1. This is a petition under Article 226 of the Constitution praying for the issue of a writ in the nature of mandamus directing the Deputy Commercial Tax Officer, Osmanganj, Hyderabad, to forbear from further proceedings on the basis of a notice dated gth November, 1957, served by him on the petitioner. That notice was issued by the respondent under Rule 56 of the Andhra Pradesh General Sales Tax Rules, 1957, requiring the petitioner to appear in person and to produce or cause to produce all the books of account with relevant vouchers of Messrs Jaya Dayal Roshanlal, Osmanganj, for the years 1954-55 and 1955-56. The petitioner, it is not denied, carried on business in grains with one Kanhailal under the firm name of Jaya Dayal Roshanlal, dealers in grains and commission agents. But according to the petitioner, the firm which came into existence on 26th October, 1954, was dissolved on 18th May, 1956.
2. The petitioner impeaches the validity of the proceedings initiated by the notice. In the first place, he challenges the right of the respondent to assess a dissolved firm. His contention is that when the firm was dissolved on 18th May, 1956, it ceased to exist as an entity for assessment and that there is no provision under the Hyderabad General Sales Tax Act (XIV of 1950) which provides for the assessment of a dissolved firm. He says that even the service of notice on him with reference to the business of a firm that ceased to exist is bad because he no longer represents the dissolved firm. He also contends that the attempted assessment is barred by time, that the goods in which the firm dealt were not liable to sales tax and that the rules under which the notice purports to be given are ultra vires. The grounds on which the several contentions are based will be mentioned later.
3. In order to consider the soundness of these contentions, it is necessary first to summarise briefly some of the provisions of the Hyderabad General Sales Tax Act. By Clause (e) of Section 2 of the Act, a 'dealer' is defined as meaning 'any person...firm...or any association or associations of persons engaged in the business of buying, selling or supplying goods in the.... State whether for a commission, remuneration or otherwise.' Section 4 of the Act provides that for every year every dealer whose turnover for the year is not less than Rs. 7,500 shall, save as otherwise provided in the Act, pay a tax at a specified rate on so much of his turnover for the year as is attributable to transactions in goods other than exempted goods. 'Turnover' is defined as meaning 'the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration.' Vide Clause (m) of Section 2. The points of sale at which the tax is leviable are stated in Section 5. Section 10 provides that 'every dealer whose probable turnover...for any year of assessment referred to in Section 4 is not less than Rs. 5,000...shall be registered under this Act.' Section 11 provides that 'no person who is not registered as a dealer' is entitled to collect any amount by way of tax. Section 12 deals with the procedure to be followed by the assessing authority. Sub-section (1) of the section enacts that 'every dealer whose turnover in the period of assessment referred to in.... Section 4, is seven thousand five hundred rupees or more in a year shall submit such return or returns relating to his turnover in such manner and within such periods as may be prescribed.' Sub-section (2) of that section says that' if the assessing authority is satisfied that any return submitted under Sub-section (1) is correct and complete, he shall assess the dealer on the basis thereof.' Sub-section (3) provides that where no return submitted by the dealer appears to the assessing authority to be incorrect or incomplete, the assessing authority may assess the dealer to the best of his judgment. By Sub-section (4), provision is made enabling the assessing authority in the alternative to assess a dealer for any year subsequent to 1951-52' as if his transactions in that year had been the same as in the previous year.' Section 13 deals with the payment and recovery of tax and other dues payable under the Act and inter alia provides that the tax assessed shall be paid in such manner in such instalments, if any and within such1 time, not being less than 15 days from the date of service of notice of assessment, as may be specified in such notice. Sub-section (2) of that section provides for the imposition of a penalty. Section 26 enables the Government to make rules 'to carry out the purposes of this Act' and in particular and without prejudice to the generality of that power, such rules may provide, inter alia, by Clause (c) for 'the assessment to tax under this Act of businesses which are discontinued or the ownership of which has changed '; by Clause (f) 'the assessment to tax under this Act of any turnover which has escaped assessment and the period within which such assessment may be made, provided that such period shall not exceed three years from the end of the year for which the turnover was assessable '; and by Clause (k) 'generally regulating the procedure to be followed and the forms to be adopted in proceedings under this Act.' By Sub-section (5) of this section, 'all rules made under this section shall be published in the Jareeda and upon such publication shall have effect as if enacted in this Act.'
4. Now under Rule 34 of the Hyderabad General Sales Tax Ruler, 1950, 'If a dealer or licensee enters into partnership in regard to his business, he shall report the fact to the licensing) registering and assessing author rity within thirty days of his entering into such partnership 'and the rule also provides that 'the dealer or licensee and the partner shall jointly and severally be responsible for the payment of the tax or licence fee leviable under the Act'. By Rule 35 it is provided that' if a partnership is dissolved, every person who was a partner shall send a report of the dissolution to the licensing, registering and assessing authority within thirty days of such dissolution '. Rule 36(a) lays down that a dealer or a licensee who discontinues or sells or otherwise disposes of the whole or any part of any business carried on by him, is required to notify the fact to the assessing or the licensing authority concerned within 30 days thereafter.
5. Now on the basis of the above provisions a firm carrying on business, being a dealer is bound to pay every year if its turnover for the year is not less than Rs. 7,500, a tax at a certain rate. The liability is imposed by Section 4. The firm is bound to submit a return or returns in the manner prescribed and if it does not submit a return or if the return submitted is incorrect or incomplete, the assessing authority is entitled to assess the firm to the best of his judgment. By virtue of the rules framed under Section 26 of the Act, the partners are jointly and severally responsible for the payment of the tax as well as the licence fees leviable and if a partnership is dissolved or if the dealer discontinues his business, it must be notified, in the first case to the licensing, registering and assessing authority and in the second case to the assessing or the licensing authority concerned within 30 days of dissolution or discontinuance. The liability upon the firm is imposed by the Act and the mode and manner of the assessment, which is a matter of procedure, is dealt with by the rules framed under the Act. A dealer cannot escape his (or its) liability by failing to submit a return or submitting an incorrect return. Further, if the dealer is a firm and is dissolved or discontinues its business, the department is entitled to proceed on the basis that it continues to exist and to do business unless and until it is informed about it. The contention urged on behalf of the petitioner that because the firm of which he was a member dissolved, although admittedly such dissolution was not brought to the notice of the authorities, no assessment on the basis of its business can be made even for the period during which it was in existence seems to me unsustainable. It cannot escape the liability by failing to discharge the duty imposed on it by the statutory rules.. The assessing authority can proceed on the basis that there was no dissolution. If the firm can be assessed then notice can be issued to the petitioner on the basis that he is a partner of that firm and represents that firm. The position might have been different, if the department had been notified of the dissolution.
6. The next point urged on behalf of the petitioner is that the assessments for the years 1954-55 and I955-56 are in the nature of escaped assessments within the meaning of Rule 32 of the rules and that no assessment can be made after 31st March, 1956, with respect to the first year and after 31st March, 1957, with respect to the second year. It is necessary to read the material portion of Clause (1) of Rule 32 in order to consider this argument. It reads thus :-
32. (1) If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the licence fee has escaped levy in any year, the assessing or licensing authority, as the case may be, may at any time within the year or the three years from the end of the year to which the tax or licence fee relates, assess the tax payable, on the turnover which has escaped assessment or levy the licence fee, after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary.
7. It seems to me that the language of the rule is clear and enables the assessing authority to assess the tax at any time within the year or three years from the end of the year to which the tax or licence fee relates. Now, as we have seen, the tax is payable for every year under Section 4. If the whole or any part thereof of the turnover of the business has escaped assessment to the tax payable in any year, the assessing authority may levy the assessment at any time within the year of assessment or three years from the end of the year to which the tax relates.
8. It is also contended for the petitioner that the notice served under Rule 56 of the Andhra Pradesh General Sales Tax Rules, 1957, is bad because the rules were framed by the Government on 10th June, 1957, while the Andhra Pradesh General Sales Tax Act came into effect only on 15th June 1957, except Section 1 of the Act. Under Sub-section (3) of Section 1, it was enacted that while that 'section (Section 1) shall come into force at once' the rest of that Act 'shall come into force on such date as the State Government may, by notification in the Andhra Pradesh Gazette, appoint'. By a notification G.0. Ms. No. 1091, Revenue, dated 10th June, 1957, the Government appointed 15th June, 1957, as the date on which the Act should come into force. The rules framed on 10th June, 1957, were framed by the Government at a time when the rule-making power was not yet vested in it under the Act. Whenever framed, the rules can come into effect only after publication and it is not denied that there was publication. I can see no objection to the rules becoming effective at the same time as the Act.
9. Another point taken on behalf of the petitioner is that as cereals and pulses are goods declared essential for the life of the community by Union Act LII of 1952, they are exempted goods under Article 286(3) of the Constitution of India as it stood unamended and were not liable to sales tax. Article 286(3) before it was amended on 19th September, 1956, was in these terms :-
286. (3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent.
10. This interdiction on the power of the State clearly applied only to laws passed by the Legislature of a State after the Constitution came into effect, because the words 'Legislature of a State' and 'Parliament' clearly refer to legislative bodies which came into existence under the Constitution. The limitation, therefore, imposed by this clause did not affect previous laws in force. The position was that under the Hyderabad General Sales Tax Act, the tax was payable only on goods other than exempted goods and 'exempted goods' are defined by Clause (f) of Section 2 as meaning 'goods specified in Schedule I.' Item 1 of Schedule 1 which was in force from 1st May, 1950, to 30th September, 1954, comprised all cereals and pulses. A Schedule was inserted by the Hyderabad General Sales Tax (Second Amendment) Act, 1954, which came into force from 1st October, 1954, the date when it received the assent of the President. In that new Schedule, cereals and pulses were no longer exempted goods. Thereafter, the Rajapramukh issued a notification imposing tax at the point of sale of these goods. There was again an amendment of the Hyderabad General Sales Tax Act by the Hyderabad General Sales Tax (Amendment) Act, 1955 (No. VII of 1955) which came into force from 14th May, 1955. By that amendment it was enacted that 'notwithstanding anything contained in this Act, so much of the turnover as is attributable to transactions in cereals and pulses...shall be liable to tax at the rate of 6 pies in the rupee at such one point only as may be specified by the Government by notification from time to time.' In accordance with this provision, a notification dated 14th May, 1955, was made by the Rajapramukh of the Hyderabad State directing the imposition of tax at the first point of purchase in regard to transactions in cereals. This Act also received the assent1 of the President. There is therefore no substance in the contention that the imposition of the tax on cereals is contrary to Article 286(3) of the Constitution.
11. A further point raised is that while the Act provides for the imposition of tax only on sales, the notification, so far as it directs the levy of tax at the purchase point, is ultra vires. Reference is made to Section 5 of the Act which is in these terms :
5. (1) The tax payable under Clause (1) of Section 3 or Clause (1) of Section 4 shall, save as provided in Section 6, be leviable in respect of every point in a series of sales by successive dealers or casual dealers.
12. The contention is that the Act contemplates the levy of tax only on sales and not on purchases. A similar argument with reference to the provisions of the Madras General Sales Tax Act and the Rules made thereunder was raised and was rejected in W.P. Nos. 417 and 946 of 1956 by a Divisional Bench of this Court consisting of the honourable the Chief Justice and Jaganmohan Reddy, J. The contention advanced there was that Section 5, Clause (ii), of the Madras Act contemplated levy only on the sale of the goods mentioned therein and that Rule 4-A (iv)(b) of the Turnover and Assessment Rules framed by the Government under the Act, which authorised the imposition of the tax on the purchase of the goods was repugnant to the section. Their Lordships pointed out that Section 3 of that Act corresponding to Section 4 of the present Act envisaged the levy of the tax on the turnover, that the definition of 'turnover' included a transaction of purchase, that the determination of the turnover was left to be provided for by the rules and that the rule so made was not repugnant to the main Act. Their Lordships referred to the decision of the Supreme Court in Konduri Buchirajalingam v. The State of Hyderabad  9 S.T.C. 397. and extracted a passage therefrom which clearly indicated that under the Hyderabad Act tax was leviable on the aggregate amount for which goods are either bought or sold. There is no substance therefore in the contention that the notification is repugnant to the provisions of the Act.
13. Another argument urged is that the delegation by the Act to the Government to fix the point at which tax is to be levied is bad as a delegation of legislative power. I am unable to see any substance in this submission. The Legislature has enacted that the tax is leviable in respect of every point of the series of sales. But by Section 6(ii) in the case of goods mentioned therein, they have limited its imposition at such one point only as may be specified by notification. The notification only specified the point at which the levy is to be made. It is clear that the tax is imposed by the Legislature and the notification merely determines the point at which it is to be levied.
14. All the above points are repeated in a number of other writ petitions which I am disposing of now and will not be separately dealt with therein.
15. I must mention that it is contended for the Government that they do not admit the dissolution of the firm and that the fact must be established first before the petitioner can raise the contention that a dissolved firm could not be assessed and that no notice can be served on the erstwhile partner of a dissolved firm. It is urged for them that this Court can only proceed on the basis of facts admitted or proved and cannot ascertain facts which are in dispute and that ascertainment of facts can only be done in appropriate proceedings under the Act. Reference has been made to the recent decision of the Supreme Court in Narayana Chetty v. Income-tax Officer, Nellore 1959 S.C.J. 250 where their Lordships observed that' the contention that the course adopted by the Income-tax Officer in making orders of fresh assessment is irregular and illogical is a matter concerning the merits of the orders of assessment and it cannot be said to raise any question of jurisdiction under Article 226 of the Constitution.' Any assessment that may follow the present notice may be made the subject of appeal, a second appeal and ultimately, if there is any question of law, even of revision to this Court. I may state that I am also inclined to uphold this contention urged on behalf of the Government.
16. For the foregoing reasons, this writ petition fails and is dismissed with costs. Advocate's fee Rs. 100.