1980 (6) TMI 111 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether individual notices to each ex-partner under section 13(1) were necessary before filing an application for enforcement of recovery.
2. Whether the service of a notice on one partner was sufficient to make all partners defaulters for recovery proceedings.

Analysis:
1. The judgment pertains to two revision petitions under the Karnataka Sales Tax Act, 1957, involving the liability of partners of a dissolved firm for tax assessments. The petitioners, former partners of a dissolved firm, challenged the recovery proceedings initiated against them without individual notices of demand served under section 13(1) of the Act. The court analyzed section 15(2) of the Act, which declares joint and several liability for tax assessments on partners of a dissolved firm. The court held that a notice of demand under section 13(1) is mandatory to establish a partner as a defaulter before recovery proceedings can be initiated under section 13(3). As no such notice was served on the petitioner, the court ruled that the application before the Magistrate was not maintainable, rendering subsequent actions contrary to law.

2. The judgment also addressed the contention that service of a notice on one partner should suffice to deem all partners as defaulters for recovery purposes. The court rejected this argument, emphasizing that after the dissolution of a firm, individual notices must be served on ex-partners as their individual liability is established by law. The court clarified that partners are not automatically agents of each other post-dissolution, and receipt of notice by one partner cannot bind others. Therefore, the court held that the absence of individual notices of demand on each ex-partner rendered the application before the Magistrate jurisdictionally flawed, leading to the setting aside of the Magistrate's orders and directing appropriate proceedings in light of the judgment.