Decided on March 13,1970



RAMAPRASADA RAO, J. - (1.) THE petitioners were the quondam partners of a firm known as Ardhanari Textiles, which had its place of business at Vembadithalam, Salem district. THE main commercial purpose of the firm which was started in the year 1959 and dissolved on 9th June, 1965, was to manufacture handloom and power-loom cloth. Sometime thereafter, it began manufacturing ready-made garments as well as exporting such ready-made garments, art silk fabrics, pure silk and zari embroidered sarees which came under the description of handloom cloth and handicrafts under the export promotion schemes for handicrafts. It is common ground that in connection with the export of handicrafts and ready-made garments, certain import licenses were issued to the firm based on the percentage of exports effected by it. THEse import licenses were issued in respect of art silk yarn, embellishments and sewing machinery. THE petitioners concede that in respect of some of these import licenses goods were imported through various ports in India , form which ports the goods were directly despatched to the firm's commercial business place within this State for being used in the manufacture of clothes and ready-made garments. It is however stated that the majority of the licenses were sold by the firm long prior to the import of the goods through named brokers in Madras.
(2.) THE petitioners claim that where the licenses were sold in accordance with the trade practice, they would not be in a position to disclose as to who ultimately imported the goods, where the importation was effected and how such goods were dealt with. THE petitioners finally plead that in no case they sold goods in the State of Maharashtr a and they are not in a position to say whether any such importation was made at the port in Bombay. The petitioners' firm was not maintaining any accounts. In these circumstances a notice dated 5th october, 1964, was issued by the respondent calling upon the petitioners to furnish correct and complete information of all the imports made by them and the nature of disposal of such imported goods between 1st January, 1960, and 31st March, 1964. They were also directed to fill up certain forms which were sent as enclosures to the aforesaid notice. In answer to the notice, the case of the petitioners is as follows :- "the firm complied with the requisition of the respondent and submitted three statements showing 8 items of imports which were directly effected by the firm during the period 1961 and 1964. In all such cases the goods had been dispatched by lorry from Bombay to Salem and were covered by the lorry receipts, the numbers of which were disclosed in the statements. The firm which was required to furnish a list of sales effected in the State of Bombay (the present State of Maharashtra ) was shown as'nil'and was duly certified by the Chartered Accountant. The certificates of the Chartered accountant certifying that all the three statements were based on books of accounts of the firm were also sent to the respondent. Subsequent thereto, on 9th June, 1965, the firm was dissolved by a deed of dissolution executed by the three partners. " * Therefore, the petitioners plead that in the absence of any single instance of sale by the quondam firm to any person in Bombay in the State of Maharashtra, the proceedings initiated by the respondent are irregular. On the information furnished by the petitioners, the respondent pursued the matter and called upon the firm to produce its accounts. This requisition was on 22nd June, 1965. Finally, the respondent issued a notice on 4th March, 1966, stating that the partnership firm was liable to pay sales tax under the Bombay Sales Tax Act, 1959 The main contentions urged before us by Mr. K. K. Venugopal are that no proceedings can be initiated and proceeded with against a dissolved firm or association of persons and that there is no sufficient material for the assessing authority to issue the impugned notice on the assumption that the petitioners were dealers who sold goods in Bombay. Contending contra, the learned Government Pleader states that there is ample data in the instant case for the assessing authority to act as it did and the legal contention is not well-founded. As regards the sustenance of the action proposed by the respondent, we have fully discussed the scope of this contention in W. P. No. 189 of 1967 (Since reported as L. V. Veeri Chettiar and Another v. Sales Tax officer (XI), Enforcement Branch, Greater Bombay, Bombay-10 disposed of by us earlier. It is not necessary for us to repeat them once over. There is no provision in the Bombay Sales Tax Act, that section 19 (3) is not the charging section which would empower the authority to assess a dissolved firm or association of persons, which is admittedly a legal entity. While adopting the reasoning rendered by us for an association of persons as being equally applicable to a partnership firm, we are of the view that the legal objection as regards want of jurisdiction of the respondent to proceed against the partners of a dissolved firm for dealings of such firm prior to dissolution has to be sustained. In this view we are unable to agree with the learned counsel for the respondent that this writ petition is not maintainable because of the availability of an alternative statutory remedy after the assessment is over. This aspect also we have considered in W. P. No. 189 of 1967 (Since reported as l. V. Veeri Chettiar and Another v. Sales Tax Officer (XI), Enforcement Branch, greater Bombay, Bombay-10 and the observations therein govern equally the case before us. The question however is whether on the facts and circumstances of the case the order is wholly without jurisdiction. This is not a case where the revenue was acting on mere surmises and bare assumptions. The facts disclose that the respondent was justified in raising a presumption that the petitioners sold goods in the State of Maharashtra and they were to be prima facie roped in as dealers within the meaning of section 2 (11) of the Bombay Sales Tax Act, 1959. In fact, the petitioners admit that they imported the goods at the Bombay Port, but they claim that they have removed the goods from Bombay to their business place at Salem. This is a matter which has to be established by acceptable proof adduced by the petitioners. It may be that the quondam firm disposed of the other licenses in a manner claimed by them. But in so far as the goods imported by them at Bombay are concerned, the onus is upon them to establish that they did not deal with the goods in Bombay and they removed the same for their own purposes to their business place in the district of Salem. Paragraph 5 of the affidavit in support of this writ petition clearly reflects on the conduct of the petitioners. They would admit that goods were despatched by lorry from Bombay to Salem and were covered by lorry receipts etc. This has to be established with reference to their accounts and not by mere personal representations as was sought to be done by the petitioners. If a person has custody of goods in a place where the Sales Tax Act is in force, and if he claims that he did not sell such goods but removed them from the jurisdiction of such sales tax authorities, then it is for the person who sets up such a contention to prove the same. The respondent gave ample opportunities to the petitioners to establish such state of affairs, but the petitioners however did not avail themselves of such opportunities given. In those circumstances and having regard to the peculiar circumstances of this case, we are of the view that on the merits the petitioners cannot contend that the action initiated by the respondent has to be thwarded even at its threshold without any further enquiry whatsoever. We are therefore of the opinion that the respondent had jurisdiction to issue the impugned notice. But in view of the legal impediment, which is substantial, the action taken by the respondent against the petitioners is without jurisdiction. The transactions admittedly relate to alleged dealings of a partnership firm. The said firm has been dissolved. There is no provision in the Act to assess a dissolved firm after it becomes defunct. In this view the rule nisi issued has to be made absolute. The petition is allowed, but there will be no order as to costs.;

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