Ramaprasada Rao, J.:— The petitioners were the quondam partners of a firm known as Ardhanari Textiles, which had its place of business at Vembadithalam, Salem District. The main commercial purpose of the firm which was started in the year 1959 and dissolved on 9th June, 1965, was to manufacture handloom and power-loom cloth. Sometime thereafter, it began manufacturing ready-made garments as well as exporting such ready-made garments, art silk fabrics, pure silk and zari embroidered sarees which came under the description of handloom cloth and handicrafts under the export promotion schemes for handicrafts. It is common ground that in connection with the export of handicrafts and ready-made garments, certain import licences were issued to the firm based on the percentage of exports effected by it. These import licences were issued in respect of art silk yarn, embellishments and sewing machinery. The petitioners concede that in respect of some of these import licences goods were imported through various ports in India, from which ports the goods were directly despatched to the firm's commercial business place within this State for being used in the manufacture of clothes and ready-made garments. It is however stated that the majority of the licences were sold by the firm long prior to the import of the goods through named brokers in Madras. The petitioners claim that where the licences were sold in accordance with the trade practice, they would not be in a position to disclose as to who ultimately imported the goods, where the importation was effected and how such goods were dealt with. The petitioners finally plead that in no case they sold goods in the State of Maharashtra and they are not in a position to say whether any such importation was made at the port in Bombay. The petitioners' firm was not maintaining any accounts.
2. In these circumstances a notice dated 5th October, 1964, was issued by the respondent calling upon the petitioners to furnish correct and complete information of all the imports made by them and the nature of disposal of such imported goods between 1st January, 1960, and 31st March, 1964. They were also directed to fill up certain forms which were sent as enclosures to the aforesaid notice. In answer to the notice, the case of the petitioners is as follows:—
“The firm complied with the requisition of the respondent and submitted three statements showing 8 items of imports which were directly effected by the firm during the period 1961 and 1964. In all such cases the goods had been despatched by lorry from Bombay to Salem and were covered by the lorry receipts, the numbers of which were disclosed in the statements. The firm which was required to furnish a list of sales effected in the State of Bombay (the present State of Maharashtra) was shown as ‘nil’ and was duly certified by the Chartered Accountant. The certificates of the Chartered Accountant certifying that all the three statements were based on books of accounts of the firm were also sent to the respondent. Subsequent thereto, on 9th June, 1965, the firm was dissolved by a deed of dissolution executed by the three partners.”
3. Therefore, the petitioners plead that in the absence of any single instance of sale by the quondam firm tp any person in Bombay in the State of Maharashtra, the proceedings initiated by the respondent are irregular. On the information furnished by the petitioners, the respondent pursued the matter and called upon the firm to produce its accounts. This requisition was on 22nd June, 1965. Finally, the, respondent issued a notice on 4th March, 1966, stating that the partnership firm was liable to pay sales tax under the Bombay Sales Tax Act, 1959, in respect of the dealings which the said firm had between 1960 and 1965, and again a show cause notice was given as to why the best judgment formula should not be adopted and a consequential penalty imposed for non-disclosure of the assessable turnover-The petitioners were also called upon to attend the office of the respondent lest it should be presumed that the quondam firm did sell goods in Bombay and that the sale price would be estimated by adding 500 per cent. to the C.I.F value of the licences held by the firm. The gravamen of the charge of the petitioners is that even at that stage no particulars were made available by the respondent as to the alleged dealings and sales effected by the quondam firm. By its representation dated 21st March, 1966, the firm pointed out to the respondent that it had not sold any goods at Bombay and this was followed up by a personal interview on 4th August, 1966, by one of the representatives of the quondam firm, in which the position was reiterated. It was explained that excepting for the items mentioned in statement ‘A’ appended to the explanation sent by the petitioners to the respondent on 24th March, 1965, all other licences were sold through brokers and no further importation was made as claimed. The firm once again requested the respondent to furnish any material on which he proposed to act. The petitioners through their representative attempted to obtain such material during August, 1966, but they were of no avail. It is in those circumstances claimed that the proceedings sought to be initiated by the respondent by his notice dated 4th March, 1966, are wholly without jurisdiction and therefore a writ of prohibition should issue. The petitioners' case is that on the facts the respondent had no jurisdiction to initiate any further action on the petitioners and in any event their legal contention is that the provisions of the Bombay Sales Tax Act, 1959, do not provide for assessment of a firm or its partners after the dissolution of the firm, and therefore the action is totally without jurisdiction.
4. The respondent has denied every one of the allegations made by the petitioners and on the facts he would state that as the importation of some of the goods at Bombay having been admitted, the onus shifts on the petitioners to disprove or negative the claim of the revenue that the goods were not actually sold by the quondam firm in the State of Maharashtra. On the legal contention it is claimed that the proposed action as against the petitioners in the manner suggested is in order.
5. The main contentions urged before us by Mr. K.K Venugopal are that no proceedings can be initiated and proceeded with against a dissolved firm or association of persons and that there is no sufficient material for the assessing authority to issue the impugned notice on the assumption that the petitioners were dealers who sold goods in Bombay. Contending contra, the learned Government Pleader states that there is ample data in the instant case for the assessing authority to act as it did and the legal contention is not well-founded.
6. As regards the sustenance of the action proposed by the respondent, we have fully discussed the scope of this contention in W.P No. 189 of 1967* disposed of by us earlier. It is not necessary for us to repeat them once over. There is no provision in the Bombay Sales Tax Act, 1959, to assess dissolved firms. The only provision is section 19(3) of the Act which has to be read with section 18 therein. The fact that the firm has been dissolved is not disputed before us. These sections enable the revenue to call for and recover the tax dues from the partners of the quondam dissolved legal entity. But such an action for personal recovery can be undertaken provided the tax payable by the partnership firm was reckoned either before its dissolution pr after its dissolution. It therefore follows that there should be an assessment on the dissolved firm. For this however, the Act should provide for specific machinery to rope in dissolved firms as well for being assessed to tax on its predissolution dealings. The Bombay Sales Tax Act, 1959, is silent on this aspect and there is no provision to assess a dissolved firm as such. We have already expressed in W.P No. 189 of 1967 that section 19(3) is not the charging section which would empower the authority to assess a dissolved firm or association of persons, which is admittedly a legal entity. While adopting the reasoning rendered by us for an association of persons as being equally applicable to a partnership firm, we are of the view that the legal objection as regards want of jurisdiction of the respondent to proceed against the partners of a dissolved firm for dealings of such firm prior to dissolution has to be sustained. In this view we are unable to agree with the learned counsel for the respondent that this writ petition is not maintainable because of the availability of an alternative statutory remedy after the assessment is over. This aspect also we have considered in W.P No. 189 of 1967 and the observations therein govern equally the case before us.
7. The question however is whether on the facts and circumstances of the case the order is wholly without jurisdiction. This is not a case where the revenue was acting on mere surmises and bare assumptions. The facts disclose that the respondent was justified in raising a presumption that the petitioners sold goods in the State of Maharashtra and they were to be prima facie roped in as dealers within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959. In fact, the petitioners admit that they imported the goods at the Bombay Port, but they claim that they have removed the goods from Bombay to their business place at Salem. This is a matter which has to be established by acceptable proof adduced by the petitioners. It may be that the quondam firm disposed of the other licences in a manner claimed by them. But in so far as the goods imported by them at Bombay are concerned, the onus is upon them to establish that they did not deal with the goods in Bombay and they removed the same for their own purposes to their business place in the district of Salem. Paragraph 5 of the affidavit in support of this writ petition clearly reflects on the conduct of the petitioners. They would admit that goods were despatched by lorry from Bombay to Salem and were covered by lorry receipts etc. This has to be established with reference to their accounts and not by mere personal representations as was sought to be done by the petitioners. If a person has custody of goods in a place where the Sales Tax Act is in force, and if he claims that he did not sell such goods but removed them from the jurisdiction of such sales tax authorities, then it is for the person who sets up such a contention to prove the same. The respondent gave ample opportunities to the petitioners to establish such state of affairs, but the petitioners however did not avail themselves of such opportunities given. In those circumstances and having regard to the peculiar circumstances of this case, we are of the view that on the merits the petitioners cannot contend that the action initiated by the respondent has to be thwarted even at its threshold without any further enquiry whatsoever. We are therefore of the opinion that the respondent had jurisdiction to issue the impugned notice.
8. But in view of the legal impediment, which is substantial, the action taken by the respondent against the petitioners is without jurisdiction. The transactions admittedly relate to alleged dealings of a partnership firm. The said firm has been dissolved. There is no provision in the Act to assess a dissolved firm after it becomes defunct. In this view the rule nisi issued has to be made absolute. The petition is allowed, but there will be no order as to costs.
9. Petition allowed.