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TMI Blog1976 (11) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... e question has now arisen with regard to the Bengal Sales Tax Act, 1941, as extended to Delhi. The facts of the present case are these: A firm G.L. Amar Nath and Company was carrying on business at Delhi. It was a partnership firm. It was formed on 24th January, 1950. In 1965 two of the five partners retired. In 1966 one of the remaining three partners retired. The two partners, namely, Harbans Lal and Amar Nath, continued to carry on their business till 10th June, 1967, when by a deed of dissolution of that date the partnership was dissolved. In the dissolution deed Harbans Lal and Amar Nath agreed that none of them shall carry on business in future under the name of G.L. Amar Nath and Company. So far as this partnership was concerned that was its end. By a letter dated 5th October, 1967, Amar Nath on behalf of the dissolved firm informed the Sales Tax Officer that the firm stood dissolved with effect from 10th June, 1967, and the registration certificate granted to it should therefore be cancelled. He also sent a copy of the dissolution deed along with the letter. On receipt of the letter the Sales Tax Officer cancelled the registration certificate with effect from 7th Octo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly done. This writ petition is confined only to the assessment years 1961-62, 1963-64, 1964-65 and 1965-66. We are not concerned with the assessment years 1962-63, 1966-67 and 1967-68, which are not the subjectmatter of the writ proceedings. Now the question is: Can the firm be assessed for the years in dispute even though it has been dissolved? At the outset two propositions can be formulated: (1) Unless there is an express provision in the statute no assessment can be made on a firm under the Sales Tax Act, which has lost its character as an assessable entity on its dissolution. (2) Can such a power be gathered by necessary implication on reading the various provisions of the Bengal Sales Tax Act as extended to Delhi? These two propositions were enunciated by the Supreme Court in Jullundur case [1966] 17 S.T.C. 326 (S.C.). As regards the first proposition Mr. Wazir Singh, counsel for the revenue, does not dispute that there was no express provision in the Bengal Sales Tax Act empowering the statutory authority to reassess a dissolved firm until an amendment was made on 28th May, 1972. Therefore, it is the second proposition which needs consideration. We have to find out whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contrary. Basing himself on the latest decision of the Supreme Court in Murarilal Mahabir Prasad[1976] 37 S.T.C. 77 (S.C.)., counsel for the revenue contends that the general scheme and specific provisions, viz., sections 4, 11, 11A, 16, 17 and 20 of the Act and rules 39 and 39(1A) quoted above make it abundantly clear that there is no bar in the way of the sales tax authorities to assess a dissolved firm. As regards the amendment made in 1972, he argues that the amendment made explicit what was implicit in the Act before the amendment. He has adopted merely all the arguments which prevailed with the majority in the Supreme Court in coming to the conclusion it did in Murarilal Mahabir Prasad's case[1976] 37 S.T.C. 77 at 110 (S.C.). In my opinion, the decision in Murarilal Mahabir Prasad's case[1976] 37 S.T.C. 77 at 110 (S.C.)., is not applicable to the Bengal Sales Tax Act. The reason is plain. In Murarilal Mahabir Prasad's case[1976] 37 S.T.C. 77 at 110 (S.C.)., the Supreme Court was concerned with the Bombay Sales Tax Acts of 1953 and 1959. On the general scheme and interpretation of its various provisions, the court came to the conclusion that a dissolved firm can be as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subba Rao, J.: "It is a settled rule of construction that in interpreting a fiscal statute the court cannot proceed to make good the deficiencies, if there be any, in the statute; it shall interpret the statute as it stands and in case of doubt, it shall interpret it in a manner favourable to the taxpayer": Jullundur Vegetables Syndicate[1966] 17 S.T.C. 326 at 329 (S.C.). The desirability or the undesirability of one conclusion as compared with another cannot furnish a guide in reaching a decision. The result reached must be that which is directed by that which is enacted by the legislature: Shop and Store Developments Ltd. v. Commissioners of Inland Revenue[1967] 1 A.C 472 at 493.So long as the legislature did not step in, the taxpayer was entitled to get the benefit of the loophole. The word "dealer" is defined in section 2(c) of the Bengal Act. It means any person who carries on the business of selling goods in the Union Territory of Delhi and includes the Government. The word "person" as defined in the General Clauses Act includes a firm also. Therefore, a firm is a "dealer". That the firm is treated as a dealer is clear from rule 39. Rule 39 talks of joint and several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is the assessment. Liability does not depend on assessment. That ex hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay. Under section 11 an existing firm can be assessed but not a dissolved firm. This was a lacuna in the Act. The legislature plugged the loophole and filled in the lacuna by the Finance Act of 1972. It introduced section 12F. Section 12F, in so far as it is material, reads as under: "Liability in other cases.-(1) Where a dealer is a firm or an association of persons or a Hindu undivided family, and such firm, association or family has discontinued business- (a) the tax payable under this Act by such firm, association or family up to the date of such discontinuance may be assessed as if no such discontinuance had taken place; and (b) every person who was at the time of such discontinuance a partner of such firm or a member of such association or family shall, notwithstanding such discontinuance, be liable jointly and severally for the payment of tax assessed and penalty imposed and payable by such firm, associa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities, is a fact of outstanding importance in the history of sales tax legislation and it affords a key to the understanding of the meaning and purpose of the amending legislation. As to an amending Act, the Judicial Committee in D.R. Fraser v. Minister of National Revenue[1949] A.C. 24 at 33 (P.C.). said: "When an amending Act alters the language of the principal statute the alteration must be taken to have been made deliberately. In tax legislation it is far from uncommon to find amendments introduced at the instance of the revenue department to obviate judicial decisions which the department considers to be attended with undesirable results." This is what happened in this case. The revenue department felt that there was a lacuna and a loophole. The Finance Act of 1972 plugged the loophole. In view of the amendment made by the Finance Act of 1972 it cannot be contended by the revenue now with any show of justification that they were endowed with a power to tax a dissolved firm even without there being a specific provision in the unamended Act. The case nearest to our Act is the Supreme Court decision in Jullundur case[1966] 17 S.T.C. 326 (S.C.). In that case the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Authority, Sangrur[1967] 19 S.T.C. 381 (S.C.)., and Additional Tahsildar v. Gendalal[1968] 21 S.T.C. 263 (S.C.). Referring to these cases Chandrachud, J., in Murarilal Mahabir Prasad[1976] 37 S.T.C. 77 (S.C.). said: "It is plausible that a distinction ought to be made between the death of an individual and the dissolution of a firm. Human beings, as assessees, are not generally known to court death to evade taxes. Death, normally, is not volitional and it is understandable that on the death of an individual, his liability to be assessed to tax should come to an end unless the statute provides to the contrary. With firms it is different, because a firm which incurs during its existence a liability to pay sales tax may, with a little ingenuity, evade its liability by the voluntary act of dissolution. The dissolution of a firm could therefore be viewed differently from the death of an individual and the partners could be denied the advantage of their own wrong. But we do not want to strike this new path because the Jullundur case(1) and the two cases which follow it have likened the dissolution of a firm to the death of an individual." As the court did not "strike this new pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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