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TMI Blog1978 (2) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... vision was added in 1969, by the amending Act 15 of 1969, with retrospective effect from 1st April, 1963, to provide for the assessment of a dissolved firm. That provision was section 21A of the Act. 3.. With respect to the provisions of the General Sales Tax Act, 1125, there was a decision in Sales Tax Officer, Special Circle, Kozhikode v. K.S.V. Gupta[1971] 28 S.T.C. 722 at 727. , by a Division Bench of this Court, which took the view that a dissolved firm cannot be assessed to sales tax under the General Sales Tax Act, 1125. The relevant observation in the said decision is to be found at page 727: "..... That being so, the proceedings for the levy of the tax for the year 1962-63 can only be regarded as maintainable under the provisions of the 1125 Act, and that Act not providing for a levy on a dissolved firm, the rule in State of Punjab v. Jullundur Vegetables Syndicate[1966] 17 S.T.C. 326 (S.C.). still applies to make the assessment invalid. The amendment of the 1963 Act by the introduction of the new section 21A and the validation of assessment made under the 1963 Act by section 7 of the Amendment Act, it is obvious, can be of no avail to validate an assessment made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Syndicate's case(1), which was indeed the foundation of the decision in the above three cases. But the learned Government Pleader submitted that the ratio of the Supreme Court decision in Vegetables Syndicate's case(1) has been shaken by the recent ruling in Murarilal Mahabir Prasad v. B.R. Vad[1976] 37 S.T.C. 77 (S.C.). The question there arose whether assessment or reassessment of a dissolved firm could be taken under the provisions of the Bombay Acts of 1953 and 1959. The Supreme Court referred to the prior ruling of the court in Jullundur Vegetables Syndicate's case(1) and pointed out that it was the direct authority for the four propositions, viz., (1) a dissolved firm cannot be assessed to sales tax unless the statute under which the assessment is made authorises the assessment either expressly or impliedly; (2) if, by definition, a firm is a dealer under the Act, it becomes a legal entity or an independent assessable unit for the purposes of the Act. If that be so, it ceased to be a legal entity on dissolution and, thereafter, on principle it cannot be assessed to sales tax unless the statute authorised it expressly or by necessary implication; (3) neither a provision re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are the provisions of the statute considered by the Supreme Court with the provisions of the General Sales Tax Act, 1125, we are struck by the significant aspects of the two statutory provisions on which considerable stress was laid by the Supreme Court in Murarilal Mahabir Prasad's case[1976] 37 S.T.C. 77 (S.C.)., viz., sections 5(3) and 26(3)(i) and (3)(ii). There is nothing corresponding to these provisions in the 1125 Act. The learned Government Pleader commended to us that the remaining provisions would be sufficient to sustain the conclusion reached by the Supreme Court in the later decision. In particular, he stressed the provisions of rule 33 of the General Sales Tax Act, which provide for assessment of escaped turnover, and the provisions of rules 34 to 37. Of these, rules 35 to 37 were noticed in Aboo's casePage 488 infra; 1969 K.L.R. 807. and in Assankutty v. Sales Tax OfficerPage 481 infra. (W.A. Nos. 148, 193 and 216 of 1971). We are in agreement with these decisions that these provisions are insufficient to sustain the conclusion that a dissolved firm can be subjected to assessment or reassessment. They do not, in our view, constitute a sufficient express or implied p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the three partners died and thus the second partnership also got dissolved. The further allegation in exhibit P4 was that thereafter the petitioner and the remaining partner assigned their rights to a third party, who was thereafter running the concern as the sole proprietor thereof. There were one or two other objections also in exhibit P4 like that the assessment became barred, etc. Exhibit P4 was dated 15th September, 1966, within ten days of exhibit P3. The Sales Tax Officer remained silent for about two years more, and on 24th August, 1968, issued exhibit P5, the preassessment notice now sought to be quashed. In the notice nothing was stated about the dissolution of the firm or the transfer of the business to a third party. Exhibit P5 dealt with only the question as to how far the accounts submitted by the petitioner could be relied upon for making the assessment. The Sales Tax Officer rejected the accounts and said that he proposed to make a best of judgment assessment as indicated in exhibit P5. The papers produced before me show that the petitioner filed another objection to exhibit P5 as well. The contention seriously urged before me is that the Sales Tax Officer has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and its subsequent dissolution by the death of one of the partners were also not intimated to the Sales Tax Officer; that the petitioner did not give the Sales Tax Officer any intimation of transfer of the mill within the time prescribed by law; and that the petitioner is sought to be assessed now in his individual capacity and not as a representative of the firm. These allegations in the counteraffidavit speak for themselves; they are contradictory one to the other. In the earlier part of the counter-affidavit, it is stated that the dissolution of the original firm was not intimated to the Sales Tax Officer within the prescribed time. In the later part of the counter-affidavit, it is averred that the petitioner is now sought to be assessed in his individual capacity and not as a representative of the firm. If the firm is in existence, the petitioner need not be assessed in his individual capacity; this need be done only after the firm is dissolved. Again, exhibit P5 is quite clear that the proposed assessment is of the firm. The Government Pleader has gone even to the extent of stating at the Bar that the averment that the proposed assessment is of the petitioner in his individu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. But, he has not drawn my attention to any provision in the Act itself by which the distinction sought to be drawn can be justified. He has referred to rules 35 to 37 of the General Sales Tax Rules framed under the Act. The relevant rule in the East Punjab Act is rule 40(1), which is quoted by Subba Rao, J., in his judgment. It reads: "A dealer and his partner or partners shall be jointly and severally responsible for payment of the tax, penalty, or any amount due under the Act or these Rules." The relevant rule in our Act is rule 35, which reads: "If a dealer or licensee enters into partnership in regard to his business, he shall report the fact to the assessing authority within 30 days of his entering into such partnership. The dealer or licensee and the partner shall jointly and severally be responsible for the payment of the tax leviable under the Act." The Government Pleader argues that the word used in rule 35 is "leviable", whereas the word used in rule 40 of the Punjab Act is "due". I am not able to see any distinction between these two words, much less a distinction which indicates by necessary implication that a Sales Tax Officer can assess the erstwhile partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit the charges for a test crushing, when the partners of the firm, the firm having been dissolved in the meantime on 3rd December, 1963, filed O.P. No. 3673 of 1968, which was heard by one of us and was allowed quashing the proposed assessment. The said decision is reported as K. Aboo v. Sales Tax Officer(1). This judgment was pronounced on 24th September, 1968; and, on the same day, the Sales Tax Officer issued notices to the partners of the firm calling upon them to file objections, if any, to the proposed assessments before 2 p.m. the next day. Two days after, on 26th September, the assessments were finalised on the erstwhile partners of the firm; and in the present writ petitions giving rise to these appeals, the partners have questioned the validity of the said assessments. Two of the partners filed two writ petitions, one by each; and the other four partners have filed the third writ petition. (One of the four petitioners was the son of a deceased partner.) All these writ petitions were dismissed by a single Judge holding that the present assessments were against persons who were admittedly members of the firm, as the partners were jointly and severally liable for the tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship, which was dissolved prior to the assessments. The simple question for us to consider is whether such assessments on the partners of a dissolved firm could be sustained in law. The counsel for the appellants has drawn our attention to three decisions, two of the Rajasthan High Court and one of Punjab and Haryana High Court. The decision of the Punjab and Haryana High Court is Moti Ram Kishore Chand v. District Excise and Taxation Officer (Assessing Authority), Bhatinda[1968] 21 S.T.C. 459., by a single Judge. The learned Judge has held that a firm which was dissolved could not be assessed to sales tax after its dissolution in respect of its turnover before dissolution under the Punjab General Sales Tax Act, 1948. The reasoning is that there was no provision in the said Act expressly empowering the Assessing Authority to assess a dissolved firm in respect of its turnover before its dissolution. The two decisions of the Rajasthan High Court are Smt. Shanti Bai v. State[1968] 21 S.T.C. 458. and Mst. Jeeyakanwar v. State of Rajasthan[1968] 21 S.T.C. 461., both Division Bench rulings. In the first of these decisions, the Rajasthan High Court has held that, if a firm stood dissolv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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