1. This is an application under Section 44(2) of the Madhya Pradesh General Sales Tax Act, 1958. By this application, the petitioner seeks a direction that the Sales Tax Tribunal be directed to refer certain questions of law for the decision of this Court.
2. The assessment in question is for the period 1st January, 1953 to 27th November, 1957, under Section 18(6) of the Madhya Pradesh General Sales Tax Act, 1958. On 20th November, 1957, the petitioner, Shri Kishanchand s./o. Jeewatram, applied for registration of the business known as 'Kishanchand Govindram' showing himself as the proprietor. In column 2 of the application for registration, Shri Kishanchand included the name of his brother Govindram as the person having interest in the business; but the words in column 2, namely, ' names and addresses of partners' were scored out. The business for which the certificate was applied was cloth business. When this application was presented, it appears that an enquiry was instituted. In the enquiry it was found that Jeewatram, the father of Kishanchand and Govindram, was carrying on the business of cloth from before 1952 as a karta. In the year 1952 it was found that the turnover of the business of the joint family exceeded Rs. 25,000. The liability to pay the tax was, therefore, determined with effect from 1st January, 1953. The Sales Tax Officer also came to the conclusion that the business in the name of 'Kishanchand Govindram', for which the registration was applied and was granted, was the business of the joint family of which Jeewatram was the karta and Kishanchand and Govindram were the coparceners. On this basis, the business known as 'Kishanchand Govindram' was assessed for the period 1st January, 1953 to 27th November, 1957, under Section 18(6) of the Madhya Pradesh General Sales Tax Act, 1958, and the tax liability was determined at Rs. 4,833.51 nP. inclusive of Rs. 100, the penalty imposed for carrying on business without obtaining registration.
3. The order of the Sales Tax Officer was confirmed by the Appellate Assistant Commissioner of Sales Tax, Bilaspur, by order dated 4th July, 1962. The Appellate Assistant Commissioner, while confirming the order, relied on the admissions of Jeewatram to the effect that his sons were not doing any business independently of their own and that they were all living jointly with him and that his sons were also looking after the cloth business, which was being run by him, and that the same business continued unsuspended till 1958 when the business styled as 'Kishanchand Govindram' came into being. On the basis of the abovesaid admissions and also the statements in the application for registration, the Appellate Assistant Commissioner held :
It is an accepted fact that a partnership business is not a separate legal entity and therefore the attempt by the appellant to show that the so-called partnership business made up of two brothers who were members of a Hindu undivided family was separate from that run by the karta of the family prior to the coming into being of this business cannot be accepted.
4. Before the Board of Revenue only two grounds were pressed, namely, (i) that the business done by 'Kishanchand Govindram' was not in continuation of the business done by their father Jeewatram ; and that the firm of 'Kishanchand Govindram ' is a distinct and separate legal entity; and (ii) that on the basis of the reports and the decisions of the Sales Tax Authorities, Jeewatram himself was not liable to any tax during the period of assessment. The Board of Revenue observed :
It is admitted by Jeewatram himself that he was carrying on business as a karta of the joint Hindu family. On certain date his sons started separate business in the name of Kishanchand Govindram. According to the explanation in Section 33(4), this amounted to a discontinuance of the business. The tax, therefore, could be assessed under Section 33 of the Act as if no discontinuance has taken place. According to Section 33(4)(a) every member of the family will be liable jointly or severally. According to the first proviso to Section 33(4)(b) the liability can be passed on to a reconstituted firm or association.
The contention of the learned counsel for the appellant that because the appellants have formed a firm the liability cannot pass on to them does not hold good.
From this decision of the Tribunal it appears that the Tribunal proceeded to decide the case on the assumption that the business of Kishanchand Govindram started in the year 1957 was a separate business and was not a continuation of the joint family business but held on the provisions of Section 33 of the Madhya Pradesh General Sales Tax Act that the liability of the business of the joint family could be fastened on the business carried on by Kishanchand Govindram.
5. The petitioner's application under Section 44(1) of the Madhya Pradesh General Sales Tax Act was rejected by the Tribunal on the ground that no question of law was involved in the case. We are of the opinion that the Tribunal was in error in rejecting the application under Section 44(1). Under Section 33 of the Madhya Pradesh General Sales Tax Act in the case of a joint Hindu family, when the business of that family is discontinued, all its members are made liable, though the tax liability is confined to the period during which the joint family business was carried on. But, in that case the assessee would be the joint family as such, and not the business started by some of the members of the family, after the discontinuance of the joint family business. Though the individual members can be assessed as dealers with respect to the joint family business, as their liability is joint and several, they should be assessed qua members of the joint Hindu family for the past business and not as dealers doing business of their own subsequent to the discontinuance. It is, no doubt, true that the assessment is for the period anterior to the date from which the business under the name and style of 'Kishanchand Govindram' was started, but it is not clear from the order of the Tribunal as to whether Kishanchand and Govindram have been made liable only as members of the joint family or whether they are being assessed as a partnership firm of Kishanchand Govindram. The Tribunal has also not recorded any finding as to whether the business carried on under the name of Kishanchand Govindram was a business of the joint family or whether it was the separate business of Kishanchand and Govindram. We are, therefore, satisfied that questions of law arise out of the decision of the Tribunal.
6. The petitioners have framed as many as 14 questions. But, in our view, only the following questions arise for our consideration :
(1) Whether, on the facts and in the circumstances of the case, and on a true interpretation of Section 33 of the Madhya Pradesh General Sales Tax Act, 1958, the Tribunal was right in holding that the business carried on under the name and style of 'Kishanchand Govindram' could be assessed for the joint family business carried on by Jeewatram from 1st January, 1953 to 27th November, 1957 ?
(2) Whether, on the facts and in the circumstances of the case, Kishanchand and Govindram could be made liable for the business of the joint family when the joint family as such was not proceeded against ?
(3) Whether, on the facts and in the circumstances of the case, the assessment proceedings shall be deemed to be proceedings against Kishanchand and Govindram only as members of the joint family and not as partners of the business 'Kishanchand Govindram ' ?
(4) Whether, on the facts and in the circumstances of the case, the finding of the Sales Tax Authorities that the business 'Kishanchand Govindram' is a continuation of the joint family business and not a separate business is justified in law ?
7. The Sales Tax Tribunal (Board of Revenue) is directed to draw up a statement of the case and refer the abovesaid questions for our decision within three months from the date this order is conveyed to the Tribunal. The petitioner shall get costs of this petition from the Commissioner of Sales Tax, Madhya Pradesh. Hearing fee Rs. 100.