THE SALES TAX OFFICER, ENFORCEMENT BRANCH Vs. K.M.S. MARI CHETTIAR

JUDGEMENT

(1.) This matter has been placed before a Bench of three Judges, because a Division Bench which heard the matter in the first instance felt that the view in Veeri Chettiar v/s. Sales Tax Officer, [1970] 26 S.T.C. 579 required reconsideration. The question is whether Sec. 19(3) of the Bombay Sales Tax Act, 1959, enabled assessment of a defunct firm. Veeri Chettiar v/s. Sales Tax Officer, [1970] 26 S.T.C. 579 decided by this court answered it in the negative, but a Division Bench of the Bombay High Court in Roopchand v/s. : AIR1970Bom351 has answered it in the affirmative. We are of the opinion that the Bombay view is the correct one. The respondent was a firm of dealers in handloom goods and textiles and imported those goods during the period from 1st April, 1960, to 23rd December, 1964. The firm stopped doing business from 2nd June, 1965, and was dissolved with effect from 31st March, 1966. The revenue in the State of Maharashtra served on the dealer in Tamil Nadu with a notice dated 26th October, 1969, asking him to show cause as to why the erstwhile firm should not be assessed under Sub -section (5) of Sec. 33 of the Bombay Sales Tax Act. To quash this notice, the respondent moved this court successfully. The appeal arises from the order of the learned single Judge who merely followed Ponnammal v/s. Sales Tax Officer, [1971] 27 S.T.C. 123, which in turn was based on Veeri Chettiar v/s. Sales Tax Officer, [1970] 26 S.T.C. 579.

(2.) Broadly speaking, tax enactments contain provisions of a pattern governing three aspects: (1) charge, (2) assessment, and (3) recovery. These provisions may be separate and distinct or any or more of them may overlap one another. The Bombay Act, by Sec. 6 which is the charging section, directs that subject to the provisions of the Act and to any Rules made thereunder, there shall be paid by every dealer, who is liable to pay, the tax or taxes leviable in accordance with the provisions of the chapter. In this case we are not concerned with the question whether the transactions sought to be charged are really liable to tax, because that will have to be left to the assessing process. A dealer is defined by the Act as any person who carries on a business and a person is defined to include, inter alia, a firm. Having defined a dealer thus and provided for charging a dealer to tax in certain circumstances, Sec. 33 lays down the procedure for assessment. This Sec. contemplates various contingencies and Sub -section (5) directs assessment of a dealer who had not furnished returns in respect of any period by the prescribed date therefor. Since this was a case where the respondent had not submitted returns to the Maharashtra Revenue, mention in the notice was made of Sec. 33(5).

(3.) Whether a defunct firm in the absence of an enabling provision could be assessed to tax was decided by State of Punjab v/s. Jullundur Vegetables Syndicate, [1966] 17 S.T.C. 326. The Supreme Court there held that, as, for the purposes of taxing, a firm is treated as a legal entity and on its dissolution it ceases to be such an entity, unless there is a statutory provision permitting the assessment of a dissolved firm, there is no scope for assessing the firm which has ceased to have legal existence. The court was there concerned with the East Punjab General Sales Tax Rules, in particular Rule 40, which merely declared the joint and several responsibility of a dealer and his partner to payment of tax, penalty or any amount due under the Act or Rules. The rule said :