BANKATLAL BADRUKA Vs. STATE OF BOMBAY

JUDGEMENT

(1.) THE petitioners were partners of a firm, which used to carry on business at Parbhani and Adilabad. THE firm was registered as a dealer under the Hyderabad General Sales Tax Act. Under section 12 of the Act, every dealer was required to submit a return relating to his turnover. THE petitioners did not submit any return in respect of the period 27th October, 1954, to 14th November, 1955. THE Sales Tax Officer, therefore, decided to assess the firm to the best of his judgment under section 12(3) of the Act. Before doing so he issued a notice to the petitions' firm. THE first hearing before the Sales Tax Officer was on 2nd February, 1956. THE petitioners did not appear before him. THE case was then adjourned 13 times, but the petitioners did not appear. THE Sales Tax Officer then estimated the turnover of the petitioners and made an order for assessment assessing the firm to tax of about Rs. 1,56,000. This order was made on 3rd January, 1957. THE petitioners appealed against this order to the Deputy Commissioner of Sales Tax. He confirmed the order of the petitioners' assessment and dismissed the appeal. THE petitioner then approached the Sales Tax Tribunal, but the Tribunal also dismissed their appeal. THEreafter the petitioners filed the present application.

(2.) THE petitioners' case is that their firm was dissolved on 2nd November, 1956. Mr. Mehta, who appears on their behalf, has argued that under the Hyderabad Sales Tax Act, the firm is a distinct legal entity, which can be assessed to tax and that as the firm is a distinct legal entity, which can be assessed to tax and that as the firm had ceased to exist when it was dissolved on 2nd November, 1956, the Sales Tax Officer was not competent to assess the tax due from the firm. He has relied on the decision of the Allahabad High Court in Jagat Behari Tandon v. Sales Tax Officer ([1957] 8 S.T.C. 459), in which it was held the an assessment order cannot be made under the U.P. Sales Tax Act, 1948, on a firm after it is dissolved and has discontinued business on the ground that the firm as a unit of assessment has ceased to exist. This case was cited before the Madhya Pradesh High Court in Lalji v. Assistant Commissioner, Sales Tax, Raipur ([1958] 9 S.T.C. 571). Under the C.P. and Berar Sales Tax Act, a registered dealer was required to intimate any change in the name or nature of the business to the Sales Tax Authorities. No intimation of the dissolution of the firm was, however, sent to him. It was held that the firm continued to be liable to assessment, so long as any change effected in the name or nature of the business has not been intimated to the prescribed authority under the Act. A similar view was taken by the Mysore High Court in State of Mysore v. Saravathulla & Co. ([1958] 9 S.T.C. 593) Rule 37 of the Mysore Sales Tax Rules provides that if a partnership is dissolved every person who was a partner shall send a report of the dissolution to the assessing authority within 30 days of such dissolution. It was held that in the absence of the compliance with rule 37 and in the absence of proper proof of the alleged dissolution prior to the date of assessment, the assessee-firm could not complain that the order of assessment was invalid because it was made after the dissolution of the assessee-firm. THE decision of the Allahabad High Court was also not followed by the Madras High Court in Ponnuswami Gramani v. Collector of Chingleput District ([1960] 11 S.T.C. 80). It was held in that case that although the Madras General Sales Tax Act and the rules framed thereunder make no separate provision for assessing the turnover of, or for the recovery of taxes due by, a dissolved firm, the firm being a dealer as defined in section 2(b) up to the date of its dissolution, could be assessed to sales tax even after its dissolution and the tax could be recovered from the partners of the dissolved firm.

(3.) THE rule will, therefore, be discharged. THE petitioners should pay Rs. 250 to the opponents for their costs. Rule discharged.