1965 (12) TMI 131 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of a dissolved partnership firm under the Punjab General Sales Tax Act, 1948.

Analysis:
The case involved a dissolved partnership firm, registered under the Punjab General Sales Tax Act, 1948, with a dispute regarding its turnover for a specific period. The firm filed the prescribed return for the period but was dissolved before the assessment process was completed. The petitioner challenged the assessment notices issued after the dissolution, arguing that no assessment could be made against a dissolved firm as a separate legal entity from its partners. The Punjab Governor's Ordinance and subsequent Act attempted to address this issue, but the court clarified that the provisions were not retrospective, based on a previous judgment. The court referred to a Full Bench decision that a partnership firm, registered under the Act and existing throughout the assessment period, does not cease to be liable to assessment merely due to dissolution before the assessment proceedings begin.

The State of Punjab appealed the Full Bench judgment to the Supreme Court, arguing that assessment proceedings initiated before dissolution could continue after dissolution. However, the Supreme Court ruled that unless there is an express statutory provision allowing assessment post-dissolution, no assessment can be made on a firm that has lost its status as an assessable entity. Citing the Supreme Court's authoritative pronouncement and the previous judgment, the High Court quashed the impugned notices and assessment orders, holding that the dissolved firm was not liable for assessment for any period before its dissolution without a subsisting assessment order. The court allowed the petition, emphasizing that the firm's liability ended with its dissolution, and no costs were awarded in the circumstances of the case.