1. This judgment will dispose C.W.P. Nos. 622 to 634 of 1974 filed under articles 226 and 227 of the Constitution of India as they raise common question of facts and law.
2. M/s. Piara Ram Chetan Dass, petitioner No. 1 (hereinafter called as the firm), was a partnership firm consisting of three partners, namely, (1) Chetan Dass Bhatia, (2) Ram Lal Bhatia, and (3) Lachman Dass Bhatia. It had its office situated at No. 2046, Katra Tobacco, Khari Baoli, Delhi, and its branch office named and styled as M/s. Rama Hing Company also having its place of business at Katra Tobacco, Khari Baoli, Delhi. Both the head office and branch office carried on the business of purchase, sale and manufacturing of compound hing at their respective places of business mentioned above. The firm also had a godown situated at 15, Kolhapur Road, Delhi. The firm and its branch were registered as a dealer under the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act), vide registration certificate No. 473 granted to it under the Central Act. The said registration certificate prescribed quarterly returns of turnover for the firm. The firm and its branch were also registered as dealer under the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi (hereinafter called the local Act), vide registration certificate No. 981-A granted to it under the local Act. The said registration certificate also prescribed quarterly returns of the turnover under section 10 of the local Act for the firm. The firm had been filing its quarterly returns and depositing the tax due on self-assessment basis with the Government both under the Central Act and the local Act.
3. Before the notified authority/assessing authority concerned under the Central Act/local Act could accept the returns furnished by the firm as correct and complete or frame an assessment to determine the tax due from the firm under section 9 of the Central Act read with section 11 of the local Act or enable it to adjust the amount paid along with the return against the tax determined to be due from it, the firm was dissolved with effect from 9th September, 1969. The notified authority/assessing authority was notified on 11th September, 1969, of the dissolution of the firm. The Registrar of Firms was also informed on 18th September, 1969, that the firm M/s. Piara Ram Chetan Dass had been dissolved with effect from 9th September, 1969. The assessing authority issued and served upon the firm a notice dated 29th November, 1966, in the prescribed form S.T. XIV under section 11 read with section 14 of the local Act with respect to the quarterly returns filed under the local Act for the year 1965-66. This is the subject-matter of C.W.P. No. 634 of 1974. In all other cases for the purpose of making an assessment for the respective years, the notices were issued and served upon the firm after 9th September, 1969, the date of dissolution of the firm.
4. The petitioners appeared before the notified authority/assessing authority in response to the notices in the prescribed form and raised written objections assailing the jurisdiction of the notified authority/assessing authority to frame an assessment on the ground that there was no provision in the Central Act/local Act authorising him to make an assessment against the dissolved firm and pleaded for the vacation of the notice being wholly unwarranted, illegal and without jurisdiction. The notified authority/assessing authority went into the question whether M/s. Piara Ram Chetan Dass, the dealer-firm, was dissolved with effect from 9th September, 1969. The notified authority/assessing authority recorded a finding that the factum of dissolution of the firm was established in the case and it was held accordingly. The notified authority/assessing authority noticed the law laid down by the Supreme Court in the case of State of Punjab v. Jullundur Vegetables Syndicate : 2SCR457 , on the point that a dissolved firm cannot be assessed. It is thereafter that the following orders were passed on 31st March, 1970, in each case :
'I, thereforee, do not assess the said firm to any tax and file the case accordingly.'
5. The petitioners claiming as the surviving partners and the legal representatives of the deceased partner Shri Chetan Dass then made separate applications in each case claiming refund of the tax deposited with the four quarterly returns in each year. The stand taken in those applications was that the payments made by the firm along with the four quarterly returns towards the tax were never appropriated towards the revenue and that the amount in each case was lying with the sales tax department as money belonging to the partners of the firm for and on their behalf. By an identical order in each case, the applications were rejected on the ground that no assessment could be framed being a dissolved firm and without framing the assessment orders, no refund could accrue. The petitioners then filed a revision petition in each case before the Commissioner of Sales Tax. The revision petition was dismissed by the Assistant Commissioner (Sales Tax), New Delhi, by an identical order holding that the notified authority/assessing authority was justified in rejecting the petitioners' application for refund of amount deposited along with the returns as the notified authority/assessing authority had not framed any assessment against the dissolved firm and the case was filed without making any assessment. The petitioners then filed a second revision in each case before the Financial Commissioner, Delhi Administration, Delhi.
6. Before the Financial Commissioner, the petitioners urged the following pleas :
1. That the order dated 31st March, 1970, as passed by the notified authority/assessing authority after determining the objections on merits is an assessment order in the eye of law.
2. That as no tax accrued due as a result of the said assessment order, the amount paid with the returns by the firm became refundable to the petitioners under section 9 of the Central Act read with section 12 of the local Act.
3. It was not necessary that a specific mention should have been made in the assessment order of the amount of refund due.
4. That the amount of refund due was to be calculated by the authorities concerned during the refund proceedings initiated on the application of the petitioners.
7. In the impugned order dated 20th February, 1973, passed by the Financial Commissioner in each case, the inference drawn is that the order dated 31st March, 1970, could not be an assessment order as the petitioners objected to the jurisdiction of the notified authority/assessing authority to pass an assessment order, which objections were sustained and the notified authority/assessing authority did not assess the dissolved firm to any tax and filed the case accordingly. The Financial Commissioner further held that the order dated 31st March, 1970, being dubbed as an assessment order, did not indicate the amount determined in the proceedings under section 12 of the local Act. The revision petitions were dismissed by a detailed reasoned order by the Financial Commissioner.
8. The petitioners then moved the Lt. Governor of Delhi under section 9 of the Central Act read section 21(1) of the local Act for making a reference to the High Court. The Lt. Governor dismissed the petitioners' application vide order dated 27th August, 1973. The petitioners, however, did not resort to the remedy available to them under section 21(2) of the local Act. It is one of the objections raised by the respondents that the petitioners have not availed of an alternative and efficacious remedy.
9. As already noticed above, the petitioners had raised before the notified authority/assessing authority the question whether the firm had actually been dissolved. The notified authority/assessing authority examined the evidence produced before it and came to the conclusion that the firm named and styled as M/s. Piara Ram Chetan Dass had not conducted any business with effect from 9th September, 1969, that the deed of dissolution dated 9th September, 1969, had been executed by all the partners inter se and they had voluntarily submitted to the dissolution, that the assets and liabilities had been actually divided as per the deed of dissolution, that there was no closing stock left with the firm at the time of the dissolution of the firm, that the firm had not operated any bank account after the dissolution and the account standing to the credit to the partnership firm had been divided amongst the partners, that the premises in which the firm was conducting business had been taken over by M/s. Chetan Dass & Company separately registered with the department and that above all one of the partners Shri Chetan Dass had died in the meanwhile. The factum of the dissolution of the firm and the finding recorded by the notified authority/assessing authority is not questioned by any of the parties before me. Except in one case for the year 1965-66 in which the notice in the prescribed form S.T. XIV under section 11 read with section 14 of the local Act was issued on 29th November, 1966, in all other cases, the notice in the prescribed form S.T. XIV was issued after 9th September, 1969. In all the cases, however, the notified authority/assessing authority did not assess the firm to any tax and filed the case as it was a case of a dissolved firm. In State of Punjab v. Jullundur Vegetables Syndicate : 2SCR457 , their Lordships were concerned with the question of the statutory right of a taxing authority under the provisions of the East Punjab General Sales Tax Act, 1948, to assess a dissolved firm in respect of its pre-dissolution turnover. The firm in that case was dissolved on 11th July, 1953, and an intimation of the dissolution was sent to the department under section 16 of the said Act on 18th July, 1953. In the meantime, on 30th May, 1953, that firm had been assessed to sales tax in respect of its turnover for the period 4th October, 1952, to 31st March, 1953. That assessment was quashed and the Sales Tax Officer made a fresh assessment on that turnover on 3rd September, 1955. At the relevant time, there was no provision expressly empowering the assessing authority to assess a dissolved firm in respect of its turnover before it dissolution. Their Lordships held :
'The scheme of the Act is a simple one. A firm is a dealer : the said dealer is assessable to tax on its turnover, if its turnover exceeds the prescribed limit. It cannot do business while being liable to pay tax under the Act without getting itself registered and possessing a registration certificate. It is assessed to tax under section 11 of the Act in the matter prescribed there under. It it discontinues its business, it shall within the specified time inform the prescribed authority accordingly. A dealer and its partners are jointly and severally responsible to pay the tax assessed on the dealer. But there is no provision expressly empowering the assessing authority to assess a dissolved firm in respect of its turnover before its dissolution. The question is whether such a power can be gathered by necessary implication from the other provisions of the Act.
The first question is whether a firm is a separate assessable entity for the purposes of the Act or whether it is only a compendious term used to denote a group of partners. The definition of 'dealer' takes in three categories of assessable units, namely, person, firm or a Hindu joint family. The substantive and the procedural provisions of the Act prescribe the mode of assessment and realization of the tax assessed on such a dealer. If we read the expression 'firm' in substitution of the word 'dealer', it will be apparent that a firm has been given the same status under the Act as is given to it under the Income-tax Act. Under section 3 of the Income-tax Act also a 'firm' is treated as a unit of assessment and as a distinct assessable entity. Though under the partnership law a firm is not a legal entity but only consists of individual partners for the time being, for tax law, income-tax as well as sales-tax, it is a legal entity. If that be so, on dissolution, the firm ceases to be a legal entity. Thereafter, on principle, unless there is a statutory provision permitting the assessment of a dissolved firm, there is no longer any scope for assessing the firm which ceased to have a legal existence. As in the present case, admittedly, the firm was dissolved before the order of assessment was made, the said order was bad.
In this context as we have stated earlier, there cannot be a distinction on principle between an assessment made on a firm under a proceeding initiated before the dissolution and that made in a proceeding started after the dissolution. In either case, unless there is an express provision, no assessment can be made on a firm which has lost its character as an assessable entity.'
10. The material provisions of the East Punjab General Sales Tax Act, 1948, are in pari materia with the provisions of the Central Act and the local Act. An assessment on a dissolved firm cannot be made, whether the proceedings were initiated before or after the firm was dissolved. The notified authority/assessing authority applied the law laid down by the Supreme Court and did not rightly assess the firm to any tax and filed the case considering it as a case of dissolved firm. No amount of tax due from the dealer-firm has been assessed under section 11 of the local Act.
11. The refund under section 12 of the local Act to a dealer is of any amount of tax or penalty paid by such dealer in excess of the amount due from him. If the notified authority/assessing authority has not gone into the question of levy, assessment and collection of the tax liability of a dealer, then there is no basis to go into the question whether the amount of tax or penalty paid by the dealer is in excess of the amount due from him. The payment of the tax on returns under the Sales Tax Act is largely based on the theory of self-assessment. The tax is paid by the dealers themselves on the basis of their own estimates and figures of the gross turnover for a particular period after taking such items there from as were admissible under the law to arrive at the taxable turnover. The dealers themselves compute the tax payable under the return itself and the amount is deposited in the Government treasury. If the Commissioner is not satisfied that the returns furnished are correct and complete, the Commissioner can proceed in such manner as may be prescribed to assess to the best of his judgment the amount of the tax due from the dealer. If the returns furnished are correct and complete, then there is no jurisdiction to assess to the best of his judgment the amount of the tax due from the dealer. If there is no jurisdiction to pass an order of assessment assessing the amount of the tax due from the dealer, then the return furnished has to be taken as correct and complete. As in the present case with the dissolution of the firm, there is no jurisdiction to make the assessment for the amount of tax due from the dealer, the result is that the returns furnished have to be taken as correct and complete with the result that the computation of the tax made in the returns itself and the amount deposited in the Government treasury has to be taken as tax due on the basis of the self-assessments. The view taken by the authorities under the Central Act/local Act rejecting the applications of the petitioners for refund is clearly supportable in law. It is, thereforee, not necessary to go into the other questions raised by the parties during the hearing.
12. For the above reasons, the writ petitions fail and are dismissed. On the facts and circumstances of the case, I make no order as to costs.
13. Petitions dismissed.
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