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TMI Blog1995 (12) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years 1958-59 to 1962-63 the firm was assessed and the liabilities accrued under the State Act at Rs. 1,124.29 and under the Central Act at Rs. 12,71,591.21. There is also no dispute that these amounts were in arrears as due from the partnership firm from the year 1963. Only after 15 years thereafter the authorities could initiate proceedings under the Revenue Recovery Act and issue necessary certificate for attachment of 21/40 shares of the three partners in the properties left by their father. At that stage one of the appellants, A. Pareed Pillay filed a suit O.S. No. 307 of 1979 on the file of the Munsiff Court, Perumbavoor, against the authorities for an injunction to restrain them from proceeding with the recovery steps. The trial court dismissed the suit, but the first appellate court reversed the decision and decreed the suit. On appeal in S.A. No. 756 of 1984 this Court justified the recovery proceedings ([1991] 83 STC 377 [State of Kerala v. A. Pareed Pillai]) and also held that the suit filed without complying with the mandatory requirement of section 80(1) of C.P.C. was not maintainable. Special leave petition, S.L.P. (Civil) No. 1014 of 1991 filed against the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W.A. No. 1575 of 1995). Since the issue is to be decided in O.P. No. 9519 of 1991* (W.A. No. 1604 of 1995) unaffected by the civil court decree, we have proposed not to go into the question of res judicata. We therefore proceed to consider on the liability of the partners for the tax due from the firm even in spite of the said decision. 7.. According to the learned counsel, the firm is a dealer under the Central Act and the partners are not liable for the tax due from the firm. His contention is that the partners enjoy immunity under the provisions of the Central Act and it is not competent for the State to legislate for the destruction of the said immunity by exercising the agency power granted under section 9 of the Central Act. 8.. We heard the counsel in detail. Section 9 of the Central Act deals with the levy and collection of tax and penalties. Sub-section (2) of section 9 enables the authorities to assess, reassess, collect and enforce payment of tax including any penalty payable by a dealer as if the tax or penalty payable by such a dealer under the Central Act is a tax or penalty payable under the General sales tax law of the State and for that purpose the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for such payment. It was held that in the absence of a specific provision as found in section 18 of the Bombay Act the partners of the firm could not be held liable for the tax assessed on the firm. In the light of the observation of the Supreme Court referring to the Bombay Sales Tax Act, this judgment may not be of any help to the appellants since there is a specific provision under the Kerala State Act. 11.. In Commissioner of Income-tax v. Ouseph and Sons [1985] 154 ITR 598 a Full Bench of this Court held that although under the partnership law a firm is not a legal entity but consists of only persons who are partners for the time being, under the Income-tax Act, a firm is an independent and distinct juristic person for the purpose of assessment as well as for recovery of tax as it is a "person" within the meaning of section 2(31) of the Act, having its own entity and personality. It is also a separate entity under the sales tax law. This judgment is in reference to the provisions of the Income-tax Act and also based on the premises that it is a separate entity under the sales tax law also. The court did not consider the effect of section 21 of the State Act. 12. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which have been cited with approval by the Supreme Court in the reference cited supra, as follows: "Now, there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, 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." We are concerned with the recovery of tax. Recovery of tax due from the firm through the partners is a method that can be adopted in fiscal legislations to ensure that the amount of tax which is due is paid and provisions in that behalf form part of the recovery machinery provided in the taxing statute. Section 9(2A) of the Central Act provides that all the provisions relating to all offences and penalties of the general sales tax law of each State shall with necessary modifications apply in relation to the collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90] 76 STC 119 (WBTT). In McDowell Company Limited v. Commercial Tax Officer [1985] 59 STC 277 the Supreme Court had taken the view that the proper way to construe a taxing statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax and whether the transaction is such that the judicial process may accord its approval to it. We find that specific provisions have been made under section 61 and section 21 of the State Act, 1963 providing that all arrears of tax at the commencement of the Act may be recovered as if they have accrued under the Act, and where a firm is liable to pay, each of the partners is jointly and severally liable. In the light of the clear and express terms of these provisions the appellants are liable. In all the decisions relied on by the learned counsel there were no specific provisions making the partners liable. We are of the considered view that combined reading of section 9(2) and 9(2A) of the Central Act read with section 61 proviso and section 21 of the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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