1972 (12) TMI 72

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..... al. The defaulter-assessee M/s. Jwala Prasad Krishna Pal was a joint Hindu family. Without clearing the arrears of sales tax the joint Hindu family discontinued the business. Thereafter, the karta of the joint Hindu family, namely, Jwala Prasad, entered into partnership with Sheo Govind, Raj Narain and Ram Pal. This partnership commenced business in the same premises under the name and style of M/s. Jwala Prasad Sheo Govind. The assets belonging to the joint Hindu family concern were transferred to this partnership-firm and the value credited to Jwala Prasad's account. The petitioners denied their liability to pay the arrears due against M/s. Jwala Prasad Krishna Pal. The sales tax authorities sought to recover the amount of arrears of sa .....

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..... nalty imposed and payable by such firm, association or family whether such assessment is made or penalty is imposed prior to or after such discontinuance, and, subject as aforesaid, the provisions of this Act shall apply as if every such person or partner were himself a dealer: Provided that where it is found that a change has occurred in the constitution of the firm or association, the firm or association as reconstituted as well as partners or members of the firm or association, as it existed before reconstitution, shall jointly and severally be liable to pay any tax including penalty, if any, due from such firm or association for any period before its reconstitution. (2) Liability to tax of transferee.-Where the ownership of the busi .....

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..... come to the appellants' aid. Once it is admitted that the assessee-in-default was a joint Hindu family and had discontinued the business, the proviso to sub-section (1) of section 3-C will also not be attracted as in terms it does not apply to such a dealer. It covers cases of firms and associations when reconstituted and not a case where the joint Hindu family discontinues business. In such a case there is no dissolution and reconstitution. The joint Hindu family after discontinuing the business would of course continue to be liable to pay arrears of tax and every person, who at the time of discontinuance of the business was a member of the family, would be liable to pay the amount by reason of clause (b) of sub-section (1) of section 3-C. .....

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