A dissolved firm cannot be assessed to sales tax under the East Punjab General Sales Tax Act, 1948.

Judgment

SUBBA RAO, J.: This appeal on a certificate issued by the High Court of Punjab at Chandigarh raises the question whether a firm could be assessed to sales-tax after it was dissolved.

2. The facts may briefly be stated. Messrs. Jullunder Vegetable Syndicate was a firm doing business in Jullunder from October 4, 1952 to July 11, 1953. It was dissolved on July 11, 1953. An intimation of the dissolution of the firm under S. 16 of the East Punjab General Sales Tax Act 1948, hereinafter called the Act, was sent to the Department on July 18, 1953. The firm was assessed to sale tax on May 30, 1953, by the Sales Tax Officer under the provisions of the Act in respect of its turnover for the period between October 4, 1952 and March 31, 1953; but the said assessment order was quashed on April 11, 1955, by the Financial Commissioner on the ground that the authority which made the assessment had no jurisdiction to do so. On September 3, 1955, the Sales Tax Officer made a fresh assessment on the turnover of the said firm. Its taxable turnover was fixed at Rs. 15,04,091-11-3 and was assessed to sales tax in a sum of Rs. 47,022-14-0. It is not clear from the record whether after the order of the Financial Commissioner fresh proceedings were initiated by the Sales Tax Officer or whether the earlier proceedings initiated by him before the dissolution of the firm were continued thereafter. But from the question formulated for the decision of the Full Bench of the High Court, which is the subject-matter of this appeal, it appears that the firm was dissolved before the proceeding for the assessment were initiated. The frame of the question indicates that after the order of the Financial Commissioner quashing the original order of assessment on the ground that the assessing authority had no jurisdiction, fresh proceedings were started for assessment. We shall, therefore, proceed to consider the question raised in the appeal on that assumption. On appeal, the Deputy Excise and Taxation Commissioner, by his order, dated October 20, 1956, reduced the figure of turnover and also correspondingly reduced the tax payable to a sum of Rs. 30,049-12-0. On revision, the Financial Commissioner, rejecting the contention of the firm that the assessment proceedings could not be taken against a firm after its dissolution confirmed the assessment. At the instance of the assessee the following question was referred to the High Court for its decision under S. 22 of the Act:

"Whether a partnership firm, which is a registered firm under the provisions of the Punjab Sales Tax Act and which was in existence throughout the period for which assessment of sales tax has to be made, ceased to be liable to the said assessment by the mere fact that it has dissolved before the proceedings for assessment are initiated."

A Full Bench of the Punjab High Court answered the question in the affirmative. The main reason given by it for its decision was that a firm was a separate assessable entity under the Act and that there was no machinery provided under the Act for assessing a firm after its dissolution in respect of its turnover of business before the said dissolution. The State of Punjab, on a certificate issued by the High Court, has preferred the present appeal to this Court.

3. Mr. K. S. Chawla, learned counsel, for the State, raised before us the following points: (1) a firm under the Act is not a separate legal entity and, therefore, an assessment thereunder can be made on the group of partners who constituted the firm before it was dissolved; (2) even if it was a separate assessable unit, dissolution of a firm does not put an end to its liability for assessment till its registration certificate is cancelled by the appropriate authority; (3) the High Court proceeded on a misapprehension that the assessment proceedings were initiated afresh the order of the assessing authority was quashed by the Financial Commissioner, but in fact after the said order of the Financial Commi