COMMISSIONER OF SALES TAX, M.P. INDORE AND ORS. versus RADHAKRISHAN AND ORS.

Citation: [1979] 2 S.C.R. 33 · Decided: 06-10-1978 · Supreme Court of India · Bench: JASWANT SINGH · Disposal: Dismissed

Cited by 1 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

' 
J 
r 
33 
COMMISSIONER OF SALES TAX, M.P. INDORE AND ORS. 
A 
v. 
RADHAKRISHAN AND ORS. 
October 6, 1978 
[JASWANT SINGH, P. S. KAILASAM AND A. D. KOSHAL, JJ.J 
Madhya Pradesh General Sales Tax Act 1958-Whether partners can be 
held liable for the tax assessed against the firm, 
Sec. 22(4-A) and Sec. 46(1)(c)-Two different procedures for enforcing 
and realizing the assessment-Whether valid-Vesting of discretionary power 
B 
in the State or public authorities or an officer of high standing is treated as a 
C 
guarantee that the powers will be used fairly and with a sense of responsi-
bility. 
The three respondents who were the three partners of a registered Partner· 
ship doing the business of sale of bidis did not file any sales 
tax 
return. 
They did not get the firm registered under the Madhya Pradesh General Sales 
Tax Act 1958. Treating the firm as an unregistered de?ler a best 
judgment 
n. 
assessment was made by the sales-tax officer and deinand notices were accorO-
v 
ingly issued. 
Even so the firm failed to pay the tax. l'hereupon the Com~ 
missioner of Sales Tax accorded sanction under section 46(1)(c) 
of 
the 
Madhya Pradesh General Sales Tax Act 1958 for criminal prosecution of the 
three respondents. 
Their v.-Tit petition for quashing the order for criminal 
prosecution 
wa.s 
granted by the High Court. 
E 
On the questions (1) whether the three partners can be held liable for 
the tax assessed against the firm and (2) v.-·hether the sanction given by the 
Con1missioner for prosecution under section 46 ( 1) (c) is sustainable in law. 
Dis1nissing the appeal the Court, 
HELD : 1. (a) In the absence of a specific provision in the 
.r\ct, 
the 
F 
partners of the firm cnnnot be held liable for the tax assessed on the finn. 
[38C] 
(b) A firm in a partnership and a Hindu undivided family are recognised 
as legal entities and as such proceedings can only be1 taken against the firm 
or undivided family as the case may be. 
Neither the partners of the firm nor 
the n1c1nbers of the Hindu undivided family will be liable for the tax assess-
G 
ed against the firm or the undivided Hindu fa·mily. 
f37H~38/\l 
Store of Puniab v. Mis Jullundur Vegetables Syndicate, [1966] 2 S.C.R. 457; 
Kapur Chand Shrinial v. Tax Recovery Officer, Hyderabad and Ors., [1969] 
1 S.C.R. 691; relied on. 
(c) The definition of "dealer" in clause 2(d) of the Act makes it clear 
that a firm is a separate entity and is a dealer for the purposes of the Act. 
/\. firm under section 7 (2) of the Act is deemed to be a registered 
dealer. 
'Section 18 provides that the amount of tax due from a registered dealer shall 
H 
34 
SUPREME COURT REPORTS 
[1979] 2 S.C.R. 
A 
be essessed separately for each year. 
Accordingly the dealer, which is a firm 
in this case, was assessed and notice given to the firm [37 A-C] 
(d) In the absence of a specific provision (such as the one found in S. IS 
of the Bombay Sales Tax Act 1959) th&t where a firm is liable to pay tax. 
under the Act, the firm and each of its partners shall be jointly and severally 
liable for such payment, the partners of a firm cannot be held liable for the 
B 
tax assessed on the firm. [38C] 
c 
2. (a) The provisions of the Act conferring 
different 
procedures 
for 
collection of tax canno!. be held to be invalid. [44B] 
(l>) When power is conferred on high and responsible officers, they 
are 
expected to act with caution and impartiality while dischl3:rging 
their 
duties 
and the circumstances under which they will choose either of the remedies 
available shouJd be left to them. 
The vesting 0£. discretionary power in the 
State or public authorities or an officer of high standing is treated as a 
guarantee that the power will be used fairly and with a sense of responsibility. 
[42GJ 
(c) The guidance wi1l have to be inferred from the policy of the law 
itself, that is, if on particular facts of a case the Commissioner in 
exercise 
D 
of his discretion comes to the conclusion that a more drastic remedy should 
be taken, the exercise of that option cannot be termed u'nconstitutional. Courts 
wt11 be justified in giving a liberal interpretation to the section in order to 
avoid constitutional invalidity and reading down the sections if it becomes. 
necessnry to uphold its validity. [43B, DJ 
E 
F 
G 
H 
(d) In the present case before a prosecution can be launched under sec-
tion 46, it is necessary that the assessee should have failed to pay 
the tax. 
due within the time allow

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