2026-VIL-1246-ORI-ST
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SERVICE TAX High Court Cases

Service Tax - Continuation of Proceedings after Death of Service Provider - Section 73 and Section 65(7) of Finance Act, 1994 - The Respondent passed an Order-in-Original raising a demand of service tax under Sections 73, 75, 77 and 78 for Financial Year 2015-16, and later issued a notice for payment in the name of the service provider, who had died, warning of recovery action under Section 87 - The Petitioner, the wife of the deceased service provider, intimated the death with the death certificate and filed a writ petition for quashing the Order-in-Original - The Petitioner contended that the order is a nullity as it cannot subsist against a dead person, and that the Finance Act, 1994 has no provision to proceed against legal representatives, unlike the provision in the income tax law - Whether proceedings under Section 73 can continue, and an Order-in-Original can be passed in the name of the service provider, after his death - HELD - A taxing statute must be read strictly, and what is not explicit cannot be construed as implicit. Section 65(7) defines assessee as a person liable to pay the service tax and includes his agent. The terms person and agent are not defined in Chapter V, so they take their ordinary meaning. An agent is a person employed to do any act for another or to represent another in dealings with a third person, and it is not the Respondent's case that the deceased engaged his legal heirs as agents in his business. A legal heir therefore cannot be equated with an agent - The definition of ‘person’ in the General Clauses Act, 1897 does not include legal representatives of a deceased person. Under Section 65(121), the definitions in the Central Excise Act, 1944 apply to service tax, so the exposition on continuing assessment against a dead person applies to the present facts. Sections 69 and 73 also refer only to the person liable to pay service tax and the person chargeable with the service tax - The Petitioner's argument that no provision in Chapter V allows proceedings under Section 73 to continue against a legal heir remained uncontroverted. The service provider died of natural causes, and it was not a case where death was manoeuvred to evade tax. On the death of the service provider, in the absence of a statutory provision empowering the authority to continue, the proceeding under Section 73 abates - Respondent could not discard the death certificate, and an Order-in-Original issued in the name of a dead person is a nullity. Recovery under Section 87 therefore cannot be taken - The Order-in-Original is set aside, the direction in the letter to discharge the liability is quashed. The writ petition is allowed
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