STATE OF PUNJAB versus M/S. JULLUNDER VEGETABLES SYNDICATE

Citation: [1966] 2 S.C.R. 457 · Decided: 01-11-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Cited by 3 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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B 
c 
D 
E 
F 
G 
STATE OF PUNJAB 
V• 
M/S. JULLUNDER VEGETABLES SYNDICATE 
November I, 1965 
[K. SuBBA RAo, J. C. SHAH AND S. M. SrKRI, JJ.] 
East Punjab General Sales Tax Act ( 46 of 
1948), s. 16 and Eau 
Punjab General Sales Tax Rules, 1949, r. 40-Assessment of dissolved 
firm lVith respect to hs predissolution turnover-Validity. 
The respondent firm was assessed to sales-tax in 1953 but th_e order 
was set aside by the Financial· commissioner, because, the authority ~ho 
made the assessment had no jurisdiction to do so. 
Fresh 
proceedings 
were then started for assessment, but the respondent firm was dissolved 
before the proceedings were initiated. 
The Sales-tax Officer 
however 
made the assessment. 
The turnover and tax were 
reduced on appeal 
and the Financial Commissioner, in 
revision, 
confirmed the 
appellate 
order. 
But the High Court on a ·reference, held in favour of the respon-
dent on the ground that a firm was a separate assessable entity under the 
Act and that there was no machinery provided under the Act for as~ess~ 
ing a firm after its dissolution 
in respect of its turnover of business 
before the dissolution . 
In appeal to this Court, 
HELD : The High Court was right in holding that the 
assessment 
order on the dissolved firm could not be supported under the provisions 
of the Act. [464 E] 
Though under the partne'fship law a firm is. not a legal entity, for the. 
purposes of sales-tax, under the Act, it is a legal entity. If that be so, on 
dissolution, the firm ceases to be a legal entity. 
Thereafter, on principle, 
unless there is a statutory provision permitting the assessment of a dis-
solved firm, there is no longer any scope for assessing 
the firm which 
ceased to have. a legal existence. 
There is no provision in the Act .. as it 
stood in 1953 expressly empowering the assessing 
authority to assess a 
dissolved firm in respect of its turnover before its dissolution. 
Neither 
s. 16 of the Act, nor r. 40 of the Rules 
made thereunder, provide for 
the assessment of a dissolved firm and the provisions of the Partnership 
Act have no bearing on the question of assessment. [461 G; 462 C-D, 
F, G, H] 
As in the present case, admittedly the firm was dissolved before the 
or<ler of assessment was made, the said order was bad and it made no 
difference \vhether the proceeding was initiated before the dissolution or 
thereafter. [462 E] 
Jagat Behai·i Tandon v. The Sales 
Tax Officer, Etawah, 
(1955) 6 
S.T.C. 125, la[ji v. The Assistant 
Co1nmissioner, 
Sales Tax, 
Raipur. 
(1958) 9 S.T.C. 571, R. D. Fernandez, In re. (1957) 8 S.T.C. 368 and 
P<tnnuswami Gramani v. The Collector of Chingleput District, (1960) 
H 
11 S.T.C. 80, disapproved. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 588 of 
1964. 
458 
SUPREME COURT REPORTS 
[1966] 2 S.C.R. 
Appeal from the judgment and order dated February 6, 1962 
A 
of the Punjab High Court in Sales Tax Reference No. 1 of 1959. 
K. S. Chawla and R. N. Sachthey, for the appellant. 
M. S. Gupta, for the respondent. 
The Judgment of the Court was delivered by 
Sobba Rao, J. 
This appeal on a _certificate issued by the High 
Court of Punjab at Chandigarh raises the question whether a firm 
could be assessed to sales-tax after it was dissolved. 
The facts may briefly be stated. Messrs. Jullunder Vegetables 
Syndicate was a firm doing business in Jullunder from October 4, 
1952 to July 11, 1953. It was dissolved on July 11, 1953. An 
intimation of the dissolution of the firm under s. 16 of the East 
Punjab General Sales Tax Act, 1948, hereinafter called the Act, 
was sent to the Department on July 18, 1953. The firm was asses-
B 
c 
sed to sales-tax on May 30, 1953, by the Sales-tax Officer under the 
D 
provisions of the Act in respect of its turnover for the period bet-
ween October 4, 1952 and March 31, 1953; but the said assess-
ment order was quashed on April 11, 1955, by the Financial Com-
missioner on the ground that the authority which made the assess-
ment had no jurisdiction to do so. 
On September 3, 1955, the 
Sales-tax Officer made a fresh assessment on the turnover of the 
said firm. 
Its taxable turnover was fixed at Rs. 15 ,04,091-11-3 
E 
and was assessed to sales-tax in a sum of Rs. 47,002-14-0. It is 
not clear from the record whether after the order of the Financial 
Commissioner fresh proceedings were initiated by the Sales-tax 
Officer or whether the earlier proceedings initiated by him before 
the dissolution of the

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