NATHU LAL Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THESE four references made by the learned Member Shri G. B. K. Hooja raise the question whether a firm could be assessed to sales-tax after it was dissolved. As a common point of law is involved in all these references, they will be disposed of by this joint answer.

(2.) BRIEFLY the facts of the case are that the partnership firm started operating on 9. 11. 61. The business of the firm was subsequently dissolved on 23. 11. 63. The intimation of the dissolution of the firm was conveyed to the Sales Tax Department on 28. 11. 63. The Sales Tax Officer, however, issued notice for the purpose of assessment on 29. 11. 63, which was received by the assessee on 30. 11. 63. On 13. 2. 64 the petitioner submitted an application denying liability of assessment on the ground that the firm stood dissolved with effect from 23. 11. 63 and that the intimation of the dissolution of the firm under sec. 9 of the Rajasthan Sales Tax Act had been communicated to the Department on 28. 11. 63. The learned Sales Tax Officer, however, rejected the application of the petitioner vide his order dated 13. 2. 64 on the ground that under sec. 6 (6) of the Rajasthan Sales Tax Act, a dealer was liable to be assessed until his registration certificate was cancelled. As the assessee had failed to file the required returns or statements of sales and to produce any evidence in support of the sales effected during the period of assessment, the learned Sales Tax Officer proceeded to assess the assessee to the best of his judgment under sec. 10 (1) (b) of the Sales Tax Act on 19. 2. 64. The petitioner filed four revisions before the Board of Revenue in which the question whether a firm could be assessed to sales-tax after it was dissolved came up for adjudication which has been referred to us tor answer.

(3.) THIS case was heard at length. I had the benefit of reading the two judgments given by the learned Members. Shri Balwant Singh has taken the view that the dissolved firm is liable to assessment for the turn over upto the date of its dissolution, but under the amended Rajasthan Sales Tax Act the dissolved firm cannot escape liability to assessment of sales tax in view of the fact that the law applied retrospectively. He was however of the view that fresh notice will have to be given to the firm. The other learned Member Shri Madhok in a separate judgment, however, came to a different conclusion that the dissolved firm ceases to be a legal entity and as such is not liable to assessment to sales tax, but in view of the amendment of the Rajasthan Sales Tax Act by Act No. 13 of 1964 and the provision therein contained, the dissolved firm cannot be assessed but the partners or members of such dissolved firms are jointly and severally liable to assessment for the amount of tax, penalty, or other sum payable.