P.K. Tare, C.J.
1. This order shall also govern the disposal of Misc. Petition No. 429 of 1971 (Chhotelal Keshavram through its partner Jayantilal, etc. v. 1. Sales Tax Officer, Rajnandgaon, 2. Additional Tahsildar, Sales Tax Recovery-cum-Assistant Sales Tax Officer, Rajnandgaon, District Durg). These two writ petitions between the same parties were heard tegether, although they involve slightly different questions. This order shall govern the disposal of both these cases; but we shall have to deal with them separately.
2. We first take up Misc. Petition No. 835 of 1972 wherein the order dated 10th July, 1972 (petitioner's annexure A-2) passed by the Additional Assistant Commissioner of Sales Tax, Raipur, is challenged on the ground that after the petitioner's case had been decided by the Supreme Court in his favour, the Legislature had no legislative competence to validate the provisions of the Madhya Pradesh General Sales Tax Act, 1958, retrospectively so as to set at naught the Supreme Court decision. This question arose on the following facts. There were two periods of assessment, that is, from 22nd October, 1949, to 9th November, 1950, and from 10th November, 1950, to 30th November, 1951. The sales tax authorities assessed the petitioner to sales tax and the matter was ultimately decided by their Lordships of the Supreme Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax  14 S.T.C. 976 (S.C.),. Thereafter, the State Legislature passed the Madhya Pradesh General Sales Tax (Second Amendment) Act, 1964 (Act No. 20 of 1964) and by Section 7 of the Amendment Act, a new Section 18-A was inserted retrospectively, as Section 21(2) of the Amendment Act provided that the amendment made by Section 7 thereof shall be deemed to have formed part of the principal Act from the commencement thereof. Subsequently, another Amendment Act was also passed, viz., the Madhya Pradesh General Sales Tax -(Amendment and Validation) Act, 1967 (Act No. 23 of 1967). It is the contention of the petitioner in this writ petition that the State Legislature could not, amend the Act retrospectively so as to nullify a judgment of the Supreme Court between the same parties. According to the petitioner, the principle of res judicata will be applicable to the instant case. Therefore, that is the only aspect to be examined in this writ petition.
3. For the sake of convenience, we may reproduce Section 7 of the M.P. General Sales Tax (Second Amendment) Act, 1964, which is as follows:
7. Insertion of new Section 18-A.--After Section 18 of the principal Act, the following section shall be inserted, namely:--
'18-A. Assessment of tax escaping assessment in respect of the period prior to the commencement of this Act.-- (1) Where a dealer was registered or licensed under any of the Acts repealed by Section 52 and has not been assessed to tax for any period prior to the commencement of this Act, then notwithstanding --
(i) any judgment, decree or order of any court, tribunal or any other competent authority to the effect that the turnover for that period cannot be assessed to tax on the ground that the assessment has not been made within the period prescribed therefor under the relevant provisions of the relevant repealed Act; or
(ii) anything contained in Section 19 of this Act or in the relevant repealed Act; he shall within five years from the date of the commencement of the Madhya Pradesh General Sales Tax (Second Amendment) Act, 1964, be assessed to tax for that period.
(2) Where, before the commencement of this Act, a proceeding for assessment had been initiated or an assessment had been made, for any period prior to such commencement, in respect of a dealer registered or licensed under any of the Acts repealed by Section 52, then notwithstanding any judgment, decree or order of any court, tribunal or any other competent authority, such proceeding or assessment shall be and shall always be deemed to have been validly initiated or made, notwithstanding that the period laid down for initiation or assessment had already expired and such proceeding or assessment shall not be called in question in any court or tribunal, or before any other authority merely on that ground.'
Originally, the period was three years which by the said Amendment Act was raised to five years and the sales tax authorities were given the power to assess within that period despite any judgment of any court or tribunal. Thus, clearly, the Amendment Act set at naught the Supreme Court decision between the same parties which is reported in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax  14 S.T.C. 976 (S.C.). This action of the State Legislature is challenged as unconstitutional on two grounds, namely, that the principle of res judicata being applicable, the State Legislature could not nullify a decision of the Supreme Court and, secondly, as Article 141 of the Constitution of India provides that the law declared by the Supreme Court shall be the law of the land, the State Legislature could not nullify that declaration of the Supreme Court. In the present case, we are not concerned with the M.P. General Sales Tax (Amendment and Validation) Act, 1967, which amended other sections; but we may be concerned with Section 10 of the said Act which amended Section 52 of the principal Act relating to the period of five years.
4. Learned counsel for the petitioner invited attention to the pronouncements of their Lordships of the Supreme Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax  14 S.T.C. 976 (S.C.), Satyadhan v. Smt. Deorajin Debi A.I.R. 1960 S.C. 941, Official Assignee v. H. BasavannaA.I.R. 1963 S.C. 754 and State of West Bengal v. Hemant Kumar A.I.R. 1966 S.C. 1061, and urged that the principle of res judicata applies to the present case and, as such, the State Legislature could not nullify the decision of the Supreme Court between the same parties. There is no doubt that as laid down by their Lordships of the Supreme Court in the said cases, the principle of res judicata is applicable although it may not apply to an appeal to the Supreme Court, by special leave from final decision after remand as Section 105(2) of the Code of Civil Procedure would not be applicable to the Supreme Court. Otherwise, the principle will be applicable to all decisions between the parties and will be binding on them. For instance, in the case of Official Assignee v. H. Basavanna A.I.R. 1963 S.C. 754, a final order of adjudication had been passed by the Bombay High Court under the Presidency-Towns Insolvency Act, 1909, and, subsequently, the District Court, Bellary, purported to decide the matter. Their Lordships of the Supreme Court laid down that the principle of res judicata being applicable to the parties, the effective order would be the one passed by the Bombay High Court and the order passed by the Bellary District Court under the Provincial Insolvency Act, 1920, will be of no legal effect. Bat, in our opinion, this principle will be subject to one exception, namely, that the Legislature would have the power to amend the law retrospectively so as to nullify even decisions of law courts. Presently, we shall advert to those cases wherein their Lordships have made a pronouncement in this behalf.
5. As regards the second point, learned counsel for the petitioner invited attention to the pronouncement of their Lordships of the Supreme Court in Janapada Sabha v. C.P. Syndicate Ltd. 1971 M.P.L.J. 467 (S.C.). In that case, their Lordships of the Supreme Court laid clown that it is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been but it is not open to the Legislature to say that a judgment of a court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of the law shall be otherwise than as declared by the court. Therefore, the limitation on the Legislature would be that it cannot declare ineffective a law declared by the Supreme Court, although it may have power to amend an enactment retrospectively. That would be the effect of Article 141 of the Constitution of India. Further on, their Lordships found that although the M.P. Koyala Upkar (Manyatakararn) Adhiniyam, 1904, purported to declare the law validating a cess, Section 51 of the C.P. Local Self-Government Act, 1920, was absolutely untouched and the same had not. been amended. In that view, their Lordships declared Section 3 of the M.P. Koyala Upkar (Manyatakaran) Adhiniyam, 1964, ineffeciive inasmuch as it could not be deemed to have amended Section 51(2) of the C.P. Local Self-Government Act, 1920. That case, in our opinion, will clearly be distinguishable. If the Legislature had amended Section 51(2) of the C.P. Local Self-Government Act, 1920, retrospectively, such a law would probably have been upheld by their Lordships of the Supreme Court
6. In this connection we might advert to the pronouncement of their Lordships of the Supreme Court in the following cases, viz., State of Kerala v. Joseph and Co  25 S.T.C. 483 (S.C.), Hira Lal Rattan Lal v. Sales Tax Officer  3i S.T.C. 178 (S.C.), A.K. Mehboob Co. v. State of M.P. A.I.R. I966 S.C. 1637, Assistant Commissioner, Madras v. B. and C. Co.  75 I.T.R. 603 (S.C.), Shri P.C. Mills v. Broach Municipality A.I.R. 1970 S.C. 192, Ahmedabad Corporation v. New S.S. and Wvg. Co. A.I.R. 1970 S.C. 1292 and Krishnamurlhi and. Co. v. State of Madras A.I.R. 1972 S.C, 2455. We are, therefore, of opinion that as the Legislature enacted Section 18-A(2) retrospectively with effect from the commencement of the principal Act, the said Amendment Act, viz., the M.P. General Sales Tax (Second Amendment) Act, 1964 (Act No. 20 of 1964) cannot at all be challenged. We feel that it is not contrary to Article 141 of the Constitution of India. Such a retrospective amendment will necessarily abrogate the principle of res judicata that might be applicable to the parties. Therefore, we would reject the contention of learned counsel for the petitioner on this point and would hold that the M.P. General Sales Tax (Second Amendment) Act, 1964, was validly enacted and it will have the effect of nullifying an earlier decision between the parties because the principal Act itself was amended and not that any action was validated retrospectively.
7. We may then consider the other aspect, that is, amendment of the principal Act by Sections 20 and 21 of the M.P. General Sales Tax (Second Amendment) Act, 1964, which are as follows:
20. Amendment of Section 51. -- (1) In Sub-section (2) of Section 51 of the principal Act, after Clause (nn), the following clause shall be inserted, namely: --
'(nnn) the form and manner in which, the date by which and the authority to whom the particulars of goods transported shall be furnished under Section 29-B.'
(2) For Sub-section (3), the following sub-section shall be substituted, namely:--
'(3) In making any rule the State Government may direct that--
(a) a breach thereof shall be punishable with fine not exceeding five hundred rupees, and if the offence is a continuing one, with a fine not-exceeding twenty-five rupees for every day the offence continues; and (b) in respect of contravention of any rule, the Commissioner may impose a penalty not exceeding one hundred rupees:
Provided that no such penalty shall be imposed save without giving the person concerned a reasonable opportunity of being heard.'
21. Certain amendments made by this Act to have retrospective effect. --(1) Amendment made by Section 2 shall be deemed to have come into force with effect from the 15th day of August, 1962.
(2) Amendments made by Section 7 and Clauses (a) and (d) of Section 9 shall be deemed to have formed part of the principal Act from the commencement thereof.
The effect of the said sections was that Section 18-A of Amendment Act No. 20 of 1964 will be deemed to have been inserted retrospectively right from the commencement of the principal Act.
8. Subsequently, the M.P. General Sales Tax (Amendment and Validation) Act, 1967, by Section 10, amended Section 52 of the principal Act. Section 10 is as follows:
10. Amendment of Section 52. -- After Sub-section (1) of Section 52 of the principal Act, the following sub-section shall be inserted, namely:--
'(1-a) Notwithstanding anything contained in Sub-section (1) a dealer registered or licensed under any of the repealed Acts who has not been assessed to tax for any period prior to the commencement of this Act shall be assessed to tax in accordance with the provisions of the repealed Acts as if this Act had not been passed, subject however to the condition that the period prescribed therefor under the relevant provisions of the relevant repealed Act shall extend till the expiry of five years from the date of commencement of the Madhya Pradesh General Sales Tax (Second Amendment) Act, 1964 (20 of 1964).'
Further, Section 15 of the said Act of 1967 validated certain proceedings. It is as follows:
Where before the first day of September, 1967, a proceeding for assessment had been initiated or an assessment had been made, for any period prior to the commencement of the principal Act in respect of a dealer registered or licensed under any of the Acts repealed under Section 52 of the principal Act, then notwithstanding any judgment, decree or order of any court, tribunal or any other competent authority, such proceeding or assessment shall be and shall always be deemed to have been validly initiated or made in accordance with law as if the amendment made by Section 10 had been in force at all material times, when such proceedings were initiated or assessment was made and shall not be called into question in any court or tribunal or before any other authority merely on the ground that the period laid down therefor under the relevant repealed Act, had already expired.
So far as the said Amendment Act of 1967 is concerned we would uphold its validity on the principle laid down by their Lordships of the Supreme Court in the cases mentioned above with reference to the enactment of Section 18-A(2) by the M.P. General Sales Tax (Second Amendment) Act, 1964.
9. We, therefore, think that the petitioner can have no grievance on these two grounds. The contentions fail and are accordingly rejected. Besides these two contentions, learned counsel for the petitioner had no other grievance in respect of Misc. Petition No. 835 of 1972. As such the petition fails and is accordingly dismissed with costs as the demand for recovery of the assessed tax cannot at all be challenged by the petitioner. Counsel's fee shall be Rs. 200. The outstanding amount of the security deposit after deduction of costs, if any, shall be refunded to the petitioner.
10. Then we come to Misc. Petition No. 429 of 1971. In this case, the facts are that the petitioner originally was a joint Hindu family firm. Subsequently, it was converted into a partnership-firm. This has been going on right from the year 1949 onwards. The joint Hindu family firm transferred its assets and liabilities to the partnership-firm except the liability for taxes, that is, income-tax and sales tax. However, such an agreement between the transferor and the transferee will certainly not be binding on the taxing authorities; but the taxing authorities will be governed by the statutory provisions only.
11. The amount due from the transferor-firm was Rs. 5,525. The taxing authorities started proceedings against the transferee-firm by issuing a notice dated 16th March, 1971 (petitioner's annexure A-1), demanding the payment of the amount from the transferee-firm. Hence this writ petition. We have already indicated that the taxing authorities will not be bound by any agreement between the transferor and the transferee firms, but they will certainly be bound by the statutory provisions.
12. Before considering the instant question we may take note of the fact as to how the petitioner-firm has been changing its legal identity. Originally, when there was a joint Hindu family firm, two brothers, viz., Ghanshyamdas and Rameshchandra, formed that firm as members of the joint Hindu family. That deed, however, is not on record. Subsequently, by the deed dated 22nd December, 1954, the two family members continued as partners while another gentleman, Shri Amritlal Somabhai, was made a partner (vide respondents' annexure R-I). Shri Amritlal Somabhai was to have an eight anna share, while the two brothers were to have a four anna share each. Subsequently, another partnership was entered into on 11th November, 1958 (respondents' annexure R-II). Some more partners were introduced, viz., Seth Bhailal Bhai, Shri Kantilal and Shri Chandrakant, and their shares were also readjusted. There was another deed of partnership dated 15th March, 1959 (respondents' annexure R-1II). Two more partners were introduced, namely, Jayeshkumar and Himanshu and again their shares were readjusted. Thus the partnership consisted of six partners; Jayeshkumar and Himanshu, being minors, were merely admitted to the partnership without any liability. Subsequently, another deed of partnership was executed on 20th January, 1064 (respondents' annexure R-IV), whereby some partners were allowed to retire and a manager was appointed to exercise certain powers. Thus, the petitioner-firm has been changing its constitution as also its legal identity from time to time. It may be that the same may have been guided by business considerations or even by the consideration of making it difficult for the taxing authorities to recover arrears of taxes. But those considerations will be wholly immaterial.
13. The matter is governed by Section 33 of the M.P. General Sales Tax Act, 1958, which is as follows:
33. Tax payable by transferee of business -- (1) When the ownership of the business of a dealer liable to pay the tax is entirely transferred, the transferor and the transferee shall jointly and severally be liable to pay the tax together with penalty, if any, payable, in respect of such business for any year or relatable to a part of any year and remaining unpaid at the time of the transfer and the transferee shall also be liable to pay the tax on the sales or purchases of goods effected by him with effect from the date of such transfer and shall within thirty days of the transfer apply for registration unless he already holds a certificate of registration.
(2) When a dealer liable to pay the tax transfers the ownership of a part of his business the transferor shall be liable to pay the tax in respect of the stock of goods transferred along with the part of his business which is not so transferred, as if the goods have been sold by him, unless the tax on such goods is leviable on the last sale.
(3) Where any goods have already been subjected to tax under this Act, nothing contained in Sub-Section (1) or Sub-section (2) shall render such goods liable to tax for the second time.
(4) When a dealer is a firm or association of persons or a joint Hindu family and such firm, association or family has discontinued business --
(a) the tax payable under this Act by such firm, association or family for the period up to the date of such discontinuance may be assessed and determined as if no such discontinuance had taken place; and
(b) every person who was at the time of such discontinuance a partner of such firm or a member of such association or family shall, notwithstanding such discontinuance, be liable severally and jointly for the payment of the tax assessed as payable by such firm, association or family, whether such assessment is made prior to or after such discontinuance and, subject as aforesaid the provisions of this Act shall apply as if every such person or partner were himself a dealer:
Provided that when it is found that a change has occurred in the constitution of the firm or association or that such firm or association has transferred its business and the tax payable by a partner or a member as aforesaid cannot be recovered from him, it may be recovered from the firm or association as reconstituted, or from the transferee:
Provided further that where a tax is recovered from the firm or association or transferee as aforesaid, such firm or association or transferee shall be entitled to recover the same from the partner or member who was originally liable to pay the tax.
Explanation. -- The dissolution or reconstitution of a firm or association of persons or partition of a joint Hindu family shall be deemed to be discontinuance of business within the meaning of this Sub-section.
(5) The provisions of this section shall apply mutatis mutandis to any arrears of tax payable under an Act repealed by Section 52 and due for any year or relatable to a part of any year prior to such transfer of business, discontinuance or dissolution of the partnership or the partition of undivided Hindu family, as the case may be.
The instant case is governed by Sub-section (4) of the said section and particularly the first proviso which requires that the amount should be first recovered from the transferor-firm or its members or partners and if the same be not recoverable, then alone it may be recovered from the members or partners of the transferee-firm. It is no doubt true that the liability is joint and several; but the proviso makes it clear that an attempt has first to be made to recover the amount from the members or partners of the transferor-firm and if it is found to be irrecoverable, then only from the members or partners of the transferee-firm. The taxing authorities made no attempt to recover the amount from the transferor-firm. On the other hand, an amount of Rs. 4,000 in deposit with the taxing authorities was returned to the transferor-firm. Therefore, it is clear that the action of the taxing authorities in recovering the amount from the transferee-firm in the first instance is contrary to the proviso to Section 33(4) of the M.P. General Sales Tax Act, 1958. Of course, if they find that the amount is not recoverable from the members or partners of the transferor-firm, then only they might resort to recovery proceedings as against the members or partners of the transferee-firm. In the present case, the period of sales tax due was relating to 17th February, 1950, to 31st January, 1951. In this connection we might advert to the following cases which would support the contention raised on behalf of the petitioner, namely, State of Bombay v. Morarji Padamsey  7 S.T.C. 704, Hatim Mahmood v. Assistant Commercial Tax Officer, Mount Road, Madras  10 S.T.C. 510 and Deputy Commercial Tax Officer v. Sha Sukraj Peerajee  21 S.T.C. 5 (S.C.). Therefore, we are of the opinion that the petition deserves to succeed partly. We, accordingly, quash the order dated 29th April, 1971 (petitioner's annexure A-3), as also the demand notice (petitioner's annexure A-4) partly, stating that although the liability of the members or partners of the transferee-firm is there, an attempt should be made to recover the amount from the members or partners of the transferor-firm in the first instance and, in the alternative, from the members or partners of the transferee-firm. To that extent, we would modify the said order and the notice and issue a writ of mandamus accordingly. Consequently, this petition succeeds partly and is allowed to the extent indicated above. However, in the circumstances of the case, we order that there shall be no order as to costs of this petition in view of the divided success. The security amount shall be refunded to the petitioner.