1963 (12) TMI 16 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Assessing Authority to assess a dissolved firm.
2. Applicability of the Full Bench decision in Jullundur Vegetable Syndicate v. The Punjab State.
3. Impact of the amendment in the definition of "dealer" under the Punjab General Sales Tax Act.
4. Requirement of intimation under Section 16 of the Act regarding the dissolution of a firm.
5. Continuation of assessment proceedings initiated before the dissolution of a firm.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the Assessing Authority to assess a dissolved firm:
The primary issue was whether the Assessing Authority had jurisdiction to assess a firm that had been dissolved before the assessment was finalized. The court held that the liabilities of a firm, which is a registered dealer, continued until such time as its registration is canceled in pursuance of the information of discontinuance or dissolution given by the firm. Since no formal intimation under Section 16 of the Act was given regarding the dissolution, the firm continued to be liable for assessment.

2. Applicability of the Full Bench decision in Jullundur Vegetable Syndicate v. The Punjab State:
The petitioner contended that according to the Full Bench decision, there was no machinery provided in the Act for the assessment of tax on a firm after it had been dissolved. However, the court distinguished the Full Bench decision, stating that it was concerned with a firm dissolved before the initiation of assessment proceedings. In the present case, the proceedings were initiated before the dissolution, making the Full Bench decision inapplicable.

3. Impact of the amendment in the definition of "dealer" under the Punjab General Sales Tax Act:
The respondents argued that the Full Bench decision had no application due to the change in the definition of "dealer." The court noted that the omission of the words "firm," "association," or "Hindu joint family" from the definition did not materially change the law. The court emphasized that a partnership firm could still be a registered dealer and treated as a separate entity for assessment purposes.

4. Requirement of intimation under Section 16 of the Act regarding the dissolution of a firm:
The court highlighted that Section 16 of the Act required dealers to inform the prescribed authority of any changes, including dissolution. Since no formal intimation was given by the firm, the dissolution did not affect its liability to be assessed. The court cited various rules emphasizing the necessity of such intimation for the cancellation of registration and cessation of liability.

5. Continuation of assessment proceedings initiated before the dissolution of a firm:
The court held that once assessment proceedings are initiated, they can continue despite the subsequent dissolution of the firm. The court referenced several authorities and legal precedents supporting the view that the assessment could proceed and be finalized even if the firm was dissolved after the initiation of proceedings. The court also noted that allowing firms to escape liability by dissolving after the initiation of proceedings would enable them to defraud the department.

Conclusion:
The court dismissed the writ petition, holding that the Assessing Authority had jurisdiction to assess the firm despite its dissolution, as the proceedings were initiated before the dissolution and no formal intimation was given under Section 16 of the Act. The Full Bench decision in Jullundur Vegetable Syndicate was deemed inapplicable to the present case, and the amendment in the definition of "dealer" did not change the legal position regarding the assessment of dissolved firms. The court emphasized the necessity of formal intimation for the cessation of liability and upheld the continuation of assessment proceedings initiated before the dissolution.