TMI Blog1985 (5) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... stion which appropriately falls for examination by the authorities constituted under the Kerala General Sales Tax Act. While, therefore, we maintain the orders of the High Court dismissing the Tax Revision Cases and confirm the orders of the Sales Tax Appellate Tribunal remanding the cases, we do so for the considerations and upon the reasons set forth in this our judgment. - Civil Appeal No. 2585-2586 of 1978, - - - Dated:- 3-5-1985 - Judge(s) : E. S. VENKATARAMAIAH., R. S. PATHAK S.T. Desai. Senior Advocate (amicus curiae), for the respondent. V.J. Francis, Advocate, for the appellant. JUDGMENT The judgment of the court was delivered by PATHAK J.- -These appeals by special leave are directed against the judgment and order dated February 14, 1978, of the High Court of Kerala dismissing two tax revision petitions arising out of assessments made under the Kerala General Sales Tax Act, 1963. The respondent, Messrs. K. Kelukutty, is a partnership firm dealing in timber. It consists of six partners. It filed returns of its taxable turnover for the assessment years 1968-69 and 1969-70 under the Kerala General Sales Tax Act, 1963, and the assessments w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of this court in State of Punjab v. Jullundur Vegetables Syndicate (1966] 17 STC 326. The word dealer has been defined by cl. (viii) of s. 2 of the Kerala General Sales Tax Act, 1963, to mean any person who carries on the business of buying, selling, supplying or distributing goods ........ and the word person has been defined by cl. (xvi-a) of s. 2 of the Act as including firm. Therefore, a partnership firm must be regarded under that Act as an assessable entity separate and distinct from its individual partners. That would be in line with the view taken by this court respecting partnership firm as an assessable entity under the I.T. Act. See CIT v. A. W. Figgies and co. [1953] 24 ITR 405 (SC). The question remains, however, whether, when the partners constituting a partnership firm carrying on one business constitute thereafter another partnership firm carrying on separate and distinct business, are there two distinct partnership firms in whose hands the turnover of the two businesses falls to be respectively assessed or is there in law only a single partnership firm liable to assessment on the turnover of both businesses? Before we proceed to examine t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 declared that although under the partnership law a firm is not a legal entity and only consists of the individual partners for the time being, it was a legal entity for the purposes of the income-tax law as well as the sales tax law. That was a case where this court was called upon to consider whether an assessment could be made on a firm under the Punjab Sales Tax Act after its dissolution on the turnover of sales effected during its existence. In our opinion, that question cannot be identified with the one before us. The Revenue has invited our attention to Mahendra Kumar Ishwarlal Company v. State of Madras [1968] 21 STC 72 (Mad), but in that case the Madras High Court has assumed that the same partners cannot constitute two different partnership firms, and on that assumption has concluded that no sale transaction could take place between the two firms. Except for the observations of Beaumont C.J. in Vissonji Sons Company [1946] 14 ITR 272 (Bom) and the overruled decision of the High Court of Andhra Pradesh in Venhata Narasimha Rao Co. [1976] 104 ITR 28, the High Courts, in the cases mentioned earlier, have proceeded to hold that in the eyes of the tax law, you can ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. We do not think the principle goes beyond the purposes of that scheme. It does not confer a corporate personality on the firm. Beyond the area within which that principle operates, the general law, that is to say, the partnership law, holds undisputed domain. Now, in every case when the assessee professes that it is a partnership firm and claims to be taxed in that status, the first duty of the assessing officer is to determine whether it is, in law and in fact, a partnership firm. The definition in the tax law defines an assessee or a dealer as including a firm. But for determining whether there is a firm, the assessing officer will apply the partnership law, subject of course, to any specific provision in that regard in the tax law modifying the partnership law. If the tax law is silent, it is the partnership law only to which he will refer. Having decided the legal identity of the assessee that it is a partnership firm, he will then turn to the tax law and apply its relevant provisions for assessing the partnership income. The Kerala General Sales Tax Act contains no provision which bears on the identity of a partnership firm. Therefore, recourse must be had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate entity or enjoys a juristic personality in that sense. The firm name is only a collective name for the individual partners. `But each partnership is a distinct relationship. The partners may be different and yet the nature of the business may be the same, the businesses may be different and yet the partners may be the same. An agreement between the partners to carry on a business and share its profits may be followed by a separate agreement between the same partners to carry on another business and share the profits therein. The intention may be to constitute' two separate partnerships and, therefore, two distinct firms. Or to extend merely a partnership originally constituted to carry on one business, to the carrying on of another business. It will all depend on the intention of the partners. The intention of the partners will have to be decided with reference to the terms of the agreement and all the surrounding circumstances, including evidence as to the interlacing or interlocking of management, finance and other incidents of the respective businesses. In the present case, there are two businesses, a business in timber and a business in saw dust. Both businesses are ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
