1975 (9) TMI 155 - SUPREME COURT

Whether the impugned assessment orders and demand notices were authorised under the Bombay Sales Tax Act, 1953, and the Bombay Sales Tax Act, 1959, after the dissolution of petitioner No. 1-firm on 20th May, 1962?

Whether respondent No. 1 followed the procedure laid down by law in passing the said orders and issuing the said demand notices?

Whether the assessment and reassessment made against petitioner No. 1-firm is proper and based on the turnovers of petitioner No. 1-firm as stated in the said orders?

Held that:- Appeal allowed. A dissolved firm may be equated with a dead person; both cease to be assessable units. The apprehension that the firm may be dissolved voluntarily in order to avoid liability should not, in my opinion, make any difference in principle; a man who takes his own life is in no worse position than one who dies of a natural cause, so far as the tax dues are concerned. As for aviodance of liability, it is up to the legislature that created the liability to prevent evasion. Section 19(3) of the 1959 Act which makes the erstwhile partners of a dissovled firm jointly and severally liable for the tax (including any penalty) due from the firm, was obviously enacted with that purpose; but making the partners liable for the dues of a dissolved firm does not mean that the dissolved firm as such can be assessed. Therefore the assessment orders made and the demand notices issued in the name of the dissolved firm in the instant case must be held to be invalid.