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TMI Blog1986 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... were raised under both these orders. Against those orders, one L.C. Goel, describing himself as an ex-partner of M/s. Benson Industries, filed two appeals before the Assistant Commissioner of Sales Tax. It was shown to the Assistant Commissioner that a letter dated 30th March, 1972. had been sent to the Sales Tax Officer, intimating that the firm had been dissolved with effect from 25th March, 1972. Along with this letter were enclosed an attested copy of the deed of dissolution, the original registration certificates under the local and the Central Act, and some unused C forms. This letter was admittedly received in the office of the Sales Tax Officer on 30th March, 1972, but for some reason or other, he did not advert to it in the assessment orders made by him. It was argued before the Assistant Commissioner that since the firm stood dissolved with effect from 25th March, 1972, and intimation of this fact had been given to the Sales Tax Officer on 30th March, 1972, assessments could not thereafter be made against the firm as it had ceased to be an assessable entity. The Assistant Commissioner accepted this proposition of law. He was of the opinion that even though the "dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Act. The question referred is as follows: "Whether, on the facts and in the circumstances of the case, the learned Financial Commissioner was justified in holding that after the receipt of an intimation regarding the dissolution of a firm, the assessing authority becomes functus officio in the matter of framing the assessment and that the question of further inquiry to verify the factum of dissolution did not arise at all?" This question has arisen out of the application of the propositions of law enunciated by the Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 STC 326 (SC). The propositions are contained in the following passage: "Though under the partnership law a firm is not a legal entity but only consists of individual partners for the time being, for tax law, income-tax as well as sales tax, it is a legal entity. If that be so, on dissolution, the firm ceases to be a legal entity. Thereafter, on principle, unless there is a statutory provision permitting the assessment of a dissolved firm, there is no longer any scope for assessing the firm which ceased to have a legal existence. As in the present case, admittedly, the firm was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The scheme of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi, is briefly as follows. When an assessment is to be made, section 11(1) and (2) require the assessing authority to "proceed in such manner as may be prescribed". The word "prescribed" is defined in section 2(e) to mean "prescribed by rules made under this Act". That means one must turn to the rules for ascertaining the procedure to be followed. The first relevant rule is rule 32. It reads as follows: "32. When it appears to the appropriate assessing authority to be necessary to make an assessment under section 11 in respect of a dealer, he shall serve a notice in form S.T. XIV upon him- (a) calling upon him to produce his books of accounts and other documents, which such authority wishes to examine, together with any objection which the dealer may wish to prefer and any evidence which he may wish to produce in support thereof." The rest of the rule is not material. It is important to observe that the notice issued under this rule requires the dealer to raise "any objection" which he may wish to prefer and, also, bring with him "any evidence which he may wish to produce in support thereof". Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner "may" amend, replace or cancel the registration certificate, but is not bound to do so. That implies that he may refuse to accept as true the information sought to be given. Thus, even when acting under rule 10, the Commissioner may well refuse to recognise the dissolution of a firm if he is not satisfied with the evidence adduced. So, whichever way one looks at the matter, the conclusion is the same: the sales tax authorities are not bound by the mere statement of a dealer, which is a firm, that it has been dissolved, and may inquire into the truth of the allegation. It would be startling if it were otherwise. For, that would mean that a firm could well nigh command the assessing authority not to make an assessment by simply telling him that it had been dissolved. There would have to be very strong reasons for the legislature wanting to produce such a result. No such reasons are apparent from the scheme of the Act or the Rules. There is nothing in the Jullundur Vegetables Syndicate's case [1966] 17 STC 326 (SC) to suggest that the assessing authority is barred from inquiring into the question whether a firm has, in fact, been dissolved or not. Even Prakash ..... X X X X Extracts X X X X X X X X Extracts X X X X
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