HIRA LAL Vs. STATE

JUDGEMENT

(1.) This Revision raises important questions regarding the criminal liability of persons who fail to pay sales tax due from them within the time allowed.

(2.) The facts are briefly these. There is a firm at Hathras entitled Ram Chand Cotton Spinning and Weaving Mills which is owned by several persons. It was assessed to a large amount as sales tax. It failed to pay the amount within the time allowed for doing so and even extensions of time yielded no result. Thereupon one of the partners of the firm, Hira Lal Burman by name, was prosecuted for an offence under Section 14 (b), U. P. Sales Tax Act (Act 15 of 1948). He was convicted and sentenced by the trial Magistrate to a fine of Rs. 500/- and to a further fine of Rs. 10/- per day for the period the breach continued. His appeal before the Sessions Judge failed, whereupon he has come up in Revision to this Court.

(3.) In challenging the correctness of his conviction his learned counsel has urged a number of points. He contends first of all that the applicant is merely a sleeping partner of the firm and not the managing partner, hence he cannot be held criminally liable for non-payment of the sales tax. On fact this defence is negatived by the evidence of the Sales Tax Officer who made the assessment on the firm, for he declares that it was within his knowledge that the applicant managed the affairs of the firm and that he (the applicant) interviewed him many times in connection with the assessment of the tax. Besides, even if I were to assume for the sake of argument that the applicant was not directly managing the affairs of the firm I find no justification for the view that he as a non managing partner is not liable to prosecution. Under Section 3 of the Act every dealer must pay sales tax provided certain specified conditions are fulfilled, while under Section 2(c) a "dealer' means any person or association of persons carrying on the business of buying or selling and supplying goods, and includes every firm. Section 14 (b) of the Act fixes a criminal" liability on 'any person who fails to pay the tax. Every partner of a firm is jointly and severally responsible for the dues of the firm. When a business is carried on by a partnership every patrner, whether he takes active interest in the day to day affairs of the partnership, or is what is popularly called a sleeping partner is a "dealer" within the meaning of Section 2 (e), and if after service of the notice of demand he fails to make the payment he thereby makes himself liable under Section 14 (b). Consequently the applicant cannot escape liability under that penal clause even if he were to be deemed a sleeping partner.