# SHABINAABRAHAM & ORS v. COLLECTOR OF CENTRAL EXCISE & CUSTOMS·

- **Citation:** [2015] 8 S.C.R. 151
- **Court:** Supreme Court of India
- **Decided:** 2015
- **Case number:** Civil Appeal No. 5802 of 2005
- **Bench:** A. K. Sikri, R. F. Nariman
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/shabinaabraham-ors-v-collector-of-central-excise-customs-30959
- **Pages:** 36

## Headnote

A
8
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.
Words and Phrases:
'Jl\ssessee" - ·Meaning of, in the context of Central
Excises andSalt Act, 1944.
F
"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 asse

## Text

_Characters 0–39,980 of 64,490. This is a partial read: ask again with offset=39980 for what follows._

[2015] 8 S.C.R. 151
SHABINAABRAHAM & ORS.
v.
COLLECTOR OF CENTRAL EXCISE & CUSTOMS·
(Civil Appeal No. 5802 of 2005)
JULY29, 2015
[A. K. SIKRI AND R. F. NARIMAN, JJ.]
A
8
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.
Words and Phrases:
'Jl\ssessee" - ·Meaning of, in the context of Central
Excises andSalt Act, 1944.
F
"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
Jul/under Vegetables Syndicate (1966) 2 S.C.R. 457;
H
154
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
[2015] 8 S.C.R.
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,
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;
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
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.
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.
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]
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
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
"
(1964) 511.T.R. 345
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
0 of his or her estate, can be taxed without the necessary
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:-
· ·
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
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
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
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
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
c
D
E
F
G
H
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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
F
G
H
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
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. -
~ ~
(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 -
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;"
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
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
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
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
of land revenue.
, .
11A. Recovery of duties ri9.t levied or not paid or short
levied or short paid or erron~ously refunded. -
c
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E
F
G
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162
A
B
c
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E
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G
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SUPREME COURT REPORTS
[2015] 8 S.C.R.
(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
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:
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
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."
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-
(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; _
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
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 respect if{ 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 7 AA."
· .., "
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
c
D
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"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
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
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
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
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.
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.
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In my judgment, in construing a taxing Act the Court is not
justified in straining the language in order to hold a
SHABINAABRAHAM & ORS. v. COLLECTOR OF
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subject liable to tax. If the legislature intends to assess
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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
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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-
(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
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
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
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
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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
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
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."
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:-
"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
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
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
suppose the omission to have been unintentional. It must
SHABINAABRAHAM & ORS. v. COLLECTOR OF
CENTRAL EXCISE & CUSTOMS [R. F. NARIMAN, J.]
have been present in the mind of the legislature that
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
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
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 &
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
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
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)
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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
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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
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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
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
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
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
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
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
representative which would, but for the death of the
SHABINAABRAHAM & ORS. v. COLLECTOR OF
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deceased, have been received by such deceased
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
page 352)
13. In Commissioner of Income Tax, Bombay v.
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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:-
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"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.
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(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
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representative in accordance with the provisions of subsection (1),-
(a) any proceeding taken against the deceased before
his death shall be deemed to have been taken against
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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
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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
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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
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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,
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disposed of or parted with.
(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
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representative.
(6) The liability of a legal representative under this section
shall, subject to the provisions of sub-section (4) and subsection (5), be limited to the extent to which the estate is
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capable of meeting the liability."
SHABINAABRAHAM & ORS. v. COLLECTOR OF
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"168. (1) Subject as hereinafter provided, the income of
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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
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(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
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
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
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
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
such specific legatee."
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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
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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.
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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.
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
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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
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us back to "assessee" as defined.
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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,
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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,
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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
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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.