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TMI Blog1963 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... nd granted till the case was fixed on 17th February, 1962, on which date the Assessing Authority was informed that the firm stood dissolved as from 8th August, 1961, and that in view of the Full Bench decision of this Court in Jullundur Vegetable Syndicate v. The Punjab State [1962] 13 S.T.C. 251; 64 P.L.R. 351., the firm which had been dissolved could not be assessed to any tax. The Assessing Authority distinguished the Full Bench decision, inter alia, on the following grounds: 1.. that because in the Full Bench case the firm had been dissolved "before proceedings of the assessment were initiated", while in the present case even according to the case of the assessee, the firm was dissolved long after the proceedings had been initiated; 2.. that no intimation under section 16 of the Act with regard to the dissolution of the firm was given to the appropriate authorities before the proceedings had been started. The Assessing Authority then went into the question of the outturn liable for assessment and assessed the firm to a tax of Rs. 19,236-32 nP. under the Punjab General Sales Tax Act (referred to as the Act in this judgment) with regard to the sales within the State and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax can be commenced after its dissolution, and despite notice of dissolution having been served on the Department even before the issue of a notice as a preliminary to assessment." From the above observations (particularly those underlined* by me) it is obvious that Mr. Justice Capoor, who spoke for the Full Bench, was fully alive to the importance of proceedings having been initiated long before the dissolution and before an intimation of the dissolution is given to the department. I am, therefore, inclined to the view that notwithstanding certain remarks in the judgment which would seem even cover a case of assessment of a dissolved firm even where the proceedings had been initiated before the dissolution, the judgment was meant to lay down the law with regard to the point that was specifically referred to the Bench which was as follows: "Whether a partnership firm, which is a registered firm under the provisions of the Punjab Sales Tax Act and which was in existence throughout the period for which assessment of sales tax has to be made ceases to be liable to the said assessment by the mere fact that it has dissolved before the proceedings for assessment are initiated." Here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In order to bring the definition of dealer, as defined in section 2(d) of the East Punjab General Sales Tax Act, 1948, in conformity with Article 286(1)(a) of the Constitution, the East Punjab General Sales Tax (Second Amendment) Bill, 1954, has been proposed to amend the Act accordingly." Apart from this on a reference to the other provisions of the Act and the rules, it is obvious that a partnership firm can be a registered dealer and the omission of the words does not make any material difference from the previous position. For example section 18 which was introduced as recently as 22nd March, 1963, talks of " undivided Hindu family, firm or other association of persons": [See sub-section (1) of section 18]. Rule 4 of the East Punjab General Sales Tax Rules, 1949 (hereinafter called the rules), some clauses of which were amended as late as 28th June, 1955, provides that an application by a dealer shall, inter alia, specify " the names and addresses of the partners of the firm or the names and addresses of persons having any interest in the business together with the age. . . . . In case of a Hindu joint family business it would be enough to give the particulars of the karta or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration in accordance with information furnished under section 16 or otherwise received." Under sub-section (3) of section 10 every registered dealer has to furnish returns of the sales etc. by the dates prescribed by the authority. Section 16 runs as under: "16. If any dealer to whom the provisions of sub-section (3) of section 10 apply- (a) sells or otherwise disposes of his business or any place of business, or (b) discontinues or transfers his business or changes his place of business or opens a new place of business, or (c) changes the name, constitution or nature of his business, or (d) wants to make any change in the class or classes of goods specified in his certificate of registration for use in the manufacture of any goods for sale or in the execution of any contract, he shall within the prescribed time, inform the prescribed authority accordingly; and if any such dealer dies, his legal representative shall, in like manner, inform the said authority." The rules which have any bearing on the question of intimation of changes to be given under section 4 are rules 8(3), 10(1), 12(1), 13(1) and 56 which are as follows: "Rule 8. (1) * * * * (2) * * * * (3) Any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion aforesaid is given in accordance with section 16, the dissolution of the firm cannot affect its liability to be so assessed. It was, therefore, argued that if proceedings are initiated before such an intimation of the dissolution of the firm is given, the proceedings can be continued and assessment can be made notwithstanding the fact that the firm had actually dissolved. In any case, where the firm was in fact in existence when the proceedings were initiated the proceedings cannot come to an abrupt end simply because of a subsequent act of the partners of the firm, agreeing to dissolve the same. Support for this was sought to be taken from a number of authorities which have been noticed by the Full Bench case of Vegetable Syndicate [1962] 13 S.T.C. 251; 64 P.L.R. 351.referred to above but were distinguished as stated above. The Deputy Commissioner of Commercial Taxes v. Bakthavatsalam Naidu [1955] 6 S.T.C. 657. is a case decided by a Bench of the Andhra Pradesh High Court wherein it was observed as follows: "Under the Madras General Sales Tax Act a firm is a 'dealer' and, therefore, the respect of a transaction done by a firm which was in existence during the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed and so was the cases from the Andhra Pradesh High Court noted above as well as an unreported decision, Writ Petition No. 397 of 1954 by Mr. Justice Rajagopalan of the Madras High Court, and the following observations of Mr. Justice Rajagopalan were quoted with approval: "It is no doubt true that neither the Act nor the rules framed thereunder make any separate provision for assessing the turnover of the dissolved firm or for the recovery of the taxes due by a dissolved firm, which was a dealer as defined by section 2(b) of the Act up to the date of its dissolution. To that extent it differs from the Income-tax Act. That, however, in my opinion, is not enough to sustain the contention of the learned counsel for the petitioner, that the partners of the dissolved firm are not in any way liable for the sales tax due by the dissolved firm..............Though there is no specific provision in the Act or the rules thereunder for collection of arrears of tax due from a dissolved firm, the liability of the petitioner as a partner of the dissolved firm to pay whatever was lawfully due by the partnership of which he was a partner can be enforced, if it is established that there was de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment when the firm was still a registered dealer. It was held in Lalji's case [1958] 9 S.T.C. 571., that the mere fact that in reply to the notices of demand issued by the Sales Tax Officer, a partner disclosed that the firm was dissolved did not affect the power of the taxing authorities to assess the tax on the firm as a registered dealer in the absence of any action under section 17 (corresponding to section 16 of the Punjab Act). It follows therefore that such an intimation given by the counsel for the firm during the assessment proceeding can have no better effect. Admittedly under the Partnership Act a partnership firm is not a legal entity. However, as has been held by the Full Bench in Vegetable Syndicate's case [1962] 13 S.T.C. 251; 64 P.L.R. 351. and other cases referred to above, in view of the special provisions of the Act "firm" is treated as having a separate entity and is registered and dealt with as a "dealer" under the Act. The provisions in the rules indicating the date up to which such a "dealer" will continue to be liable to be assessed would also constitute special provisions which would be binding on such a firm. Apart from this, it was contended b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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