (at page 69)
31. The impugned judgment in the present case has
referred to Ellis C. Reid's case but has not extracted the real
ratio contained therein. It then goes on to say that this is a C
case of short levy which has been noticed during the lifetime
of the deceased and then goes on to state that equally therefore
legal representatives of a manufacturer who had paid excess
duty would not by the self-same reasoning be able to claim
such excess amount paid by the deceased. Neither of these D
reasons are reasons which refer to any provision of law. Apart
from this, the High Court went into morality and said that the
moral principle of unlawful enrichment would also apply and
since the law will not permit this, the Act needs to be interpreted
accordingly. We wholly disapprove of the approach of the High E
Court. It flies in the face of first principle when it comes to
taxing statutes. It is therefore necessary to reiterate the law
as it stands. In Partington v.A.G., (1869) LR4 HL 100at122,
Lord Cairns stated:
F
"If the person sought to be taxed comes within the letter
of the law he must be taxed, however great the hardship
may appear to the judicial mind to be. On the other hand,
if the Crown seeking to recover the tax, cannot bring the
subject within the letter of the law, t~e subject is free, G
however apparently within the spirit of law the case might
otherwise appear to be. In other words, if there be
admissible in any statute, what is called an equitable,
construction, certainly, such a construction is not
H
186 SUPREME COURT REPORTS [2015] 8 S.C.R.
A admissible in a taxing statute where you can simply
adhere to the words of the statute"
32. In Cape Brandy Syndicate v. IRC, (1921) 1 KB
64 at 71, Rowlatt J. laid down:
B
"In a taxing Act one has to look merely at what is clearly
said. There is no room for any intendment. There is no
equity about a tax. There is no presumption as to tax.
Nothing is to be read in, nothing is to be implied. One
c can only look fairly at the language used."
33. This Court has, in a plethora of judgments, referred
to the aforesaid principles. Suffice it to quote from one of such
judgments of this Court in Commissioner of Sales .Tax
Commissioner, Uttar Pradesh v. Modi Sugar Mills, 1961
0
(2) SCR 189 at 198:-
"In interpreting a taxing statute, equitable considerations
are entirely out of place. Nor can taxing statutes be
interpreted on any presumptions or assumptions. The
E court must look squarely at the words of the statute and
interpret them. It must interpret a taxing statute in the
light of what is clearly expressed; it cannot imply anything
which is not expressed; it cannot import provisions in the
statute so as to supply any assumed deficiency."
F
34. We are, therefore, of the view that this appeal must
be allowed and the judgment of the High Court of Kerala is,
accordingly set aside and that of the learned Single Judge
restored.
G
Kalpana K. Tripathy Appeal allowed.
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