P. Hanumanthiah vs The Deputy Commercial Tax Officer, Moore Market Division

Somasundaram, J.—These are revision petitions against the conviction of the petitioner by the Fifth Presidency Magistrate, Madras, in C. T.

Nos. 92 and 93 of 1955.

The petitioner, one P. Hanumanthiah, has been prosecuted for failure to pay the balance of sales tax for 1950-1951 and 1951-1952. That he

was a partner along with one A.P. Subramania Mudaliar and that they were doing business under the name and style of Messrs P.H.A.P.

Subramania Mudaliar and Co., is not disputed. The complaints have been undoubtedly laid against the petitioner and A.P. Subramania Mudaliar

for offences u/s 15(b) of the Madras General Sales Tax Act, 1939. If both of them have been prosecuted, as has been pointed out in my decision

in Behara Latchanna Patnaick v. State 1952 M.W.N.187, then it can well be contended that the firm was being prosecuted. Under the Act, if a

firm is assessed to tax, it is the firm that must be proceeded against and prosecuted for non-payment of tax. It has been made quite clear by the

decision of Subba Rao, J., in The Public Prosecutor Vs. K. Jacob Nadar, , that for the purpose of assessment ""the firm is treated as one entity and

that in default of payment pursuant to the notice, the firm is liable to be prosecuted. It is true that under Rule 19 of the Madras General Sales Tax

Rules, if a dealer or licensee enters into a partnership with regard to his business, he shall report the fact to the assessing authority within thirty days

of his entering into such a partnership and that the dealer or licensee and the partner shall jointly and severally be responsible for the payment of the

tax leviable under the Act. But that rule does not override the provisions of the Act which enable the authorities concerned to deal with the firm as

one entity for the purpose of assessment and prosecution."" In these cases what happened was, after the complaints were laid against the two

partners, either on account of absence or some other reason, one of the accused, via., the second accused at the time of the complaints, was

separated. In short, each case was split up into two and the petitioner alone was proceeded against. It has already been held that in case a firm has

to be assessed, for non-payment it is the firm that must be prosecuted. It may consist of two or more partners, in which case all of them may be

proceeded against by bringing them on record as accused, in which case, as already pointed out, it may be contended that since the firm consists

of these partners, it is the firm that is being prosecuted. Strictly speaking, when a firm is being prosecuted, it is against the name of the firm that the

prosecution must lie and not merely against the partners as such. But, not to stand on mere technicalities, if the entire partners had been brought on

record, there is no objection to treating the entire partners as partners of the firm and the firm being represented by its partners. Then it is the firm

that is deemed to be prosecuted as all the partners are before the Court. But, if in the course of the prosecution, the case against one of the

partners of the firm is separated, then it ceases to be a prosecution against the firm, as the firm then collapses by one of the partners being

proceeded against separately, unless it is specifically stated in the complaint that the prosecution is against the firm as such, and the name of the firm

also is mentioned therein. If the firm as such is prosecuted under its name and style, then it does not matter whether all the partners are before the

Court or only some of them are before the Court. What happened here is that the second accused, against whom also the original complaints were

laid, the cases against him alone were separated in the course of the trial, and the cases against him having been split up, the cases against the

petitioner alone cease to be against the firm as such, and if the firm is not prosecuted, it has been held that the conviction cannot stand against the

individual partner alone. It is true that the petitioner has admitted in his statement that he and Subramania Mudaliar were partners of the firm and

that he failed to pay the balance. But his admission has no legal force inasmuch as the prosecution cannot be laid against him alone and the trial

cannot be proceeded against the petitioner alone individually. I am, therefore, reluctantly compelled to set aside the convictions and sentences on

the ground that the prosecutions have not been against the firm as such and that, therefore they must fail.

In the end, the convictions and sentences are set aside and the accused acquitted. The fines, if paid, will be refunded.