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High Court Of Madhya Pradesh
P. V. Dixit, C. J. and K. L. Pandey, J.
GHANSHYAMDAS CHHOTALAL - Appellant
Versus
SALES TAX OFFICER - Respondents
M. P. 387 Of 1962
Decided On : 10/16/1963
The revisional powers of the Commissioner under sect on 22-A are very wide. The Commissioner can exercise those powers of his own motion or on an application made by a dealer and can, subject to the provisions of the Act, pass such order, not being prejudicial to the dealer as he thinks fit. When the Commissioner takes up a matter in revision, suo motu or an application by a dealer, he is entitled to consider the whole case. The provisos to sub-sections (1) and (2) nowhere a dealer applies under section 22-A for revision for an order made by an authority subordinate to the Commissioner, the Commissioner shall exercise revisional powers only in regard to the matter specifically raised by the party. [Para 5
(2) Sales Tax Act, 1947 (C. P. & Berar) – S. 11(5) - dealer need not be heard before issuing notice under section 11 (5) - condition of satisfaction of Commissioner regarding dealer's liability and failure to apply is in respect of assessment, and not in respect of issue of notice.
The satisfaction of the Commissioner that the dealer is liable to pay tax under the Act and the condition that the dealer has willfully failed to apply for registration are requisite conditions for making an assessment under that provision They are not conditions precedent to the issue of notice contemplated by the expression "after giving the dealer a reasonable opportunity of being heard used in sub section (5) of section 11. There is nothing in that sub-section to indicate that the dealer must be heard before any notice is issued to him with regard to intended assessment. It is open to the dealer to urge his points before the taxing authorities when a notice is given to him. [Para 6
(3) Constitution of India - Arts. 226, 227 and C.P. and Berar Sales Tax Act, 1947 - S. 11 (5) - whether turnover exceeds taxable limit and whether failure to apply for registration is wilful are questions of fact to be raised before taxing authorities - those questions cannot be raised in writ proceeding. [Para 6
(4) Sales Tax Act, 1947 (C.P.& Berar) as amended by M.P. Sales Tax (Amendment) Act, 1953 - S.8 (v), S.11 (5) - notices on 8-12-1952 and 23-10-1953 for assessment for period from 17-2-1950 to 30-10-1951-not barred by time as amendment of 1953 dates back to 1-6-1947.
Notices for assessment in respect of the period from 17.2.1950 to 30.10.1951 were given to a dealer on 8-12-1952 and 23-10-1953. These notices were challenged on the ground that under section 11 (5) (as it was on those dates), an assessment could be made "at any time within three calender years from the commencement of this Act and thereafter within 12 months from the expiry of such period" and as they were more than 12 months after the expiry of the period they were barred by time, and that the retrospective amendment made in section 11 (5) with regard to limitation could not empower the taxing authorities to make as assessment against the firm by issuing the notices, as on the dates the notices were issued the assessment had already become barred by time under the law as It stood then and the subsequent enlargement of the period of time could not revive the liability of the firm with regard to payment of tax or the right of the taxing authorities to take action for assessment.
Held: Section 8 (v) of the Amendment Act of 1953 deleted words "from the commencement of this Act and thereafter within 12 months" occurring in sub-section (5) of section 11 of the 1947 Act and this amendment was given retrospective effect from 1-6-1947 by section 24 of the Amendment Act. The effect of this amendment is that from the very time the Act came into force, section 11 (5) has to be read as empowering the Commissioner to make an assessment under section 11 (5) "at any time within three calender years from the expiry of such period".
The notices being within three calender years from the expiry of such period the assessment made against the firm was not barred by limitation. The word "period" occurring in section 11 (5) covers the whole period during which a dealer being liable to pay tax had wilfully failed to apply for registration and it does not mean the quarter for which return is to be filed. 1958 JLJ 344 relied on. [Paras 7, 8 and 9
(5) Sales Tax Act, 1947 (C. P. & Berar) - S.2 (c) and Partnership Act, 1932-Ss. 47 & 49-liability of partnership firm to tax does not disappear on dissolution.
The liability of the firm to assessment to tax in respect of the transactions effected by it while it was in existence does not disappear after its dissolution. The liability of the firm to pay tax under the Act arises during the very period of its existence when its turnover exceeds the taxable limit. When the amount of tax payable by the firm is determined after assessment, that amount really becomes a quantified debt owed by the firm to the State. If the assessment is not made and the tax amount is not determined before the dissolution of the firm, the liability to pay tax does not disappear. It continues to exist, and can be quantified by making an assessment and determining the tax amount in winding up proceedings. The combined effect of sections 47 and 49 of the Partnership Act is that though a partnership is dissolved it is deemed to continue for the purpose of winding up its business and discharge of partnership debts. The amount of tax determined in such an assessment would be a State debt recoverable from and out of partnership assets even after dissolution. (1957) 8 STC 459, (1962) 13 STC 251, (1961) 12 STC 562 and (1958) 9 STC 571, distinguished. [Paras 11 & 15
(6) Interpretation of Statutes - legislature making statute expressly retrospective - closed transactions or substantive rights become open for consideration.
Ordinarily an Act does not have retrospective operation on substantive rights which have become fixed before the commencement of the Act but the Legislature may enact laws affecting substantive rights by making the laws expressly retrospective or by using language which has that result. When the provisions of the Act are made retrospective by the use of express words or by necessary intendment, then the closed transactions or substantive rights, which would have continued undisturbed but for the retrospective operation, are undoubtedly affected and reopened. AIR 1963 SC 1356, 1958 JLJ 344 referred to. [Para 8
( 1 ) BY this application under Articles 226 and 227 of the Constitution, the petitioner questions the legality of the assessment to sales tax made against a partnership firm doing business under the name and style of M/s Chhotalal Keshaoram and co. , Rajanandgaon, by an order passed by the Sales Tax Officer, Raipur, on 20th July 1954. By that order the taxable turnover of the firm for the period from 17th february 1950 to 30th November 1951 was determined at Rs. 1,96,000/-and the amount of sales tax payable by the firm was found to be Rs. 6,125/ -. The petitioner also challenges the legality of the notices issued to the' firm in Form XII on 8th December 1952, 23rd October 1953, 6th May 1954 and 24th May 1954, under Section 11 (5) of the Central Provinces and Berar Sales Tax Act, 1947, (here, inafter referred to as the Act), pursuant to which the impugned assessment was made. He prays that the said notices, the assessment order made by the Sales tax Officer, Raipur, the demand notices for payment of Rs. 6125/-, and the decisions of the Appellate Assistant Commissioner of Sales Tax, Raipur, and the commissioner of Sales Tax, Madhya Pradesh, upholding the assessment made by the Sales Tax Officer be quashed by the issue of a writ of certiorari.
( 2 ) THE material facts are that on nth January and 19th January 1949 the petitioner and four other persons, including one Girdharilal Govindji, executed a deed of partnership for doing business of purchase and sale of Tendu leaves grown in, plucked and collected from Korar Range, Kanker Forest, for the seasons during the years 1949, 1950 and 1951 ending with 31st March 1952. The partnership actually came into existence on 6th December 1948. One of the terms of the partnership was that it would last for a period of three years ending on 31st March 1952 and that it shall not be terminated during the term of the Korar forest contract which also terminated on 31st March 1952. This partnership was a 'dealer' as defined by section a (c) of the Act. It did not get itself registered as required by Section 8. It did not file any returns even when notices under Section 10 requiring it to file returns were served on it when the Assistant Commissioner of Sales Tax found that the turnover of the firm exceeded the taxable quantum on 22nd November 1949 and it was liable to submit returns from, 17th February 1950. In response to the notices issued under Section 11 (5), the firm put an appearance before the sales Tax Officer, Raipur, and contested its liability to assessment. Before the Sales Tax Officer, it was contended on behalf of the firm that it was "dissolved by a deed executed on 13th September 1949; that under the terms of dissolution the lease of the forest range in respect of the seasons 1950 and 1951 was made over to Girdharilal Govindji who agreed to furnish security to the petitioner for regular payment of all instalments of lease-money in respect of the unexpired term of the forest lease; that Tendu leaves during the season 1950 were plucked and collected by Girdharilal alone; that on 28th February 1951. Girdharilal transferred to the applicant the lease in respect of the unexpired period of the year 1951 which, was then worked by the petitioner jointly with M/s. Monanlal Hargovinddas. The Sales Tax Officer rejected this contention and by an order passed on 20th July 1954 held that there was no dissolution of the firm during the material period; and that in this period its taxable turnover amounted to Rs. 1,96,000/- and it was liable to pay Rs. 6125/- as sales tax". On 5th September, 1954, a notice for the payment of the amount of tax was issued in the name of the firm.
( 3 ) THE firm then preferred an appeal before the Appellate Assistant Commissioner of Sales Tax, Raipur, objecting to the assessment made by the Sales Tax Officer inter alia on the grounds that the notices issued under Section 11 (5) of the Act were barred by time, and that the firm, bad been dissolved on 13th
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