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TMI Blog1984 (5) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... allenging the legality and validity of the assessment orders for the periods of three quarters ending with 30th September, 1973, four quarters ending Chait Sudi, 2018 and four quarters ending December, 1972 and on such Civil Rules Nos. 7660 (W)-7663 (W) of 1975* were issued and those rules, after hearing, were made absolute, whereby the assessment orders were set aside. It has been stated further that thereafter, against those orders making the rules absolute, four appeals being F.M.A.T. Nos. 1480-1483 of 1975 were filed and in those appeals, applications for stay of operation of the orders were also made, which came up for consideration on 19th June, 1975 and the learned Appeal Court was pleased to extend the stay order as issued, for a limited period and also to direct the petitioners to give the names of the heirs and legal representatives of the deceased Kankan Wari Baid to *Bachhraj Baid v. Commercial Tax Officer [1975] 36 STC 101. Mr. Moni Bhusan Sarkar, who at that time was appearing for the appellants, so that the assessment in question, could be made and completed in accordance with law. With such observations, the applications and the appeals were disposed of and it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the learned Advocate thereafter, on 26th February, 1976 the present rule was issued against the notice dated 26th July, 1975 as issued by the respondent No. 1 as mentioned above, claiming such notice to be bad, illegal, improper, invalid, void, ultra vires and without jurisdiction. Shri Kalimohan Chakraborty, the Commercial Tax Officer concerned, has filed the affidavit-in-opposition dated 23rd September, 1975 for respondents Nos. 1, 2, 3 and 4 in this Rule. It was his case that Shri Bachhraj Baid, Shri Bhenwalal Baid and Smt. Kankan Wari Baid were carrying on business as partners under the firm name of M/s. Eastern Trading Co., and were registered dealers under the Acts as mentioned above. He has admitted that the said Smt. Baid died on 9th May, 1973. He has stated that although under the provisions of law, the dealers are required to intimate inter alia any change of ownership within 14 days to the Commercial Tax Officer concerned and the legal representatives of the deceased dealers are required to inform within 30 days from the date of death of the dealer, no intimation or information about the death as mentioned above, was communicated to him by anybody till 30th May, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal representatives of the deceased Kankan Wari Baid did not join with the petitioners in continuing the business of the partnership. The deponent has further stated that the assessment as mentioned, having been made inter alia in the name of a dead partner (Smt. Kankan Wari Baid), as no information about her death was received, therefore the assessments were untenable. It was his case that at the time of hearing of the application in connection with the interim relief in the concerned appeals, the Appeal Court duly appreciated the difficulty, that without the names of the heirs and legal representatives of the deceased, they could not be substituted and as such, the order in the manner and way in which it has been indicated hereinbefore, was passed. It has further been stated that the petitioners, not having even furnished returns for considerable periods, the Assistant Commissioner of Commercial Taxes, respondent No. 2, was satisfied that in the facts and circumstances of the case, there were good and sufficient reasons for demanding security for Rs. 10,00,000, for the proper payment of tax, payable by the dealers under the said Bengal Act and as such, notices were issued afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directions of the Appeal Court and the steps in the matter of substituting the names of the heirs and legal representatives of the deceased as mentioned above, were being contemplated now and that too after a long lapse of time, without any bona fide and without duly considering the facts of the case. Section 20(4) of the said Bengal Act lays down that subject to such rules as may be prescribed, any assessment made or order passed under that Act or the Rules made thereunder by any person appointed under section 3 or section 3A may be reviewed by the person passing it upon application or of his own motion and subject as aforesaid, the Tribunal may, in like manner and for reasons to be recorded, review any order passed by it, either on its own motion or on application. It has been stated by Mr. Ghosh that since the heirs of Kankan Wari Baid did not join the erstwhile partnership, there was a separate partnership and in the subsequent rules after Civil Rules Nos. 7660(W)-7663 (W) of 1975 assessments were not challenged. Mr. Ghosh further made reference to the provisions of the said Bengal Act, relating to "dealer" meaning thereby, any person who carries on business of selling good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deceased Smt. Kankan Wari Baid became partners/dealers within the meaning of the said Bengal Act, no assessment could be made upon them without amending the registration certificate and lastly and fifthly, Mr. Ghosh claimed, that the deceased partner's assessment in question, was a nullity and the same could not be rectified by adopting the procedure as in the instant case. It should be noted here that Smt. Kankan Wari Baid admittedly died on 9th May, 1973 and as such, admittedly some assessment was made after her death and accordingly Mr. Ghosh claimed that any assessment made after the death of the lady, was a nullity and it was the definite claim and contentions of Mr. Ghosh that amendment, if any, must be in case of or in course of the assessment. He, on a further reference to the orders as made by the Appeal Court wanted to establish that since there was no provisions to deal with the heirs and legal representatives of the deceased partner, Smt. Kankan Wari Baid, the steps as taken, were without jurisdiction and unauthorised. In support of his submissions that the legal representatives cannot be assessed, Mr. Ghosh firstly referred to the determinations in the case of Chie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure for assessing a dissolved firm for its predissolution turnover. There was a lacuna in the Act and it was filled by the insertion of section 12-F. In that case it has also been observed that under the general law a firm is not a distinct legal entity but is only a compendious name for all its partners. A firm which carries on the business of selling goods would be a dealer within the meaning of the Act as the word "person", would include a firm being a body of individuals by force of section 3(42) of the General Clauses Act, 1897. There is nothing repugnant in the subject or context to exclude the application of this definition contained in the General Clauses Act, 1897. The provisions of sections 4, 5, 7, 11 and 11-A of the Act and rules 39(1) and 39(1A) are not repugnant to the firm being included in the definition of a "dealer" as contained in section 2(c). On the question whether the firm, was a dealer, reference was made by Mr. Ghosh, to the determinations as made by this Court in the earlier Rules as obtained by the petitioners, whose particulars have been mentioned hereinbefore and which judgment has been reported in Bachhraj Baid v. Commercial Tax Officer [1975] 36 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transferee carries on such business and the said section 17 makes the transferee of a business liable for the outstanding liability of the transferor, but does not say that on transfer the liability of the transferor has ceased. The section merely imposed an additional liability on the transferee keeping intact the liability of the transferor. Therefore, when the ownership of the business is transferred, the transferor by reason of the transfer is not absolved from outstanding tax liabilities of the transferred business. Section 17 speaks not only of the tax liabilities but also other liabilities, for example, submission of the return, deposit of security, payment of tax. On the basis of the above determinations, Mr. Ghosh claimed the assessment as made on the death of the Smt. Baid to be a nullity. Then, reference was also made by Mr. Ghosh to the observations of the Gujarat High Court in the case of Champaklal Sohanlal v. J.H. Shah, Sales Tax Officer [1968] 22 STC 507 which, while dealing with the term "dealer ", has observed that there is no provision in the Bombay Sales Tax Act, 1953 making liable the heir or the legal representative of a deceased dealer for the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Bengal Act, reference was made by Mr. Ghose to the case of Jagdish Kaur v. Sales Tax Officer [1974] 33 STC 522 wherein it has been observed that section 17 of the Bengal Finance (Sales Tax) Act, 1941 as extended to Delhi is not limited in its operation to transfers inter vivos only. There is nothing in that section which leads to any inconsistency if it is applied to transfers however they have been effected. Therefore, section 17 applies to the widow of a deceased dealer succeeding to his business by virtue of a will and thereafter continues to carry on his business, but she will be liable to pay the arrears of sales tax and to be assessed to sales tax for a prior period, only if her deceased husband has not already paid the tax, apart from holding, that if a transferee has wound up the business or ceased to carry on the business, the transferee would not at all be liable under section 17. On a reference to section 42 of the Indian Partnership Act and the terms thereof, Mr. Ghosh, in the facts and the circumstances of the case, claimed that on the death of Smt. Kankan Wari Baid, the partnership stood dissolved and as there was no agreement between the partners to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay tax, carry on business as a dealer unless he has been registered and possesses a registration certificate." Section 7(4) is as follows: "The Commissioner may from time to time amend any certificate of registration in accordance with information furnished under section 16 or otherwise received." Section 10, sub-section, (2) which is relevant is: "...............every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed." Section 11 says: "If no returns are furnished by a registered dealer....................or if the Commissioner is not satisfied.......... the Commissioner shall...............proceed in such manner as may be prescribed." Sections 10 and 11 deal with the payments of tax, returns and assessment of tax. Section 13 relates to accounts and section 14 to production and inspection. Section 15 deals with delegation of Commissioner's powers. The next two sections are important for us. Section 16 says: "If any dealer to whom the provisions of sub-section (2) of section 10 apply,-(a) sells or otherwise disposes of his business..........he shall within the prescribed time inform the prescribed authority according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord of the assessment. That section does not envisage rectification of an error of judgment. The mistake must be a mistake which will appear upon a glance at the record and not a mistake which emerges after prolonged debate on the merits of the question and the assessee carrying on the business of manufacturing and selling reinforced cement concrete spun pipes was assessed to sales tax at 2 per cent of the turnover. Subsequently the Sales Tax Officer took the view that the pipes sold by the assessee were liable to be assessed at 7 per cent as they fell under the description of "sanitary fittings" and accordingly issued a notice to the assessee under section 22 for the purpose of rectifying the assessment: Held, that the Sales Tax Officer had no jurisdiction to take proceedings under section 22. It should be noted here that the case of the answering respondents was that, it was the obligation of the dealers to intimate about the death of the deceased partner, but they not having done so, there was not only some basis for the initiation, but the initiation as made, was operative. Regarding the intimation and the conduct thereof, of the partners, there has been a dispute and as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Co. at the same place with effect from 10th May, 1973 on the basis of a deed of partnership executed on 1st November, 1973 as a transferee of that firm. As such, the petitioners were claimed by Mr. Dutta to be absolute transferees having had their identity completely merged under section 17 of the said Bengal Act. The above submissions were also sought to be supplemented by Mr. Dutta by saying that the position in law would be such as indicated hereinbefore as there was complete change of identity and furthermore as the requirements under section 17 as mentioned above, were satisfied. Some of the observations in the case of Bibas Chandra Gon v. State of West Bengal [1964] 15 STC 277; AIR 1963 Cal 678 or the background of the same have been indicated hereinbefore. Mr. Dutta also referred to that determinations of Bachawat, J., and stated that the relevant tests or criterion for determining the issue has been laid down in paragraph 10 of the judgment, which also indicates the necessary requirements under section 17 as indicated above and according to Mr. Dutta, such and relevant tests in this case have not been satisfied. In the concerned appeals, this Court had set aside the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ously be for the assessment year 1945-46 and not for 1946-47. Apart from the above, Mr. Dutta contended that the notices in this case would not be bad as they were issued on the understanding of the Appeal Court's order by the officer concerned and more particularly when he felt that such authority was given to him. On a production of the copy of the deed dated 5th June, 1975 Mr. Dutta categorically claimed that the same established and showed absolute transfer. This deed was claimed to be the subsequent and second deed by Mr. Dutta and according to him the first one was dated 5th April, 1960. The copy of the first deed was produced by Mr. Ghosh. Mr. Dutta also claimed that the consideration of the effect of the review at this stage, being only academic, this Court should not make any interference and that apart, he claimed that concurrent findings of fact as made or arrived at, must not also be interfered with in this jurisdiction. Mr. Dutta also submitted that jurisdiction or power to interfere under article 226 being discretionary, no interference should also be made. Mr. Ghosh, on a further reference to the order and the purpose of the notice claimed, that the question of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a taxing authority acts despite the absence of basic jurisdictional facts the assessee need not exhaust the available statutory remedies before seeking a writ and the High Court can stop the assessment proceeding at its inception. On a reference to the other determination on the Indian Income-tax Act, 1961 in the case of Calcutta Discount Co. Ltd. v. Income-tax Officer [1961] 41 ITR 191 (SC), on the principles as laid down, therein and that too on the effect of the ordes as impeached, it was claimed by Mr. Ghosh that alternative remedy in this case would be no bar in entertaining this application. Mr. Ghosh further claimed that when in this case, the High Court entertained the writ petition by issuing a rule, the same cannot be discharged for the availability of alternative remedy and non-availing of the same. He wanted to establish such submissions on a reference to the determinations in the case of Hirday Narain v. Income-tax Officer, Bareilly AIR 1971 SC 33, where it has been observed that when the High Court in spite of the fact that the petitioner has not availed of the alternative remedy, entertained the petition and gave hearing on merits, such petition cannot be reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a "dealer" is under the obligation to intimate the authorities, the death of one of the partners and what should be the effect, if no such intimation is given and as such, the review as was initiated in this case, it was permissible and possible. Admittedly, the partner, Smt. Kankan Wari Baid, died on 9th May, 1973 and the partners of the said firm carried on the business upto 1971, or at least upto the death of the lady, as indicated above. It also appeared from the records that initially the firm in question, was shown, mentioned and indicated as a "dealer", but such position did not continue thereafter. It appeared further that the firm Eastern Trading Company was not shown as the registered dealer and such registration or the certificate thereof, which was dated 22nd April, 1967 was in the name of the three partners. Such being the position, the answering respondents specifically claimed that the dealers in this case were individuals and not the firm. From the intrinsic evidence as available in this proceedings and more particularly from the letter dated 22nd August, 1975 as mentioned hereinbefore, it appeared without any doubt, that after the death of Smt. Kankan Wari Baid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror, who must be a registered dealer, and such transfer or other disposition may be either in whole or in part. One thing is also certain that both the transferor and the transferee are jointly and severally liable to pay the tax, including penalty, if any, due from the transferor in respect of the period upto the time of such transfer, disposition or change. It is also thus clear that firstly, either the whole or part of the business as such, must be transferred, and secondly, if there is any change in the ownership, the previous owner must be succeed in the business or part thereof by the transferee. Such tests, without any doubt would apply appropriately in this case. In the case of Anakapalle Co-operative Agricultural and Industrial Society v. Workmen AIR 1963 SC 1489, the tests for determining whether there has been any change in the ownership or not have been laid down, specified, dealt with and discussed by the Supreme Court. It has also been observed in the case of Commissioner of Income-tax, Madras v. K.H. Chambers AIR 1965 SC 970 that tests of change of ownership, integrity, identity and continuity of a business have to be satisfied, before it can be said that a person "s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of sub-section (2) of section 10 apply,- (a) sells or otherwise disposes of his business or any part of his business or any place of business or effects or comes to know of any other change in the ownership of the business, or (b) discontinues his business or changes his place of business or opens a new place of business, or (c) changes the name or nature of his business or effects any change in the class or classes of goods in which he carries on his business and which is or are specified in his certificate of registration, he shall within the prescribed time (and in the prescribed manner) inform the prescribed authority accordingly; and if any such dealer dies, his legal representative shall in like manner inform the said authority." In view of such and necessary amendment of the certificate under section 7(4) of the said Bengal Act, the persons or authorities, whose names are introduced by amendment in the registration certificate, become liable under section 10(2) of the said Bengal Act, which require that the dealers concerned, as may be required so to do by the Commissioner by notice served in the prescribed manner and every registered or certified dealers s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of general import and such transfer may be by the act of parties as also by operation of law. Section 17 defines the rights and liabilities of the transferee. Such transferee will have the right to have his name incorporated in the registration certificate, for carrying on the same business and the liability would be to the same extent, as if the name was initially registered. If the word "transfer", meant transfer by act of parties only, and excluded transfer by operation of law, even then, information regarding such transfer, would still have to be furnished under section 16(2) of the said Bengal Act and on such information, the authority could amend the registration certificate under section 7(4) and consequently, the legal representative would be liable under sections 10(2) and 11, even though the extent of liability of the legal representative would remain undefined and uncertain. The word "transfer" without any doubt, do not refer to the manner in which the transfer took place, but it relates to the fact of changing over. Section 4 of the said Bengal Act, which is the charging section, also makes the dealer liable to pay the sales tax on his turnover. Section 17 which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the transfer of business of a registered dealer, and therefore, irrespective of the fact as to how many times the transfer is effected, the transferee remains liable under section 17, as transferee from the original registered dealer. The records as produced by the answering respondents were looked into, for the purpose of finding out whether the order of review was passed on recording the reasons, duly. The submissions of the respondents on this point have been indicated hereinbefore. From the records it appeared that reasons were recorded. In any event, it cannot also be overlooked that the petitioners had the due and necessary understanding of the substance of the notices. Such being the position, the submissions on the issue of the defective notices, as were put forward by Mr. Ghosh, cannot be accepted. In fact, the petitioner had due knowledge of all that had happened and so also the fact that their review proceedings were disposed of. Such being the position, the proceedings as initiated, cannot be held and found to be defective, which was specifically urged by Mr. Ghosh and the more so when, the liability to pay tax and to comply with the obligations as indicated herein ..... X X X X Extracts X X X X X X X X Extracts X X X X
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