The main legal point established in the judgment is that a dissolved firm can be assessed under the Punjab General Sales Tax Act if no intimation of dissolution is given as required under Section 16. The judgment also emphasizes that assessment proceedings, once initiated, are pending until the final order, and the subsequent dissolution of the firm does not alter the liability of the firm to be assessed.

Harbans Singh, J.

1. Facts giving rise to this writ petition which were admitted to a Division Bench in view of the importance of the point involved are briefly as follows :

The firm Messrs Khushi Ram Behari Lal carried on a business of commission agents in cotton and foodgrains with its head office at Dhuri and branches at Amritsar and Nabha but did not submit any returns under the Punjab General Sales Tax Act (hereinafter referred to as the Act), inter alia, for the year 1959-60. A notice under Section 11(5) of the Act was issued and the case was first fixed for 1st July, 1960. A writ having been filed by the firm challenging the imposition of purchase tax on cotton, the proceedings had been stayed by the High Court and consequently the case was adjourned by the Assessing Authority sine die. For the decision of the writ petition, the case was fixed for hearing on 30th November, 1961, and a number of adjournments were thereafter sought by the assessee and granted till the case was fixed on 17th February, 1962, on which date the Assessing Authority was informed that the firm stood dissolved as from 8th August, 1961, and that in view of the Full Bench decision of this Court in Jullundur Vegetable Syndicate V/s. The Punjab State 64 P.L.R. 351, the firm which had been dissolved could not be assessed to any tax. The Assessing Authority distinguished the Full Bench decision, inter alia, on the following grounds:-

1. that because in the Full Bench case the firm had been dissolved "before proceedings of the assessment were initiated", while in the present case even according to the case of the assessee, the firm was dissolved long after the proceedings had been initiated ;

2. that no intimation under Section 16 of the Act with regard to the dissolution of the firm was given to the appropriate authorities before the proceedings had been started.

2. The Assessing Authority then went into the question of the outturn liable for assessment and assessed the firm to a tax of Rs. 19,236-32 nP. under the Punjab General Sales Tax Act: (referred to as the Act in this judgment) with regard to the sales within the State and to Rs. 62,277-96 nP. under the Central Sales Tax Act. The present writ petition is directed against this order.

3. The main contention of the learned counsel for the petitioner is that though in the case before the Full Bench, the proceedings were stated to be initiated after the dissolution of the firm, yet the ratio of the decision was that there was no machinery provided in the Act for the assessment of tax on a firm after it had actually been dissolved. He contended that no distinction was made as to whether proceedings had been initiated before or after the dissolution, the crucial matter being lack of any provision in the Act for assessment of a tax on any dealer not in actual existence on the date of assessment.

4. On the other hand, the contention of the learned counsel for the Assessing Authority was that the Full Bench decision referred to above is a binding authority only with regard to the question actually referred to it and he further contended that at places in the judgment, the Full Bench has drawn a distinction between a case where proceedings were initiated before the dissolution of the firm. In paragraph 15 of the judgment, at page 360 of the report, while referring to a decision of the Madras High Court in Deputy Commissioner of Commercial Taxes, Guntur Division, Guntur V/s. K. Bakthavatsalam Naidu [1955] 6 S.T.C. 657, which had taken the view that a firm even after dissolution could be assessed, observed as follows:-

It does not apper from the report of the case that the assessment proceedings had not commenced before the dissolution of the firm, and no argument was addressed to the learned Judges as to the firm not being liable to assessment on account of its having been dissolved before the assessment was commenced or made.

5. Again while similarly distinguishing the case of Bankatlal Badruka V/s