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G. S. Bedi and Others, Kanpur Vs. the Sales Tax Officer, Kanpur and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberCivil Misce Maneous Writ Petition No. 3342 of 1974
Reported in(1976)5CTR(All)0001A
AppellantG. S. Bedi and Others, Kanpur
RespondentThe Sales Tax Officer, Kanpur and ors.
Excerpt:
- - sales tax act, in spite of dissolution or reconstitution of a firm the erstwhile as well as the continuing partners, jointly and severally are liable to pay sales tax for the period till dissolution or reconstitution of the firm k. he was one of the continuing partners as well......of demand upon g.s. bedi, petitioner no. 1. a perusal of this notice shows that it was a notice of assessment and demand for the year 1973-74. it has no relevancy to the controversy raised before us, which relate to assessment year 1963-64.6. till any of the partners of the old firm or an authorised representative of the firm is served with a notice of demand no proceedings for recovery of sales tax dues can be launched against the firm or its partners.7. in the result, the petition succeeds and is allowed. the recovery certificate dated 9.3.1971 in so far as it proceeds against the four petitioners is quashed.8. the petitioners would be entitled to their costs.
Judgment:

Satish Chandra J. - The four petitioners were partners of a firm called 'Standard & Co.' at Kanpur. On 27-12-63, the firm was dissolved and reconstituted. The four petitioners retired from this firm. Other partners continued the business of the firm in the same name. The erstwhile firm was assessed to sales-tax for the period 1st April 1963 to December, 1963. The assessment order and the notice of demand were served upon one C. R. Sethi who was at that time accountant of the continuing firm. In the due course recovery proceedings were initiated against the four petitioners. They have challenged the recovery proceedings principally on the ground that they had been served with any notice of demand, they are not defaulters and coercive measures to recover the sales-tax dues could not be launched against them.

2. The respondents have relied upon a letter of authority executed by K. L. Raizada, one of the partners of the new firm saying :

'We hereby appoint Sri C. R. Sethi as our authorised representative for the year 1963-64. He is fully authorised to file or receive or sign any statement or document regarding this case. All their actions shall be binding on us.'

3. Under section 3-C of the U.P. Sales Tax Act, in spite of dissolution or reconstitution of a firm the erstwhile as well as the continuing partners, jointly and severally are liable to pay sales tax for the period till dissolution or reconstitution of the firm K. L. Raizada was one of the partners. He was one of the continuing partners as well. The various partners who continued the partnership firm were thus jointly and severally liable to pay tax till December, 1963. Consequently, Sri K. L. Raizada could act on behalf of the reconstituted firm which consisted of some of the partners of the old firm also for the assessment year 1963-64. The latter of authority could not be said to be on behalf of the petitioners who were partners of the erstwhile firm and had retired long before the letter of authority was executed. Further, the letter of authority shows that Sri C. R. Sethi, Accountant, was authorised to deal with the case for the year 1963-64 which would mean the assessment proceedings for that year. The assessment proceedings came to an end when the assessment order was made by the assessing authority. Likewise, with the assessment order the letter of authority of C.R. Sethi to represent the firm also came to an end.

4. In this view it cannot be said that the service of assessment order and the notice of demand on C.R. Sethi was served on an authorised agent of the firm. The position, therefore, is that the old firm was not served with notice of demand or the assessment order, with the result that it cannot be said that the firm become a defaulter. No coercive measures to recover sales tax dues could be launched against the firm of any of its partner.

5. During the pendency of the present writ petition the assessing authority served a copy of the assessment order and a notice of demand upon G.S. Bedi, petitioner No. 1. A perusal of this notice shows that it was a notice of assessment and demand for the year 1973-74. It has no relevancy to the controversy raised before us, which relate to assessment year 1963-64.

6. Till any of the partners of the old firm or an authorised representative of the firm is served with a notice of demand no proceedings for recovery of sales tax dues can be launched against the firm or its partners.

7. In the result, the petition succeeds and is allowed. The recovery certificate dated 9.3.1971 in so far as it proceeds against the four petitioners is quashed.

8. The petitioners would be entitled to their costs.


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