1974 (8) TMI 98 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 19(3) of the Bombay Sales Tax Act, 1959 regarding assessment of a defunct firm.
2. Reconsideration of the conflicting views in Veeri Chettiar v. Sales Tax Officer and Roopchand v. Assistant Commissioner of Sales Tax.
3. Application of section 33(5) in assessing a defunct firm.

Detailed Analysis:
The judgment by the High Court of Madras involved a reconsideration of the interpretation of section 19(3) of the Bombay Sales Tax Act, 1959, concerning the assessment of a defunct firm. The court considered conflicting views from previous cases, particularly Veeri Chettiar v. Sales Tax Officer and Roopchand v. Assistant Commissioner of Sales Tax, where the former denied the assessment of a defunct firm while the latter affirmed it. The court ultimately sided with the Bombay High Court's view, stating that the Bombay perspective was correct in enabling the assessment of a defunct firm under section 19(3 of the Act.

Regarding the procedural aspects of tax enactments, the court highlighted three key elements: charge, assessment, and recovery. The charging section, section 6 of the Bombay Act, mandates the payment of taxes by liable dealers. The court clarified that the issue at hand was not the actual liability of the transactions but rather the assessment process. Section 33 of the Act outlines the assessment procedure, including the assessment of dealers who fail to submit returns by the prescribed date, as was the case with the respondent in this matter.

The court referenced the decision in State of Punjab v. Jullundur Vegetables Syndicate, where the Supreme Court held that a dissolved firm ceases to exist as a legal entity unless there is a statutory provision permitting its assessment. The court noted the introduction of section 19-A in the Madras General Sales Tax Act to address similar concerns. In the context of the Bombay Sales Tax Act, the court emphasized the significance of section 19, which specifically deals with the liability of a defunct firm for tax purposes.

The judgment delved into the interpretation of section 19(3), which states the joint and several liability of partners of a dissolved firm to pay taxes due up to the time of dissolution. The court reasoned that the language of the provision clearly indicated the legislature's intent to enable the assessment and collection of taxes from a defunct firm. The court rejected the respondent's argument that section 19 was solely for collection purposes, emphasizing that section 33(5) enables assessment of dealers who fail to furnish returns, while section 19(3) provides a specific procedure for assessing defunct firms.

Furthermore, the court drew a parallel with section 44 of the Income-tax Act, which expressly permits the assessment of a defunct firm for income tax. Although the language of the two provisions differs, the court concluded that section 19(3) of the Bombay Act indeed facilitates the assessment of defunct firms. Consequently, the court allowed the appeal, upholding the assessment of the defunct firm under section 19(3) of the Act.