Partners are jointly and severally liable for the firm's pre-dissolution liabilities as per Section 25 of the Partnership Act and Section 15(2) of the Karnataka Sales Tax Act. The penalty under Section 13(2) is deemed to be interest and is statutorily payable by the partners.

( 1 ) ON a reference made by one of us (Puttaswamy, J.), being of the opinion that the ruling of this court in Ganesha Narayana Hegde Doddamane v. Commercial Tax Officer [1977] 40 STC 407; (1977) 2 Kar LJ 508 needs reconsideration these cases were posted before us for disposal.

( 2 ) THE petitioners were partners of a firm called "kantilal Padamshi and Co. " of Hubl. This firm was carrying on business in cotton, cotton seeds, etc. , and was also a commission agent. The firm was a registered "dealer" both under the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the KST Act), and the Central Sales Tax Act, 1956 (hereinafter referred to as the CST Act ). The firm was assessed to taxes for different periods both under the KST and CST Acts. But before the taxes due and payable by the firm could be recovered, the firm came to be dissolved. Thereafter, the Commercial Tax Officer, II Circle, Hubli, Dharwar District (hereinafter referred to as the C. T. O.) served demand notices on the firm demanding payment of a sum of Rs. 1,22,529. 56 which included taxes due and payable and the penalty levied under section 13 (2) of the KST Act. Payments not having been made by the firm, he issued recovery certificate to the tahsildar, Savanur, who attached the properties of the petitioners by his order, exhibit A, made on 22nd February, 1973, and notified the sale of the attached properties (exhibits B and C ). The petitioners have challenged in these writ petitions exhibits A, B and C.

( 3 ) SRI W. K. Joshi, learned Advocate, appearing for the petitioners, submitted that a partner is not liable to pay pre-dissolution liability of the firm relying on Ganesha Narayana Hegde's case (1978 )7 CTR (Kar )79 , 1976 (1 )Karlj233 , [1977 ]40 STC400 (Kar );. In any event, he argued the payment demanded includes penalty levied and the petitioners cannot be made liable to pay penalty.

( 4 ) SRI S. Rajendra Babu, learned Government Advocate, appearing for the revenue argued to sustain the action taken by the authorities as according to him partners are jointly and severally liable to pay the pre-dissolution liabilities of the firm and what is collected under the Act for default in paying the amounts though called "penalty" is in reality interest and the petitioners cannot therefore escape their liability to pay the amounts payable by the firm.

( 5 ) THE question that arises for our consideration in these cases is where a firm is assessed to tax, are the partners - after dissolution of the firm - liable to pay the taxes due from the firm.

( 6 ) IN Ganesha Narayana Hegde's case (1978 )7 CTR (Kar )79 , 1976 (1 )Karlj233 , [1977 ] 40 STC400 (Kar ), Lal, J. , has taken the view that partners of a firm will not be personally liable for payment of sales tax, payable by the firm and the liability only extend to the assets of the firm that may be found in their possession. Ganesha Narayana Hegde's case (1978 )7 CTR (Kar )79 , 1976 (1 )Karlj233 , [1977 ]40 STC400 (Kar ) fully supports Sri Joshi's submission.

( 7 ) IN Ganesha Narayana Hegde's case (1978 )7 CTR (Kar )79 , 1976 (1 )Karlj233 , [1977 ] 40 STC400 (Kar ), this Court has relied on the rulings of the Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate AIR1966 SC 1295 , [1966 ]2 SCR457 , [1966 ]17 STC326 (SC ) and V. V. Ali Koya Haji v. Assistant commissioner of Sales Tax (Assessment) [1976] 37 STC 618 (Ker ). These decisions, according to Sri Joshi, support the view taken in Ganesha Narayana Hegde's case (1978 )7 CTR (Kar )79 , 1976 (1 )Karlj233 , [1977 ]40 STC400 (Kar ) and heavily relied on them in support of his case.

( 8 ) JULLUNDUR Vegetables Syndicate's case AIR1966 SC 1295 , [1966 ]2 scr457 , [1966 ]17 STC326 (SC ) was a case under the East Punjab General Sales Tax Act, 1948. The Jullundur Vegetables Syndicate was assessed to sales tax in the year 1953 but that order was set aside for want of jurisdiction. Fresh proceedings were then started for assessment but