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Sri Pulak Chandra Paul Vs. Commercial Tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case NumberMandamus Appeal Nos. 743, 744 and 745 of 1975
Judge
Reported in[1978]42STC209(Cal)
AppellantSri Pulak Chandra Paul
RespondentCommercial Tax Officer and ors.
Appellant AdvocateGopal Chandra Chakraborty and ;Narayan Chandra Bhattacharjee, Advs.
Respondent AdvocateSamarendra Nath Dutta, Adv.
DispositionAppeal dismissed
Cases ReferredState of Punjab v. Jullundur Vegetables Syndicate
Excerpt:
- .....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. 4. the above observation was made by the supreme court in connection with the east punjab general sales tax act, 1948. under section 2(d) of that act, 'dealer'.....
Judgment:

M.M. Dutt, J.

1. These three appeals are directed against the orders See [1975] 36 S.T.C. 98 passed by Amiya Kumar Mookerji, J., whereby the learned Judge dismissed the writ petitions of the appellant.

2. The case of the appellant was that he along with his brother Kanak Paul had been carrying on a partnership business under the name and style of M/s. Gopal Chandra Paul & Sons. It was alleged that the firm was a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941 and the Central Sales Tax Act, 1956 and held registration certificates under both the Acts. The said partnership firm was dissolved on 17th November, 1972. The appellant intimated respondent No. 1, the Commercial Tax Officer, Chinabazar Charge, about the dissolution of the firm by two separate letters, both dated 21st April, 1973. By the said letters, the appellant requested respondent No. 1 to cancel the registration certificates which were also surrendered along with the said letters. In spite of the dissolution of the firm, respondent No. 1 served notices for the assessment of sales tax under both the said Acts for the periods of 4 quarters ended previous to the day of Aukshay Tritiya, 1376 B. S., 1377 B. S., 1378 B. S. and 1379 B. S. The appellant challenged the said notices and the authority of respondent No. 1 to assess the dissolved firm by filing writ petitions in this court. It was contended by the appellant that in the absence of any provision in either of the said Acts for the assessment of sales tax of a dissolved firm, respondent No. 1 acted illegally and without jurisdiction in issuing the said notices. The said contention of the appellant was overruled by the learned Judge and the writ petitions were dismissed. Hence these appeals.

3. The only question that is involved in these appeals is whether a dissolved firm can be assessed under the Bengal Finance (Sales Tax) Act, 1941, or under the Central Sales Tax Act, 1956. Mr. Chakraborty, learned Advocate appearing on behalf of the appellant, has placed strong reliance on the following observation of the Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 S.T.C. 326 (S.C.):

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 the 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 realisation 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 is an independent assessable unit for the purposes of the Act. Indeed, 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.

4. The above observation was made by the Supreme Court in connection with the East Punjab General Sales Tax Act, 1948. Under Section 2(d) of that Act, 'dealer' means any person, firm or Hindu joint family engaged in the business of selling or supplying goods in East Punjab. A firm is not a legal entity under the Indian Partnership Act. The East Punjab General Sales Tax Act has conferred a legal status on a firm and has recognised a firm as a legal entity by including the same in the definition of the word 'dealer'. The observation of the Supreme Court in the above case to the effect, that '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', on which much reliance has been placed on behalf of the appellant, should not, in our opinion, be read de hors the context in which the observation has been made. In making the said observation, the Supreme Court noticed the inclusion of a firm in the definition of the word 'dealer' under Section 2(d) of the East Punjab General Sales Tax Act. Thus it follows that unless a firm is recognised as a legal entity or a separate unit under the provisions of any law, it cannot be treated as such.

5. Before the amendment of the Bengal Finance (Sales Tax) Act, 1941, by the Bengal Finance (Sales Tax) (West Bengal Amendment) Act, 1950, the definition of the word 'dealer' as contained in Section 2(c) was, inter alia, as follows:

Dealer' means any person, firm or Hindu joint family engaged in the business of selling or supplying goods in West Bengal....

6. The said definition was substituted by Section 2(b) of the said Amendment Act as follows:

dealer' means any person who carries on the business of selling goods in West Bengal and includes the Government.

7. It is apparent that although the legislature conferred on a firm a legal status and recognised it as a legal entity for the purpose of assessment of sales tax, by the said Amendment Act such legal status was withdrawn. In considering whether the word 'dealer' also includes a firm for the purpose of assessment of sales tax as a separate entity, the alteration made in the definition of 'dealer' by the said Amendment Act is of much significance.

8. The learned Advocate for the appellent has drawn our attention to the definition of the word 'person' under Section 3(32) of the Bengal General Clauses Act. Under the said Act 'person' shall include any company or association or body of individuals, whether incorporated or not. It is contended that as a firm consists of a body of individuals, it is a person and is therefore a dealer within the meaning of the definition of that term. It is true that 'dealer' is a person under the definition, but the question is whether the firm can be regarded as a person under the definition as given in Section 3(32) of the Bengal General Clauses Act. The definition of the word 'person' does not include a firm. The partners of a firm who constitute the same, being a body of individuals, would be a person under the definition. A dealer being a person it would include the partners of a firm as a body of individuals and hence a person. It is difficult to hold that under the definition of the word 'person', a firm is included as a separate entity independent of the partners. The definition of various terms under the Bengal General Clauses Act would apply unless there is anything repugnant in the subject or context. In view of the fact that by Section 2(b) of the said Amendment Act 'firm' has been excluded from the definition of the word 'dealer', it is apparent that it is the intention of the legislature that a firm shall not be treated as a separate unit for the purpose of assessment of sales tax under the Bengal Finance (Sales Tax) Act, 1941. Considered in this context, it is difficult to hold that a firm is a person within the meaning of the term under the Bengal General Clauses Act.

9. In support of the contention that a firm is a dealer, strong reliance has been placed on behalf of the appellant on the decision of the Supreme Court in Murarilal Mahabir Prasad v. Shri B. R. Vad A.I.R. 1976 S.C. 313. In that case, the Supreme Court had to consider whether a firm was a dealer within the meaning of Section 2(6) of the Bombay Sales Tax Act, 1953. Chandrachud, J. (as he then was), who delivered the majority judgment, observed as follows:

Turning first to the Act of 1953, Section 2(6) of that Act defines a 'dealer', in so far as relevant, to mean any 'person' who carries on the business of selling or buying goods. This definition does not by itself make the firm a distinct assessable entity and the position obtaining under the general law that a firm is but a compendious name for the partners who compose it remains outstanding. But Section 3(35) of the Bombay General Clauses Act, 1904, defines 'person' as including 'any company or association or body of individuals, whether incorporated or not'. The provisions of the Bombay General Clauses Act apply to the interpretation of the Bombay Acts unless there is anything repugnant in the subject or context of the Act under review. There is no such repugnancy and therefore the word 'person' in Section 2(6) of the Act of 1953 must be taken to include a 'body of individuals' that a firm is. Not only is there nothing in the Act of 1953 which is repugnant to the notion that the firm could be a dealer, but Section 24 of that Act furnishes a strong indication for saying that the framers of the Act intended to recognise the firm as a legal entity. That Section provides that every dealer who is liable to pay the tax and who is an undivided Hindu family, an association or a club, society, firm or company, shall send to the prescribed authority a declaration stating the name of the person who shall be deemed to be the manager of such dealer's business. Section 24 would be meaningless in its reference to a 'firm', unless the fundamental assumption of the provision was that a firm as distinct from its partners is an independent assessable entity. That assumption is made good by the combined operation of Section 2(6) of the Act of 1953 and Section 3(35) of the Bombay General Clauses Act.

10. Since the Act of 1953 considers a partnership firm to be a legal entity, on the dissolution of the firm its legal personality would cease to exist. On the firm ceasing to have existence in the eye of law, there can be no assessment of the firm as such for, in the absence of an express statutory provision or a clear statutory intendment, a dead person cannot be assessed.

11. It is clear from the above observation that the ratio for holding a firm as a legal entity or a dealer within the meaning of Section 2(6) of the Bombay Sales Tax Act, 1953, is that in view of Section 24 of the said Act, the legislature intended to recognise a firm as a legal entity. It has been observed, Section 24 would be meaningless in its reference to a 'firm', unless the fundamental assumption of the provision was that a firm as distinct from its partners is an independent assessable entity. In our opinion, it will not be correct to say that merely on the basis of the definition of the term 'person' under Section 3(35) of the Bombay General Clauses Act, 1904, the Supreme Court held that a firm was a legal entity, as contended on behalf of the appellant. This decision of the Supreme Court is, therefore, of no assistance to the appellant. In order to sub- stantiate legislative intent to recognise a firm as a separate assessable unit under the Bengal Finance (Sales Tax) Act, 1941, reliance has been placed on behalf of the appellant on the application forms for registration under Section 7 or Section 8 of the Act as prescribed by Rule 4(i) of the Bengal Sales Tax Rules. The relevant portions of form IA are as follows :

I,...,son of..., proprietor/partner/karta/principal officer/director/managing director, on behalf of the persons whose particulars are given on the reverse...carrying on the business known as...hereby apply on behalf of the said business for a certificate of registration under the Bengal Finance (Sales Tax) Act, 1941.

The proprietor or any partner of, or any other person having an interest in the business has interest in no other business anywhere in India/has interest in the following other businesses in India:-

___________________________________________________________Name of the proprietor, Name and particulars Address placespartner or other person of the business of places ofbusiness______________________________________________________________________________________________________________________The name and address of the proprietor/partners of the business/all persons having any interest in the business together with their age, father's name, etc., are shown in the statement below (to be filled in if the applicant is not a company incorporated under the Companies Act, 1956, or under any other law).

12. Thereafter there is a tabular form. Column (2) of that form is 'name of the proprietor/partner/or other person in full'. Form IB is somewhat like form IA and contains the words 'proprietor/partner'. Annexure A to form IB requires certain statements of facts to be furnished by 'proprietor/ partner of applicant-dealer. for registration' under the Act.

13. It is urged on behalf of the appellant that as in the said application forms for registration, partners have been referred to as applicants, it should be presumed that the intention of the legislature is that a firm should be assessed as a legal entity or a separate assessable unit. We are unable to accept this contention. The most significant fact which appears from these application forms is that nowhere the word 'firm' has been mentioned. Partners of the firm being a body of individuals are persons within the meaning of the term under the Bengal General Clauses Act. If the rulemaking authority had any such intention to accept applications from partnership firms, it would have surely included in the application forms, the word 'firm'. In our view, so far as the legislative intent is concerned, the inclusion of the word 'partner' in the application forms cannot be equated with Section 24 of the Bombay Sales Tax Act, 1953, referred to by the Supreme Court in the case of Murarilal Mahabir Prasad v. Shri B. R. Vad A.I.R. 1976 S.C. 313. The decision of the Delhi High Court in Ranjit Singh v. Assessing Authority [1972] 29 S.T.C. 499 was a case under the Bengal Finance (Sales Tax) Act,_1941, as extended to the Union Territory of Delhi. In that case, a learned single Judge of the Delhi High Court relied on the decision of the Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 S.T.C. 326 (S.C.) and held that after the dissolution of the partnership firm no assessment could be made of the dissolved firm. The question whether a firm is a legal entity or not was not considered in the said decision of the Delhi High Court. In that case, the partnership firm itself was registered as a dealer. In our view, that case does not lend any support to the contention of the appellant.

14. Even if we assume that the contention of the appellant is correct, namely, that a firm is a legal entity and is assessable as a separate unit, there is still a great difficulty for the appellant. We have already referred to the application forms for registration and it has been noticed that there is no provision in the forms entitling a firm to make an application in the firm name. In the instant case, in paragraph 13 of the affidavit-in-opposition of respondents Nos. 1 and 2, it has been, inter alia, stated as follows :

13. In reply to the statements made in paragraph 8 of the petition I state that the dealers themselves described Sarbasree Pulak Chandra Paul and Kanak Chandra Paul carrying on business under the name and style of M/s. Gopal Chandra Paul & Sons as the dealers; and registration certificate was issued describing the said persons as dealers, in accordance with the provisions of law.

15. Mr. Samarendra Nath Dutta, learned Advocate appearing on behalf of the respondents, produced before us the applications made by the appellant and his brother Kanak Chandra Paul for granting registration certificates. It appears that although they described themselves as partners, the appli cant was not the firm. The registration certificates also do not show that the firm was registered; on the contrary they show that the certificates were issued in the names of the appellant and his brother Kanak Chandra Paul. As the firm was not registered, as it could not be, the question of dissolution of the firm is quite immaterial. So, even on the assumption which we have made, the appellant has no cause against the respondents. The learned Judge was, therefore, perfectly justified in dismissing the writ petitions of the appellant. No other point has been argued in these appeals.

16. For the reasons aforesaid, these appeals are dismissed, but there will be no order for costs in any of them.

17. Let the operation of this judgment remain stayed for a period of six weeks from date, as prayed for on behalf of the learned Advocate for the appellant.

D.C. Chakravorti, J.

18. I agree.


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