K SOMASUNDARAM Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE petitioner, the assessee, which was a firm of partnership, and which has since been dissolved, was dealing in hardware, paints, cement, etc., and carrying on business at Erode. For the assessment year 1963-64, by an order dated 15th October, 1964, its taxable turnover was determined at Rs. 6, 09, 568.55. For the assessment year 1964-65, the taxable turnover was determined at Rs. 6, 25, 089.28 by an order dated 12th January, 1966. On 8th April, 1966, the car of the manager of the firm was intercepted at Hosur check post and certain anamath accounts relating to the business of the assessee were found being transported from Erode to Bangalore. THEse accounts disclosed escaped turnover of the assessee. Accordingly, after issuing the necessary notices, reassessment proceedings were initiated under section 16(1) of the Tamil Nadu General Sales Tax Act, 1959. Ultimately, the suppressed turnover for the assessment year 1963-64 was determined at Rs. 3, 23, 403.12 and a revised assessment was made on 19th May, 1966. In respect of the assessment year 1964-65, the suppressed turnover was found to be Rs. 2, 63, 384.14 and a revised assessment was made on 31st May, 1966. For the assessment year 1964-65, the assessee submitted a return disclosing a taxable turnover of Rs. 7, 07, 764.11 in form A-2. On the ground that there was a number of discrepancies in the entries in the account books and the evidence shown in the anamath accounts recovered on 8th April, 1966, the account books were not relied on and the taxable turnover was determined at Rs. 10, 56, 384.23 by an order dated 30th June, 1966. In respect of these three years, the assessing authority also levied penalties.

(2.) THE petitioner-assessee preferred three appeals before the Appellate Assistant Commissioner. Though their objections against the reassessments for 1963-64 and 1964-65 and the preassessment notice in respect of 1965-66 related to the merits of the case, at the stage of the appeals the assess also contended that the firm was dissolved on 30th April, 1966, long before the orders under appeal and that therefore the said orders were bad in law. This was on the ground that the Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate had held that unless there is a statutory provision permitting assessment of a dissolved firm no assessment of a firm after its dissolution can be made. THE petitioner-assessee contended before the appellate authority that there was no specific provision in the Tamil Nadu General Sales Tax Act, 1959, to assess a firm after its dissolution. THE Appellate Assistant Commissioner rejected this contention on the ground that the deed of dissolution had not been registered and that further sections 15, 19 and 53(c) and (d) of the Act read with rule 40 of the Tamil Nadu General Sales Tax Rules clearly provided for assessment of dissolved firms. On the merits, after giving certain reliefs and reducing the penalties, the appellate authority confirmed the orders of the assessing authority. THE order of the Appellate Assistant Commissioner is dated 21st October, 1966.THE petitioner preferred further appeals before the Tribunal. When those appeals were pending, the Tamil Nadu Legislature passed the Tamil Nadu General Sales Tax (Amendment) Act (12 of 1968). By this Act, section 19-A was introduced in the principal Act with retrospective effect form 1st April, 1959. It also contained a section regarding validation of past levy. Though a ground relating to want of jurisdiction to make an assessment or reassessment of a dissolved firm was raised in the grounds of appeal, it does not appear to have been pressed at the time of arguments before the Tribunal, as we do not find any discussion in the order of the Tribunal on this question. THE appeals were disposed of by the Tribunal only on the merits. THE order of the Tribunal is dated 24th December, 1969.

(3.) THE learned counsel for the assessee contended that "assessment to tax" is different from "levy of penalty". In the original enactment, both with reference to assessment to tax and levy of penalty there was to statutory provision in respect of a dissolved firm. Section 19-A cured this defect and enabled an assessment to tax and also levy of penalty on a dissolved firm; but the validating provision contained in section 5 deemed only "all taxes levied or collected or purporting to have been levied or collected under the principal Act" before the amendment as having been validly levied and collected in accordance with law as if section 19-A had been in force at all material times. THE expression "taxes levied or collected" would not include levy of penalty. He also referred to section 19-A where "penalty" is specifically included. Thus, according to the learned counsel, though the absence of a statutory power to levy penalty was conferred on the assessing authority to levy penalty on a dissolved firm under section 19-A, the penalties levied already had not been validated by the deeming provision contained in section 5 and, therefore, the levy of penalty in this case could not be sustained. In this connection, he also relied on the decision of this court in Royappa Gounder v. Commercial Tax Officer, Erode [ 1967 (2) MLJ 546].THE learned counsel for the revenue, on the other hand, contended that the words "all taxes levied or collected or purporting to have been levied or collected" would include not only the sales tax payable but also the penalties levied. He also relied on the fact that no separate order levying penalty is now contemplated under the Act and, therefore, according to him, the legislature could not have intended to validate an order in part and leave off the invalidity in respect of the other part. He further contended that in this case the revenue need not even invoke the validating provision contained in section 5, as that section dealt with assessment which had reached the stage of finality, and, in respect of pending matters, the power contained in section 19-A itself is enough to levy the penalty. It is not necessary for us to go into the question whether the words "all taxes levied or collected" occurring in the validating provision contained in section 5 would also include the levy of penalty, as we consider that this case could be decided on the basis that it is a proceeding "pending" and it had not reached the stage of finality. As can be seen from the statement of facts, at the time when the Validating Act was enacted and published, the assessment proceeding was pending before the Tribunal and had not reached the stage of finality.