C. Hajee Abdul Subhan Sahib vs The Joint Commercial Tax Officer, Madras-7 and Another

Padmanabhan, J.—In this writ petition, the petitioner, who was one of the parters of a firm, C. Hajee Jainulabdeen and Company, which is

admittedly no longer in existence now, challenges the validity of orders of assessment passed by the first respondent for the years 1951-52, 1952-

53, 1953-54, 1954-55, 1955-56 and 1958-59. The total amount of sales tax, after deducting certain amounts already paid, comes to Rs.

33,392.93.

Mr. G. Narayanan, the learned counsel for the petitioner, takes two contentions before me : (1) for the years 1951-52 to 1954-55 the

assessments were made under rule 16(2) of the Rules framed under the Madras General Sales Tax Act, 1939. Mr. G. Narayanan submits that this

rule has been struck down as ultra vires by this Court in A. Abdul Shukoor v. Secretary to Government, Revenue Department, Madras (W.P. No.

1487 of 1964). Consequently, the learned counsel contends that the orders of assessment for the years 1951-52 to 1954-55, though passed

earlier, became ab initio void by reason of the decision of this Court striking down rule 16(2) on the basis of which these assessments were made;

(2) the assessment for the year 1955-56 was made towards the end of the year 1959 and for the year 1958-59 was made in 1962. Mr.

Narayanan submits that the partnership became dissolved prior to the passing of the order of assessment even in 1959 and that consequently no

order of assessment could be passed against a dissolved firm.

I am of the opinion that both the contentions of Mr. Narayanan have to be upheld. So far as the first contention of Mr. Narayanan is concerned,

Mr. Lokapriya, the learned Government Pleader, argues that the orders of assessment passed for the years 1951-52 to 1954-55 became final

inasmuch as no appeals had been taken by the assessee-firm. This Court struck down rule 16(2) as ultra vires only in 1967. Consequently, the

petitioner cannot take advantage of the decision of this Court which struck down rule 16(2) as ultra vires. However, on being confronted with the

question whether the orders of assessment passed for the years 1951-52 to 1954-55 could be said to be valid in the fact of the striking down of

rule 16(2) by this Court, the learned counsel admitted that the effect of the decision of this Court striking down rule 16(2) of the 1939 Act was to

render the orders of assessment passed for the years 1951-52 to 1954-55 null and void. If once it is conceded that as a result of the striking down

of rule 16(2) by this Court, the orders of assessment passed for the years 1951-52 to 1954-55 became null and void, then no amount could be

recovered on the basis of an order which became non est. No direct precedent has been placed before me to show that notwithstanding the fact

that rule 16(2) has been struck down by this Court, the assessment orders passed earlier on the basis of the ultra vires rule could be enforced. The

learned Government Pleader cited a decision of Ramaprasada Rao, J., as he then was, in Kuppuswami Chettiar v. State of Madras 1971 28 STC

The learned Judge has held in the said decision that if an assessee had not availed himself of the statutory remedy of appealing against an

original order of assessment and that has been corrected in a higher forum, the order of assessment became final. However, Mr. Lokapriya himself

admitted that the learned Judge was concerned with an order of assessment, which was not on the face of it null and void and without jurisdiction,

and consequently the said decision is not applicable to the facts of this case. I, therefore, hold that in view of the fact that rule 16(2) was struck

down by this Court, the assessment order passed on the basis of the rule were also rendered void and no amount could be recovered from the

petitioner on the basis of the said order.

As regards the second contention of Mr. Narayanan, the arguments of Mr. Lokapriya is that the partnership firm had filed a return in 1959 prior

to its dissolution and the order of assessment was passed against the firm only on the basis of the said return. However, it is conceded in the order

dated 29th November, 1976, by the Joint Commercial Tax Officer that the firm became defunct during the year 1958-59 even prior to the passing

of the order of assessment for the year 1955-56. The Bench of this Court presided over by T. Ramaprasada Rao, C.J., has held in Deputy

Commissioner of Commercial Taxes v. Hajee Abdul Shukoor 1980 45 STC159; (1979) 2 MLJ 119 as follows :

The matter is both intrinsically and extrinsically concluded; intrinsically in the sense that the residuary clause dealing with the repeal of the Madras

Act 9 of 1939 provides in sub-clause (e) of section 61(1)(ii) :

''The repeal of the said Act by clause (i) shall not affect .......

(e) any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, fine, penalty, forfeiture or punishment as

aforesaid;

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such fine, penalty, forfeiture or punishment

may be imposed, as if this Act had not been passed.''

This is, therefore, a straight answer to the non-availability of the taxing power with the taxing authorities to get into the net of taxation the

dealings of a dissolved firm which was functioning when the 1939 Act was in force. We said extrinsically also because the order of the Tribunal is

unassailable, for the principle had been laid down by the Supreme Court in State of Punjab Vs. Jullunder Vegetables Syndicate, where the court

said that unless there is a statutory provision permitting the assessment of a dissolved firm, no assessment of a firm after its dissolution can be made

under the quondam East Punjab General Sales Tax Act of 1948. A similar question is now the power before us (sic). Applying the principle and

ratio of the Supreme Court in the above case and having regard to the provision contained in section 61(1)(ii)(e), the authorities are not enabled to

bring to tax the dealings of dealers which functioned under the 1939 Act which did not provide for a power to assess such dealings in so far as

they relate to the dissolved firm.

No contra ruling has been placed before me by the learned Government Pleader. In the circumstances, the rule nisi is made absolute and the

writ petition is allowed, but in the circumstances, without costs.

Petition allowed.