1970 (12) TMI 65 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of assessment orders on a dissolved firm.
2. Interpretation of the partnership deed regarding dissolution.
3. Jurisdiction of the respondent to reassess.
4. Effect of Section 24 of the Mysore Sales Tax (Amendment) Act, 1970.
5. Legislative power to validate invalid assessments.

Issue-wise Detailed Analysis:

1. Validity of Assessment Orders on a Dissolved Firm:
The court examined the validity of assessment orders dated 30th November, 1962, made on a dissolved firm. The firm was dissolved under section 42(c) of the Partnership Act following the death of a partner on 28th July, 1961. The court had previously declared these assessment orders inoperative and ineffective if the partnership deed did not contain a clause preventing dissolution under section 42(c).

2. Interpretation of the Partnership Deed Regarding Dissolution:
The petitioner produced the partnership deed dated 16th February, 1960, which did not contain any clause for the continuation of the firm despite the death of any partner. The respondent erroneously interpreted the deed, concluding that it prevented dissolution under section 42(c). The court clarified that there was no such clause, making the dissolution effective from 29th July, 1961.

3. Jurisdiction of the Respondent to Reassess:
The court found that the respondent had no jurisdiction to proceed with reassessment under para. 4 of its previous order since para. 3 had already declared the original assessment orders inoperative. The reassessment orders dated 23rd January, 1969, were thus ex facie without jurisdiction and liable to be set aside.

4. Effect of Section 24 of the Mysore Sales Tax (Amendment) Act, 1970:
Section 24 aimed to validate assessments made on dissolved firms, overriding any court judgment. The court analyzed this provision, noting that while the Legislature can validate invalid assessments retrospectively, it must remove the basis of invalidity. The court found that Section 24 did not change the law retrospectively but merely attempted to override judicial decisions, which the Legislature cannot do.

5. Legislative Power to Validate Invalid Assessments:
The court referenced several Supreme Court decisions, emphasizing that the Legislature can validate a tax only by removing the grounds of its invalidity. The court concluded that Section 24 of the Mysore Sales Tax (Amendment) Act, 1970, did not remove the cause of the invalidity of the assessments made on 30th November, 1962. Thus, the provision was ineffective in validating the invalid assessments.

Conclusion:
The writ petitions were allowed, and the impugned assessment orders dated 23rd January, 1969, were quashed. The petitioner was awarded costs of the writ petitions with an advocate's fee of Rs. 100. The court held that Section 24 of the Mysore Sales Tax (Amendment) Act (9 of 1970) was ineffective in validating the invalid assessments made on dissolved firms prior to 1st April, 1964.