TMI Blog1963 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... t order made by the Sales Tax Officer, Raipur, the demand notices for payment of Rs. 6,125, and the decisions of the Appellate Assistant Commissioner of Sales Tax, Raipur, and the Commissioner of Sales Tax, Madhya Pradesh, upholding the assessment made by the Sales Tax Officer be quashed by the issue of a writ of certiorari. 2.. The material facts are that on 11th January/19th January, 1949, the petitioner and four other persons, including one Girdharilal Govindji, executed a deed of partnership for doing business of purchase and sale of tendu leaves grown in, plucked and collected from Korar Range, Kanker Forest, for the seasons during the years 1949, 1950 and 1951 ending with 31st March, 1952. The partnership actually came into existence on 6th December, 1948. One of the terms of the partnership was that it would last for a period of three years ending on 31st March, 1952, and that it shall not be terminated during the term of the Korar forest contract which also terminated on 31st March, 1952. This partnership was a " dealer " as defined by section 2(c) of the Act. It did not get itself registered as required by section 8. It did not file any returns even when notices under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed by the Sales Tax Officer. The Appellate Assistant Commissioner also added"The lease stood in the name of Shri Chhotalal Keshaoram and Co., throughout the period under assessment and hence it is the partners who are jointly and individually liable to pay for the entire period. The service of the notice on one partner Shri Ghanshyamdas and recovery of tax from him, therefore, is correctly being made. In this view of the matter also, the assessment as done by the assessing officer appears to be justified. " He accordingly rejected the appeal. 4.. The petitioner then, abandoning the remedy of second appeal before the Deputy Commissioner, Sales Tax, and the revision thereafter before the Tribunal and ultimately a reference to this Court, adopted the remedy of a petition under section 22-A of the Act before the Commissioner for revising the order of the Appellate Assistant Commissioner. The Commissioner agreed with the Appellate Assistant Commissioner that the notices issued to the petitioner under section 11(5) were within time. He, however, disagreed with the finding of the Appellate Assistant Commissioner that the firm had been dissolved on 13th September, 1949. On a consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched by the Commissioner that there was no dissolution of the firm was in itself the operative order made by the Commissioner in revision. The order of the Commissioner was one declining to interfere with the order made by the Appellate Assistant Commissioner upholding the order of the Sales Tax Officer assessing the firm. The second proviso to sub-section (2) of section 22-A specifically says that the order of the Commissioner declining to interfere shall be deemed not to be an order prejudicial to the dealer. It cannot, therefore, be urged with any degree of force that in making the order that he did in exercise of his revisional powers under section 22-A and in giving his own reasons therefor, the Commissioner acted contrary to the provisions of section 22-A or made an order prejudicial to the dealer. 6.. It was next submitted that the notices, which were issued to the petitioner under section 11(5) of the Act by the Sales Tax Officer, were without jurisdiction inasmuch as they were issued by the said officer without first satisfying himself that the firm was liable to pay tax under the Act and had wilfully failed to apply for registration and without giving to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner. The question whether the turnover of a dealer did or did not exceed the taxable limit and whether he wilfully failed to apply for registration are all questions of fact which the petitioner should have raised before the taxing authorities themselves. He cannot be allowed to raise them here and question the finding of fact reached by the taxing authorities that the firm had a taxable turnover and had wilfully failed to apply for registration. If for the purposes of this petition the finding reached by the taxing authorities that the firm was liable to pay tax under the Act and had wilfully failed to apply for registration is accepted, then it is very clear that the conditions for making an assessment under subsection (5) were satisfied. 7.. Learned counsel for the petitioner then urged that the assessment was barred by limitation under the law as it stood when notices (annexures E and G) under section 11(5) were issued to the petitioner on 8th December, 1952, and 23rd October, 1953. The argument was that under section 11(5), as it was on these dates, an assessment could be made " at any time within three calendar years from the commencement of this Act and thereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the legislature may enact laws affecting substantive rights by making the laws expressly retrospective or by using language which has that result. When the provisions of an Act are made retrospective by the use of express words or by necessary intendment, then the closed transactions or substantive rights, which would have continued undisturbed but for the retrospective operation, are undoubtedly affected and reopened. In the present case, there is no ambiguity whatsoever with regard to the language of the amendment made in section 11(5) by the Amending Act referred to above. Section 24 of the Amending Act expressly gave to the amendment retrospective effect from 1st June, 1947. The question of determining the extent of the retrospective effect of the amendment does not, therefore, admit of any doubt. In view of this amendment, even on the dates on which the two notices were issued to the firm, section 11(5) must be read as providing for an assessment "at any time within three calendar years from the expiry of such period". The matter is really concluded by a Full Bench decision of this Court in Kanhayyalal v. Deputy Commissioner of Sales Tax[1958] 9 S.T.C. 503; A.I.R. 1958 M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58 M. P. 211. furnishes a complete answer to the petitioner's contention that the assessment was barred by time. It must be noted that the view expressed in Kanhayyalal's case [1958] 9 S.T.C. 503; A.I.R. 1958 M. P. 211. with regard to the effect of subsequent change in the period of limitation for enforcing a liability under a taxing statute accords with that stated in S.C. Prashar v. Vasantsen[1963] 49 I.T.R. (S.C.) 1; A.I.R. 1963 S.C. 1356. In that case Hidayatullah, J., with whom Raghubar Dayal, J., agreed stated the effect thus (at p. 1386): "Now, we do not think that we can treat the different periods indicated under section 34 as periods of limitation, the expiry of which grant prescriptive title to defaulting tax payers. It may be said that an assessment once made is final and conclusive except for the provisions of sections 34 and 35 but it is quite a different matter to say that a 'vested right' arises in the assessee. On the expiry of the period the assessments, if any, may also become final and conclusive but only so long as the law is not altered retrospectively. Under the scheme of the Income-tax Act a liability to pay tax is incurred when according to the Finance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evel of those periods of limitation which confer not only immunity but also give titles by the passage of time." The observations of Kapur, J., relied on by the learned counsel for the petitioner, are not of much assistance to him. Kapur, J., said that the principle that if a right of action has become barred according to the law of limitation in force, subsequent enlargement of the period of time does not revive the remedy to enforce the rights already barred, would apply to the periods specified in section 34 of the Income-tax Act and if the period prescribed for taking action had already expired, subsequent change in the law does not make it so retrospective in its effect as to revive the power of an Income-tax Officer to take action under the new law. As we read these observations, we think they were made on the basis that the provisions by which section 34 of the Income-tax Act was amended did not contain express words or reveal a necessary intendment to impair the immunity from any action under section 34 which had become final after the lapse of the specified period of time. It will be seen that the real question to be determined is as to the extent of the retrospective ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Supreme Court in Ghanshyamdas' case(2). In Ghanshyamdas' case(2), it was in connection with section 11-A of the Act that the Supreme Court held that "period" in section 11-A could only mean a quarter and that it could not be further split up into months, weeks and days and that the question of "escaped assessment" under that section had to be considered on the ground that each quarter was a separate period of assessment. In Ghanshyamdas' case(2), the question of the meaning of the word "period" as used in section 11(5) did not arise for consideration. It is noteworthy that in Ghanshyamdas' case(2), the Supreme Court while contrasting the provisions of section 11(5) and section 11-A, pointed out that under section 11(5) the position is different and that there is no statutory obligation cast on a dealer, who does not get himself registered under the Act, to submit a return and the case of such a dealer is "really a case of evasion from his obligation to get himself registered under the Act", and that in the case of such a dealer the assessment can be made only within three years from the expiry of the period in respect whereof he is liable to pay tax. The notices, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of the dissolution. The effect of this provision is that for the purposes of winding up, the partnership is deemed to continue. Now, it cannot be denied that the payment of partnership debts is a part of winding-up process. That it is so is clear from section 49 of the Partnership Act. The combined effect of sections 47 and 49 of the Partnership Act is that though a partnership is dissolved it is deemed to continue for the purpose of winding up its business and discharge of partnership debts. If a partnership is deemed to continue for the discharge of its liabilities incurred while it was in existence, then it is plain that an assessment under the Act can be made against the firm in respect of sale transactions effected by it while it was in existence and doing business. The amount of tax determined in such an assessment would be a State debt recoverable from and out of partnership assets even after dissolution and in the hands of the partners or otherwise. If the firm is deemed to continue, then the notices issued to the firm were valid and in order. In fact, in the assessment proceedings before the Sales Tax Authorities, the petitioner put in his appearance on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o far as the local Act is concerned, that under section 4(2) thereof the liability to pay tax under the Act arises " with effect from the date of the expiry of two months after the month " up to the end of which the dealer's turnover calculated from a date specified in sub-section (2-a) exceeds the limits specified in sub-section (5). In view of this provision, it cannot be contended that under the Act the tax liability, in the nature of the liability for the payment of a debt, does not arise until the taxable turnover is actually determined and the tax amount is fixed in assessment proceedings. It must be observed that according to the Full Bench decision of the Punjab High Court, for assessment under the Punjab Act what was necessary was that the firm should exist before the initiation of assessment proceedings and that if proceedings for assessment are initiated before the dissolution of the firm, then an assessment can be made even after the firm is dissolved. With all due respect to the learned Judges of the Punjab High Court, it is difficult to see how on the reasoning adopted by them the existence of a firm at the time of the making of the assessment order is of no consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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