HIRALAL BARMAN Vs. SUB-DIVISIONAL OFFICER HATHRAS

JUDGEMENT

(1.) This is an application under Article 226 of the Constitution praying that

(2.) There is a registered partnership firm carrying on business under the name and style of Messrs Ramchand Spinning and Weaving Mills, Mursan Gate, Hathras, district Aligarh. The firm owns the mills and deals in cloth, arid yarn after manufacturing the same. The partners of the Firm are Shri Hira Lal Barman, Jawaharlal, Rajendra Kumar, Virendra Kurnar and Manikchand, Shrimati Satyavati Devi and Shri Naridlal Barman. The partnership Firm was running the mills. Returns for the sale of the goods for the year 1951-52 were submitted to the Sale Tax Officer, Hathras and a sum of Rs. 102386/- was the amount of tax levied against the Firm. Something was paid by the Firm. Returns for 1952-53 were also submitted In due time and thereafter the returns for 1953-54 were filed before the Sales Tax Officer. It is alleged in the petition that the Mill worked for about four months in the year 1953 and in the year 1954 for fifteen days only. The sales tax was paid in part by the assessees and the department according to the petitioner's case made a demand from the Firm for a further sum of Rs. 90000 /- and odd. The property of the Firm i. e., the mills itself was attached in the year 1952 but they were subsequently released on certain conditions. In 1952 the personal property of the deponent namely the residential house was attached by the Sales Tax Department. The personal property of Shri Manikchand, another partner, was also attached. On 18-8-1954 the moveable properties in the Annapurna Kothi belonging to Sm. Annapurna Devi were attached under the process issued by opposite party 1. 30-9-1954 was the date fixed for sale of the liveable properties which were attached. The warrant of arreast was also issued under the provisions of the Land Revenue Act by the Sub-Divisional Officer, Hathras, for the arreast of the petitioners 1 to 3 for realisation of the sales tax alleged to be due from the Firm. The order for the realisation of the amount by arrest was stayed by this Court on 28-9-1954. Counter-affidavit has been filed on behalf of the State of Uttar Pradesh by Shri Krishna Soti, Sales Tax Officer, Hathras. In paragraph 3 of the counter-affidavit it is stated that the process for realisation of the sales tax dues on the firm of Messrs Ramchand Spinning and Weaving Mills relates to the year 1951-52 and 1952-53. There is still a balance of Rs. 60631/14/6 due from the Firm for the year 1951-52 and Rs. 36759/3/6 for the year 1952-53. In para 8 it is further stated that a large amount of Sales tax for the year 1949-50 was recoverable from the Firm, the payment of which had fallen into arrears. The demands made by the Sales Tax Department relate only to the years 1951-52 and 1952-53. Against the order of attachment of the Mills, it is stated in the counter-affidavit that a representation was made by the petitioner as a result of Which the attachment was released on condition that payments should be made by fixed instalments within specified period and it was also recommended that there "were other properties Which could be sold and the mills should be released from attachment. Out of these instalments agreed by the Mills to be paid, two instalments of Rs. 10,000/- each Were paid towards the arrears. The Sales Tax Department only issued a certificate of the sales tax for realisation of arrears and it is not for the Sales Tax Department to attach any property. It is admitted in para 19 of the counter-affidavit that the moveable property from the residence of Shri Hiralal Burman was attached on 18-8-1954 and certain objections were filed in regard to the attachment on behalf of. Sm. Annapurna Devi which were investigated and rejected by the Court on 27-9-1954. It is stated that the orders of arrest have been issued in accordance with the provisions of the law. It is contended that registered partnership firm is an entity for the purpose of taxation and it is not open to the Department to realise arrears of tax due from the Firm from the personal property of the partners. It is further contended that there was no certificate under Section 145, Land Revenue Act determining the arrears of the sales tax and the name of the defaulters and as such the provisions of Section 146, Land Revenue Act did not apply and the entire proceedings were illegal.

(3.) It is contended by the Standing Counsel who represents the opposite party that a partnership is not a person in law. It has no juridical existence and the assessment of tax in effect is against the partners who constitute the firm. If is therefore open to the department to realise the arrears of the sales tax due from the firm from the personal property of the partners. Reliance has been placed by the petitioners on the definition of the word, "dealer" in the Sales Tax Act. Section 2 (c) of the Act defines a dealer as any person or association of persons carrying on the business of buying or selling and supplying goods in the United Provinces whether for commission, remuneration or otherwise and it includes any firm or Hindu joint family and any society, club or association which sells or supplies goods to its members but it does not include any department of the State Government or the Indian Union. Section 3 of the Act provides that subject to the provisions of the Act every dealer shall pay on turnover in each assessment year a tax at three pies a rupee. Section 8 lays down that