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1980 Supreme(Kar) 108
Karnataka High Court
S.M.SULIGAVI - Appellant
Versus
JUDICIAL MAGISTRATE I CLASS - Respondent
Decided On : 06-16-80
The absence of a notice of demand rendered the application before the Magistrate not maintainable and all further action taken was contrary to law.
Headnote:
S. 13 - Karnataka Sales Tax Act, 1957 - S. 13, S. 15(2), Rule 43 - The court discussed the necessity of individual notices to each ex-partner of a dissolved firm before filing an application for enforcement of recovery. It emphasized that a notice of demand under S. 13(1) is mandatory for a partner to be regarded as a defaulter, and failure to comply with the demand notice is the basis for making an application for recovery under S. 13(3). The court held that the absence of a notice of demand rendered the application before the Magistrate not maintainable and all further action taken was contrary to law.
Fact of the Case:
The petitioner, a partner in a dissolved firm, objected to the recovery of tax due from the firm, arguing that their liability was limited to their share. The Magistrate overruled the objection, leading to the petitioner's revision petitions.
Finding of the Court:
The court found that the absence of a notice of demand rendered the application before the Magistrate not maintainable and all further action taken was contrary to law.
Issues: The main issue was the necessity of individual notices to each ex-partner of a dissolved firm before filing an application for enforcement of recovery.
Ratio Decidendi: The court emphasized that a notice of demand under S. 13(1) is mandatory for a partner to be regarded as a defaulter, and failure to comply with the demand notice is the basis for making an application for recovery under S. 13(3).
Final Decision: The court set aside the orders of the Judicial Magistrate and directed him to proceed to pass appropriate orders in the light of the judgment.
( 1 ) THESE two revision petitions are, presented by the petitioner under subsection (4) of S. 13 of the Karnataka, sales Tax Act, 1957, (hereinafter referred to as the Act ). The facts of the case in brief are as follows: the petitioner was a partner along with three others, of a partnership firm under the name and style of ganesh Trading Company at Bagalkot. It is not in dispute that the firm was dissolved in or about the year 1975. Thereafter by virtue of the power vested in the authority under the Act under sub-section (2) of S. 15 of the act assessments were made against the dissolved "firm for the assessment years 1974-75 and 1975-76. Thereafter, applications were filed under S. 13 (3) (b) of the Act before the court of the judicial Magistrate First Class, Bagalkot, for the recovery of the tax due from the firm. In the application though the firm was shown as respondent, in the note below the application, the names and addresses of all the four partners were furnished. After the application was filed the Magistrate passed orders attaching the properties of the partners. . Thereafter, the petitioner and another filed their objections before the Magistrate objecting to the legality of the proceedings. The objection was that as the petitioner and another had only 35 per cent share in the dissolved firm, their liability to pay the tax was only to that extent and therefore the entire tax due could not be recovered from them on the ground of default in payment of tax by the, firm. The objection was overruled by the learned magistrate on, the ground that the liability of the partners of a dissolved firm was joint and several and if the entire tax due from the firm was recovered from the petitioner and another, their remedy was to obtain reimbursement from other partners by taking appropriate proceedings. Aggrieved by the said orders of the learned Magistrate, these two revisions petitions have been presented to this Court.
( 2 ) IN the revision petitions, the main contention urged by the petitioner is that the application filed under S. 13 (3) (b) of the Act before the learned judicial Magistrate was not preceded by a notice of demand served on the petitioner and therefore, the petitioner was not a defaulter in terms of S. 13 (2) of the. Act and consequently, the proceedings before the Magistrate was without the authority of law.
( 3 ) IN the meanwhile, it appears the magistrate had sent requisition to the revenue authorities for taking action to recover the tax due by selling the properties attached and accordingly properties of some of the partners have been sold and the auction purchasers have got themselves impleaded as respondents to these revision petitions.
( 4 ) THE learned counsel appearing for the 2nd respondent, the Assistant 'commissioner of Commercial Taxes (Assessment) Belgaum submitted as follows:- the partnership firm of which the petitioner was a partner was dissolved and the fact of dissolution was published in the issue dated 2-11-1975 of the samyuktha Karnataka paper. S. 15 (2) of the Aet empowers the department to assess a dissolved firm. The said sub-section also empowers the department to serve notice of demand only on one of the partners and therefore the department had served a notice of demand on H. Kankanmali who was one of the partners and who had been authorised by the other partners to represent them in the assessment proceedings. In support of the last submission, he produced a postal acknowledgement which indicates that notice of demand had been served on. H. Kankanmali on 27-6-1977. Though the learned counsel did not dispute that no notice of demand under S. 13 (1) of the Act had been served on the petitioner and other partners he urged that sendee of demand notice on one of the partners was sufficient in view of S. 15 (2) of the Act read with sub-rule (2) of. Rule 43 of the Rules and the receipt of notice by such partner was on behalf of the firm.
( 5 ) THEREFORE, the question for
