1976 (10) TMI 120 - SC - VAT and Sales Tax

Whether the appellant-firm had failed to prove that it had stood dissolved on a date prior to the date of assessment, viz., March 12, 1962? Held that - Appeal dismissed. The facts and circumstances referred to by the High Court throw a considerable doubt upon the correctness of the statement made on behalf of the appellant-firm that it had stood dissolved on August 8, 1961. It has to be borne in mind that the High Court was dealing with the matter on the writ side. In a writ petition, the scope for interference with a finding of the departmental authorities is much more restricted and the court can normally interfere only if the finding is based upon no evidence or is based upon extraneous or irrelevant evidence or is otherwise perverse. The same cannot be said of the finding of the sales tax authority embodied in its report sent to the High Court in the present case thus no sufficient ground to interfere with the judgment of the High Court.

Summary

Issues:
1. Dissolution of the appellant-firm before the date of assessment.
2. Validity of assessment proceedings.
3. Compliance with statutory requirements regarding firm dissolution.

Analysis:
The Supreme Court heard an appeal against the Punjab and Haryana High Court's judgment, which held that the appellant-firm failed to prove its dissolution before the date of assessment, March 12, 1962. The appellant, a commission agent of cotton and foodgrains, did not submit returns for the year 1959-60 under the Punjab General Sales Tax Act. The High Court stayed the assessment proceedings initiated in response to a writ petition challenging the assessment's validity. Despite the appellant's claim of dissolution before the assessment date, the High Court dismissed the petition, prompting the appeal to the Supreme Court.

The Supreme Court set aside the High Court's decision and remanded the case for a definite finding on the firm's dissolution. Following the remand, the High Court directed an inquiry by the Sales Tax Officer to determine if the appellant-firm dissolved on August 8, 1961. The Officer's report stated that dissolution was not proven before the assessment date. The High Court, after examining the report and evidence, concluded that the appellant failed to establish dissolution before March 12, 1962, leading to the current appeal.

During the appeal, the appellant contended that the firm dissolved on August 8, 1961, but the High Court's findings cast doubt on this claim. The Court noted that no intimation of dissolution was provided during multiple hearings preceding the assessment date. Additionally, the appellant failed to notify authorities of the dissolution within the statutory period, further undermining their argument. The Court emphasized the limited scope for interference in writ petitions, requiring findings to be unsupported by evidence or perverse for intervention. Ultimately, the Court found no grounds to overturn the High Court's decision, dismissing the appeal without costs.

In conclusion, the Supreme Court upheld the High Court's judgment, emphasizing the lack of evidence supporting the appellant's claim of dissolution before the assessment date. The Court highlighted the statutory requirements for firm dissolution notification and the restricted scope for interference in writ petitions, leading to the dismissal of the appeal.