R.L. Narasimham, C.J.
1. In these three references, under Section 24(1) of the Orissa Sales Tax Act, 1947, the Member, Board of Revenue, Orissa, has referred the following questions for the decision of this Court:-
(1) Whether the transactions commencing with collection of raw hides at Jharsuguda, sending hides to Madras to be tanned and exported, and the tanning of hides there and exporting the same to foreign exporters, is a continuation of the series of acts in the course of the export of goods out of the territory of India or not?
(2) Whether the exemption claimed under Article 286(1)(b) of the Constitution is rightly based on deductions claimed in the returns themselves as 'turnover' on goods sold to foreign exporters, or is an afterthought ?
(3) Whether the proviso to Article 286(2) governs also the provisions of Article 286(1) (a) and (b) of the Constitution ?
(4) Whether in the alternative the deductions claimed in the returns may be exempted from taxation under Article 286(2) of the Constitution ?
(5) Whether a partnership firm still continues to function for the purposes of the Sales Tax Act even though it is dissolved by agreement under a registered deed of dissolution and notice of dissolution is given to the appropriate authorities, and the Income-tax Department deals with the business of the dissolved firm as that of an individual and imposes a higher rate of tax and levies it ?
(6) Whether the use of the firm name only by one of the partners who continues the same business after the dissolution of the partnership at will and after retirement of the only other partners renders the business liable as a firm for the purpose of taxation under the Sales Tax Act?
But in his order of reference he has rightly pointed out that question No. (6) is the most important, and once that question is answered against the petitioner, the other questions will not arise for decision.
2. Messrs Fazl Bhai Dhala & Co. was a partnership firm carrying on business at Jharsuguda in Sambalpur district. Fazl Bhai Dhala was a firm carrying on business in Madras. The Sales Tax Authorities levied sales tax in respect of what they considered to be transactions of sale between M/s. Fazl Bhai Dhala & Co. of Jharsuguda and Fazl Bhai Dhala of Madras, for the quarters ending 30th September, 1950, 31st December, 1950, and 31st March, 1951. The petitioner challenged the levy of sales tax on the ground that for the quarters in question the original firm of Messrs Fazl Bhai Dhala & Co. of Jharsuguda had ceased to exist due to the dissolution of the partnership firm and that the business was carried on only by Fazl Bhai Dhala as an individual, and that the same person carried on the business at Madras. It was therefore urged that as a person cannot sell property to himself the transactions between the Jharsuguda firm and the Madras firm would not amount to 'sale' and that they would merely amount to movement of goods from an agent to the principal, or from the main office of a person to his branch office.
3. The aforesaid contention was rejected by the Sales Tax Authorities mainly on the ground that notwithstanding the averment of the petitioner there was no reliable evidence to show that the partnership firm of Messrs Fazl Bhai Dhala & Co. ceased to exist during the relevant period. It is admitted that at Jharsuguda there was a partnership firm consisting of Fazl Bhai Dhala and Abdul Bhai Dhala. This firm was registered in 1939 for a period of ten years. It was contended before the Sales Tax Authorities that, after the expiry of that period, the partnership between the two became a partnership-at-will by virtue of Section 17(b) of the Indian Partnership Act and it was dissolved by giving a notice as required by Section 23(1) of that Act on 18th January, 1950, prior to the quarters in question. The Sales Tax Authorities, however, rejected this contention mainly because no intimation of the change in the nature of the firm was given to the department, under Section 18(a) of the Orissa Sales Tax Act, read with Rule 14 of the Orissa Sales Tax Rules. They also attached some importance to the fact that for the quarters in question returns under Section 11 of the Sales Tax Act were filed by Messrs Fazl Bhai Dhala & Co. of Jharsuguda and the treasury receipted challans showing payment of the tax for the quarters in question showed that payment was made by the firm of Fazl Bhai Dhala & Co. The letter-head, the invoices, cash memos-all bear the name of the firm and the books of account also indicated that the firm continued to exist. In view of these facts 'the Sales Tax Department refused to believe the story of the petitioner that the firm had been dissolved on the 18th January, 1950, and that the business was carried only by Fazl Bhai Dhala in his individual capacity after that date. The petitioner produced before the Sales Tax Authorities his income-tax assessment order which showed that the Income-tax Authorities treated the partnership as having been dissolved; but the Sales Tax Authorities refused to accept the findings of the Income-tax Authorities as binding on them in view of all the other circumstances mentioned above.
4. The question as to whether the Jharsuguda business was carried on by the partnership, Fazl Bhai Dhala & Co., for the quarters in question or else whether that firm was dissolved on the 18th January, 1950, and whether after that date the business was carried on by Fazl Bhai Dhala in his individual capacity, is essentially a question of fact on which the findings of the Sales Tax Authorities must be held to be binding on us. The order of the Collector of Commercial Taxes in revision, which was mechanically endorsed by the Member, Board of Revenue, fully discusses all the relevant pieces of evidence before coming to a decision on this question. The income-tax assessment order may be a relevant piece of evidence but it is open to the Sales Tax Authorities to take a different view especially in view of the conduct of the petitioner in not reporting about the dissolution of the partnership under Section 18(a) of the Orissa Sales Tax Act and in his continuing to file returns and maintaining accounts in the name of the firm. I must therefore hold that there was no error of law in the finding of the Collector of Commercial Taxes that during the relevant quarters the partnership firm Fazl Bhai Dhala & Co., of Jharsuguda continued to exist as a 'registered dealer' for the purpose of assessment of sales tax, subject to all the liabilities arising out of the registration of the firm under the Act and the omission to modify the registration certificate, as required by Section 18(a) of the Orissa Sales Tax Act.
5. This finding must necessarily be fatal to the petitioner's case. Admittedly the Madras business was run by Fazl Bhai Dhala in his individual capacity; and in his books of account the transactions in question were shown as 'sales'. A partnership firm may enter into a transaction of sale with an individual businessman even though the latter may be one of the partners of that firm.
6. Question No. (6) is therefore answered as follows:
On the findings of fact of the Collector of Commercial Taxes it must be held that the partnership firm continued to exist for the purpose of the Orissa Sales Tax Act.
The other questions do not arise for decision and need not be answered. The reference is disposed of accordingly. There will be no order for costs.
G.C. Das, J.
7. I agree.