Case: Murarilal Mahabir Prasad & Ors Vs. Shri B. R. Vad & Ors

CHANDRACHUD, J.1. The question which arises for decision in this appeal is whether under the Bombay Sales Tax Act, 1953, and the Bombay Sales Tax Act, 1959, a dissolved firm can be assessed or reassessed to sales tax in respect of its pre-dissolution turnover.2. The first appellant - M/s. Murarilal Mahabirprasad - was a partnership firm constituted under a deed of partnership dated December 3, 1953. It was doing business at 30, Commercial Chambers, Masjid Bunder Road, Bombay, as importers, commission agents, indenting agents, del credere agents and financiers and also as wholesale dealers in colours, chemicals, dyes, etc. The firm consisted of 5 partners : appellants 2 to 5 and one other who died in 1965. The firm was registered as a dealer under the Acts of 1953 and 1959.3. Under diverse orders of assessment passed prior to its dissolution, the firm was assessed to sales tax for the period July, 1953, to March 31, 1958. On November 10, 1960, the Sales Tax Officer (VIII), Enforcement Branch, Bombay, seized certain documents from the firms office. Notices were issued to the firm from time to time for attendance to explain these documents. Over sixty meetings took place between the firms representatives and the authorities, at the end of which, two notices dated November 20, 1963, came to be issued to the firm. By the first of these notices, the firm was asked to explain certain discrepancies in its books of account. The second notice was issued under section 15 of the Act of 1953, by which the firm was asked to show cause why the assessment already made for the period April 1, 1957, to March 31, 1958, should not be reopened on the ground that certain sales were suppressed by the firm as a result of which a part of its turnover had escaped assessment. Respondent 1, the Sales Tax Officer (VIII), Enforcement Branch, Greater Bombay, fixed the hearing of the assessment proceeding on April 1, 1965, but the firm requested by its letter dated April 3, for an adjournment till May on the ground that one of the partners had died suddenly in Delhi and that the other partners would be back in Bombay by May. On May 26, 1965, respondent 1 addressed a notice to the firm stating that the hearing would be taken up from day to day from June 14, 1965, and that the partners should remain present at the hearings.There was considerable difficulty in serving the aforesaid notice, as another firm by the name of M/s. Murarilal Balkrishna had apparently started doing business at the place where the assessee-firm was carrying on its business. Intimations were sent to the registered address of the firm and an Inspector of the department went personally to effect the service. Eventually, on August 31, 1965, respondent 1 passed ex parte orders of reassessment for the period April 1, 1957, to March 31, 1958, and ex parte orders of assessment for the period April 1, 1958, to March 31, 1961. The assessment of the firm for the period subsequent to March 31, 1958, was pending ever since, as it had to await the result of inspection of the incriminating documents seized from the firms office in November, 1960. On October 22, 1965, demand notices were pasted on the office of the firm at its Masjid Bunder Road address. M/s. Murarilal Balkrishna who were doing business there are said to have informed a partner of the firm that demand notices were so pasted.4. By the revised assessment order, respondent 1 held that for the period April 1, 1957, to January 31, 1958, the turnover of suppressed sales which had escaped assessment was Rs. 41, 47, 090. He assessed on this turnover an additional tax of Rs. 1, 95, 582.47. Respondent 1 found that for subsequent periods also a large part of the turnover was suppressed by the firm. On that footing, he assessed the sales tax for the period April 1, 1958, to March 31, 1961, breaking up the period in four assessments. By the demand notices, the firm was called upon to pay a total tax of Rs. 6, 70, 969.96, inclusive of the sales tax quantified in the revised assessment. The notices apprised the firm of its liability to pay penalty if the tax was not paid within the stated period.The assessment for the period April 1, 1957, to December 31, 1959, was made under the Act of 1953. The tax due for this period comes to Rs. 5, 63, 900 and odd. The assessment for the period January 1, 1960, to March 31, 1961, was made under the Act of 1959. The tax due for this period comes to Rs. 92, 300 and odd. The firm has filed appeals against the aforesaid orders, which are pending before the Assistant Commissioner, Sales Tax, Bombay. In view of those appeals the recovery proceedings were stayed by the appellate authority.5. During the pendency of the assessment proceedings, no formal intimation appears to have been given by or on behalf of the firm to the assessing authority that the firm was dissolved. It was on December 21, 1964, that in a letter written to respondent 1, one of the partners made a casual and fleeting reference to that fact : "you will also appreciate that the firm was dissolved 4 years back". It is however futile to pursue this line of inquiry because, on being called upon to produce the deed of dissolution, the partners did produce a deed showing that the firm was dissolved on May 20, 1962. Respondent 1 appears to have accepted the authenticity of the deed of dissolution and in fact, acting upon it, the sales tax authorities cancelled the registration of the firm under the Sales Tax Acts with effect from June 16, 1962. We cannot now go behind the position that the firm was dissolved on May 20, 1962.6. On November 24, 1965, the appellants filed a writ petition in the High Court of Bombay challenging the orders of reassessment and assessment on various grounds. In view of the fact that the appeals filed by the firm before the Assistant Commissioner of Sales Tax were pending, the High Court did not decide the question whether the procedure prescribed by law was followed in the assessment proceedings and whether the orders were justified on merits. The only question which the High Court considered was whether the impugned orders were without jurisdiction as having been passed against a dissolved firm. By its judgment dated December 8, 1969, the High Court rejected the contention of the firm and held that in view of the provisions contained in the Bombay Sales Tax Acts of 1953 and 1959, it was permissible to assess a dissolved firm. The correctness of that finding is challenged by the appellants in this appeal by special leave.The only question with which we are concerned in this appeal is whether the orders of reassessment and assessment passed by respondent 1 are without jurisdiction by reason of the fact that the assessee-firm was dissolved prior to the date on which those orders were passed. In fact, the very assessment and reassessment proceedings for the relevant years were commenced after the dissolution of the firm. The notice under which those proceedings were started is dated November 20, 1963, while the firm was dissolved on May 20, 1962. We may mention that in a judgment to which we must immediately turn, this court has taken the view that if under a statute a dissolved firm cannot be assessed to sales tax, it does not make any difference whether the proceeding was initiated before or after the dissolution. Thus, the true question for decision is whether a dissolved firm can be assessed or reassessed under the Bombay Sales Tax Act, 1953, and the Bombay Sales Tax Act, 1959.7. A similar question came up for decision before this court in State of Punjab v. Jullundur Vegetables Syndicate [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457]. That was a case under the East Punjab General Sales Tax Act, 1948. The respondent-firm therein was assessed to sales tax in 1953 but that order was set aside for want of jurisdiction. Fresh proceedings were then started for assessment but the firm was dissolved before the commencement of those proceedings. The firm was thereafter assessed and the order of the Sales Tax Officer was confirmed in further proceedings with some modifications. On a reference the Punjab High Court set aside the assessment on the ground that the East Punjab General Sales Tax Act, 1948, did not provide for a machinery for assessing a dissolved firm in respect of its pre-dissolution turnover. The judgment of the High Court was confirmed by this court.Since the learned counsel for the appellants has relied heavily on the aforesaid decision, it is necessary to analyse it closely. The court, speaking through Subba Rao, J., observed at the outset that the question as regards the validity of the assessment depended upon the relevant provisions of the particular Act. On examining the relevant provisions, namely, sections 2(d), 4(1), 7(1), 16(b), 17 and rule 40 the court held that there was no provision in the statute expressly authorising the assessing authority to assess a dissolved firm. The court then proceeded to find whether such a power could be gathered by necessary implication from the other provisions of the Act and held in the negative. Thus, by reason of the language and scheme of the Punjab Act, a dissolved firm could not be assessed. Relying on section 2(d) which defined a dealer to include a firm, the court held that though under the partnership law a firm was not a legal entity, the firm was an independent assessable unit for the purposes of the Punjab Act. If that be so, on dissolution, the firm ceased to be a legal entity and could not be assessed in the absence of a statutory provision permitting the assessment of a dissolved firm. The court found that there was a lacuna in the Punjab Act of 1948 which was filled up later by an amendment but that amendment was not retrospective. Finally, the court touched upon the conflicting decisions of the High Courts on the point and observed that all of those decisions were over-burdened with the consequences of a contrary construction on the incidence of taxation and also their mixing up the question of the statutory power of assessing a dissolved firm with the liability of the partners to pay the tax so assessed on the firm before its dissolution. The reasons given by some of the High Courts in support of a contrary conclusion were rejected by this court.The Jullundur Vegetables Syndicate case [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457] is a clear and direct authority for the following propositions : (1) A dissolved firm cannot be assessed to sales tax unless the statute under which the assessment is made authorises the assessment either expressly or by necessary implication; (2) If, by definition, a firm is a dealer under an Act, it becomes a legal entity or an independent assessable unit for the purposes of that Act. If that be so, the firm ceases to be a legal entity on dissolution and, thereafter, on principle it cannot be assessed to sales tax unless the statute so authorises expressly or by necessary implication; (3) Neither a provision requiring a dealer to inform the authorities if it discontinues its business, nor a provision imposing a joint and several liability on the dealer and its partners for the payment of tax, penalty or any other amount due under the Act or Rules can be interpreted as conferring jurisdiction to assess a dissolved firm; (4) In interpreting a fiscal statute the court cannot proceed to make goods the deficiencies, if any, in the statute : it shall interpret the statute as it stands and, in case of doubt, it shall interpret it in a manner favourable to the taxpayer. The language of a taxing Act cannot be strained in order to hold a subject liable to tax.8. The decision in the Jullundur case [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457] was followed by this court, without more, in Khushi Ram Behari Lal & Co. v. Assessing Authority, Sangrur [[1967] 19 S.T.C. 381 (S.C.)], and in Additional Tahsildar, Raipur v. Gendalal [[1968] 21 S.T.C. 263 (S.C.)]. Khushi Rams case [[1967] 19 S.T.C. 381 (S.C.)] arose under the East Punjab General Sales Tax Act, 1948, the provisions of which were considered by this court in the Jullundur case [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457]. Gendalals case [[1968] 21 S.T.C. 263 (S.C.)] arose under the Central Provinces and Berar Sales Tax Act, 1947. The court did not examine the provisions of that Act separately, presumably because those provisions were considered by the M.P. High Court in Lalji v. Assistant Commissioner, Sales Tax, Raipur [[1958] 9 S.T.C. 571], and the decision of the Madhya Pradesh High Court was expressly disapproved by this court in the Jullundur case [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457]. The Madhya Pradesh High Court had relied upon section 17 of the C.P. and Berar Sales Tax Act, corresponding to section 16(b) of the East Punjab Act, to sustain the continuity of the firm as a legal entity until information of dissolution was given to the prescribed authority. No other provision of the C.P. Act, apart from section 17, appears to have been canvassed before this court in support of the argument that it was permissible under that Act to assess a dissolved firm.Applying the ratio in the Jullundur case [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457], we must examine the provisions of the two Bombay Acts in order to find whether those provisions, expressly or by necessary implication, authorise the assessment of a dissolved firm.9. Turning first to the Act of 1953, section 2(6) of that Act defines a "dealer", in so far as relevant, to mean any "person" who carries on the business of selling or buying goods. This definition does not by itself make the firm a distinct assessable entity and the position obtaining under the general law that a firm is but compendious name for the partners who compose it remains outstanding. But section 3(35) of the Bombay General Clauses Act, 1904, defines "person" as including "any company or association or body of individuals, whether incorporated or not". The provisions of the Bombay General Clauses Act apply to the interpretation of the Bombay Acts unless there is anything repugnant in the subject or context of the Act under review. There is no such repugnancy and therefore the word "person" in section 2(6) of the Act of 1953 must be taken to include a "body of individuals" that a firm is. Not only is there nothing in the Act of 1953 which is repugnant to the notion that the firm could be a dealer, but section 24 of that Act furnishes a strong indication for saying that the farmers of the Act intended to recognise firms as a legal entity. That section provides that every dealer who is liable to pay the tax and who is an undivided Hindu family, an association or a club, society, firm or company, shall send to the prescribed authority a declaration stating the name of the person who shall be deemed to be the manager of such dealers business. Section 24 would be meaningless in its reference to a "firm", unless the fundamental assumption of the provision was that a firm as distinct from its partners is an independent assessable entity. That assumption is made good by the combined operation of section 2(6) of the Act of 1953 and section 3(35) of the Bombay General Clauses Act.Since the Act of 1953 considers a partnership firm to be a legal entity, on the dissolution of the firm its legal personality would cease to exist. On the firm ceasing to have existence in the eye of law, there can be no assessment of the firm as such for, in the absence of an express statutory provision or a clear statutory intendment, a dead person cannot be assessed.10. Section 2(2) of the Income-tax Act, 1922, defined an assessee as "a person by whom income-tax is payable". The Bombay High Court in Ellis C. Reid v. Commissioner of Income-tax [(1930) 5 I.T.C. 100] held that the definition in terms applied to living persons only, that the treasury had no power to tax without the express permission of the legislature and, therefore, if an assessee failed to make a return of his income under section 22(2), the Income-tax Officer had no power to make an assessment under section 23(4) after the assessees death. Seeing that, originally, in the Income-tax Act, 1922, there was no reference to the decease of a person on whom the tax was charged, the learned Chief Justice observed : "It must have been present to the mind of the legislature that whatever privileges the payment of income-tax may confer, the privilege of immortality is not amongst them", and that it was very difficult to assume that the omission in the Act as regards the power to tax a dead assessee was unintentional. Section 24B which was introduced in the Income-tax Act, 1922, to remove the lacuna pointed out in the Bombay judgment extends the legal personality of a deceased assessee for the duration of a previous year, so that income received by an assessee during the previous year and the income received by his heirs and legal representatives after his death, but in the previous year, can be brought to tax after his death. In Commissioner of Income-tax, Bombay City v. Amarchand N. Shroff [[1963] 48 I.T.R. 59 (S.C.)], this court observed that the individual assessee under the Income-tax Act has ordinarily to be a living person, that there can normally be no assessment of a person after his legal personality ceases and that, apart from section 24B, no assessment could be made on a dead person.We must, therefore, proceed on the basis that the first appellant-firm was an independent assessable entity under Act of 1953 and that on its dissolution on May 20, 1962, its legal personality ceased to have existence. Is there then any provision in the 1953 Act which permits or contemplates the assessment of a firm after its dissolution ? If not, the general rule would apply that a dead person cannot be assessed.11. It is plausible that a distinction ought to be made between the death of an individual and the dissolution of a firm. Human beings, as assessees, are not generally known to court death to evade taxes. Death, normally, is not volitional and it is understandable that on the death of an individual, his liability to be assessed to tax should come to an end unless the statute provides to the contrary. With firms it is different, because a firm which incurs during its existence a liability to pay sales tax may, with a little ingenuity, evade its liability by the voluntary act of dissolution. The dissolution of a firm could therefore be viewed differently from the death of an individual and the partners could be denied the advantage of their own wrong. But we do not want to strike this new path because the Jullundur case [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457] and the two cases which follow it have likened the dissolution of a firm to the death of an individual. Let us therefore proceed to examine the other provisions of the 1953 Act.12. Section 5 of the 1953 Act provides that every dealer whose turnover exceeds the limits therein mentioned shall be liable to pay sales tax. Sub-section (3) of section 5 says that every dealer who has thus become liable to pay the tax "shall continue to be so liable until cancellation of his registration under sub-section (6) of section 11, and upon such cancellation his liability to pay the tax shall cease". This provision shows that if a firm has incurred the liability to pay sales tax, that liability continues until the cancellation of the registration. There may be a hiatus between the dissolution of the firm and the cancellation of its registration and during this interregnum the liability of the firm is expressly kept alive by the statute. Under section 11(6), the prescribed authority has to cancel the registration with effect from the prescribed date if, inter alia, the business in respect of which a certificate has been granted under section 11 has been discontinued or transferred. On being satisfied that the business has been discontinued or transferred, the authority concerned has undoubtedly to cancel the registration but the obligation to cancel the registration would arise not on the statement of an assessee that the business has been discontinued or transferred but on the satisfaction of the authority that this is truly so. In other words, by virtue of section 5(3), the mere fact of dissolution does not by itself bring to an end the firms liability to be taxed.Section 15(1) of the 1953 Act has an important bearing on the question under consideration. That section reads thus :"15. (1) If in consequence of any information which has come into his possession the Collector is satisfied that any turnover in respect of sales or purchases of any goods chargeable to the tax has escaped assessment in any year or has been under-assessed or assessed at a lower rate or any deductions have been wrongly made therefrom, the Collector may, in any case where such turnover has escaped assessment or has been under-assessed or assessed at a lower rate for the reason that the provisions of sub-section (1) of section 2 of the Bombay Sales Tax (Validating Provisions) Act, 1957, were not then enacted, at any time, within eight years, and in any case where he has reason to believe that the dealer has concealed the particulars of such sales or purchases or has knowingly furnished incorrect returns, at any time within eight years and, in any other case, at any time within five years of the end of that year, serve on the dealer liable to pay the tax in respect of such turnover a notice containing all or any of the requirements which may be included in a notice under sub-section (3) of section 14 and may proceed to assess or reassess the amount of the tax due from such dealer and the provisions of this Act shall apply accordingly as if the notice were a notice served under that sub-section :Provided that the amount of the tax shall be assessed after making the deductions permitted from time to time under the Bombay Sales Tax Act, 1948, the Bombay Sales Tax (No. 2) Ordinance, 1952, and this Act, as the case may be, at the rates at which it would have been assessed had the turnover not escaped assessment or full assessment as the case may be :rovided further that where in respect of such turnover or deduction, as the case may be, an order has already been passed under section 30 or section 31, the Collector shall make a report to the appropriate appellate or revising authority, as the case may be, which shall thereupon after giving the dealer concerned a reasonable opportunity of being heard, pass such order as it deems fit."13. This provision leaves no doubt that the dissolution of a firm cannot operate as a bar to a fresh assessment of the turnover which had escaped assessment, provided that the action contemplated therein is taken within the specified period. In substance, section 15(1) provides that if the Collector is satisfied that any turnover has escaped assessment or has been under-assessed or assessed at a lower rate or any deductions have been wrongly made therefrom, he can after serving a notice on the assessee proceed to assess or reassess the amount of the tax due from him. It is a clear and necessary implication of section 15(1) that even a dissolved firm can be assessed or reassessed within the period mentioned therein. The dissolution cannot operate as a bar to the exercise by the Collector of his power to reopen an assessment and indeed it is difficult to conceive that in matters as vital to the administration of sales tax as the assessment of suppressed turnovers, the legislature could have contemplated that the liability to reassessment could be avoided by the erring firm by the simple expedient of winding up its affairs.14. Section 15(1) contains an important clause that action thereunder can be taken by the Collector after giving a notice to the assessee under section 14(3) of the Act within the prescribed period. Once such a notice is given, the Collector gets the jurisdiction to assess or reassess the amount of tax due from the dealer and all the provisions of the Act "shall apply accordingly as if the notice were a notice served under" section 14(3). Section 14(3) speaks of the power of the Collector to assess the amount of tax due from the dealer after giving notice to him, if the Collector is not satisfied that the returns furnished are correct and complete. The jurisdiction to assess or reassess which is conferred by section 15(1) is thus equated with the original jurisdiction to assess the dealer under section 14. By this method, the continuity of the legal personality of the assessee is maintained in order to enable the assessment of turnover which has escaped assessment. It is no answer to a notice under section 15 that the partners having dissolved the firm, the assessment cannot be reopened. It puts a premium on ones credulity to accept that having created a special jurisdiction to assess or reassess an escaped turnover, the legislature permitted that salutary jurisdiction to be defeated by the device of dissolution. The argument of the appellants really comes to this : suppress the turnover, evade the sales tax, dissolve the firm and earn your freedom from taxation.Importantly, the notice dated November 21, 1963, for reopening the assessment for the period April 1, 1957, to March 31, 1958, was served on the firm under section 15. On reassessment, the firm was assessed to a sales tax of Rs. 1, 95, 582.47 on sales suppressed during that period.15. Section 15A confers on the Collector analogous powers to assess or reassess a dealer for taxes due prior to November 21, 1956, when the States were reorganised, if either no assessment was made for the prior period or if any turnover had escaped assessment. This provision, like the one contained in section 15, is of general application and makes no exception in favour of dissolved firms. Therefore, if a firm was not assessed prior to the reorganisation of States or if any part of its turnover had escaped assessment, it is competent to the Collector to assess or reassess the firm notwithstanding its subsequent dissolution. This is the necessary implication of section 15A. It must follow as a corollary that the power to rectify a mistake apparent from the record can be exercised by the Collector under section 35 of the Act of 1953 even after the dissolution of an assessed firm, though on conditions specified in the section. The section contains a compelling implication that evident errors can be corrected no matter whether the firm is in existence or is dissolved. Dissolution is not a panacea for liability to pay sales tax. A difficulty was raised on behalf of the appellants that on the dissolution of the firm the principle of agency would cease to apply as amongst the partners and therefore no partner would have the right to represent either the firm or any of the other partners in the proceeding under section 15, commenced or continued after the dissolution of the firm. This question does not bear on the liability of a dissolved firm to be assessed or the power of the Collector to assess a dissolved firm under section 15. It may perhaps be that in the assessment of a dissolved firm, each of the erstwhile partners may have a right to be heard because each of them would be interested in warding off a liability which may fall on them jointly and severally. But that is more a matter of procedure which the assessing authority must adopt in the assessment proceedings in order to give efficacy to the order which may eventually be passed in the proceedings. Who, in the assessment proceedings against a dissolved firm, has the right to be heard will not determine whether a dissolved firm can be assessed under the Act of 1953.Sub-sections (3)(i) and (3)(ii) of section 26 provide that when a firm liable to pay the tax is dissolved, it shall be liable to pay the tax on the goods allotted to any partner "as if" the goods had been sold to such partner, unless he holds a certificate of registration or obtains it within the prescribed period. This provision in terms envisages the assessment of a dissolved firm, though only to the limited extent and for the limited purpose that the goods allotted to a partner at the time of dissolution shall be deemed to have been sold to that partner. By the use of the words "as if", section 26(3)(ii) creates a fiction that the allotment of goods to a partner on dissolution of the firm shall be deemed to be a sale made by the dissolved firm to that partner. The fiction cannot be extended further than the sub-section warrants but there is no fiction in regard to the liability of the dissolved firm to be assessed to sales tax in respect of the goods thus deemed to be sold. The imposition of such a liability is in keeping with the general scheme of the Act, the various provisions of which show that the assessment of a dissolved firm is within the clear intendment of the statute.16. The construction which we have placed on these provisions of the 1953 Act does no violence to the familiar principle, which, in Cape Brandy Syndicate v. Commissioners of Inland Revenue [(1921) 12 Tax Cas. 358 at 366], was expressed thus by Rowlatt, J. :"In a taxing statute one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."17. The principle was approved and adopted by this court in several decisions : A. V. Fernandez v. State of Kerala [[1957] 8 S.T.C. 561 (S.C.); [1957] S.C.R. 837], Commissioner of Income-tax, Bombay v. Provident Investment Co. Ltd. [[1957] 32 I.T.R. 190 (S.C.); [1957] S.C.R. 1141], Commissioner of Income-tax, Madras v. Ajax Products Ltd. [[1965] 55 I.T.R. 741 (S.C.); [1965] 1 S.C.R. 700], Commissioner of Income-tax, Gujarat v. M/s. B. M. Kharwar [[1969] 72 I.T.R. 603 (S.C.); [1969] 1 S.C.R. 651], Commissioner of Income-tax, West Bengal v. Vegetable Products Ltd. [[1973] 88 I.T.R. 192 (S.C.); [1973] 3 S.C.R. 448]. The principle is variously expressed by saying that in fiscal statutes one must have regard to the letter of the law and not to the spirit of the law, that the subject cannot be taxed by inference or analogy, that in a taxing Act there is no governing principle to look at and one has simply to go on the Act itself to see whether the tax claimed is that which the statute imposes, that while construing taxing Acts it is not the function of the court to give to the words used a strained and unnatural meaning and that the subject can be taxed only if the revenue satisfies the court that the case falls strictly within the provisions of the law.The principle thus stated has hardly ever been doubted but it is necessary in the application of that principle to remember that though the benefit of an ambiguity in a taxing provision must go to the subject and the taxing provision must receive a strict construction, "that is not the same thing as saying that a taxing provision should not receive a reasonable construction" : Wealth-tax Commissioner v. Kripashankar [[1971] 81 I.T.R. 763 (S.C.); (1971) 2 S.C.C. 570]. If the statute contains a lacuna or a loophole, it is not the function of the court to plug it by a strained construction in reference to the supposed intention of the legislature. The legislature must then step in to resolve the ambiguity and so long as it does not do so, the taxpayer will get the benefit of that ambiguity. But, equally, courts ought not to be astute to hunt out ambiguities by an unnatural construction of a taxing section. Whether the statute, even a taxing statute, contains an ambiguity has to be determined by applying normal rules of construction for interpretation of statutes. As observed by Lord Cairns in Pryce v. Monmouthshire Canal and Railway Companies [(1879) 4 App. Cas. 197], cases which have decided that taxing Acts are to be construed with strictness, and that no payment is to be exacted from the subject which is not clearly and unequivocally required by Act of Parliament to be made, probably meant little more than this, that, inasmuch as there was not any a priori liability in a subject to pay any particular tax, nor any antecedent relationship between the taxpayer and the taxing authority, no reasoning founded upon any supposed relationship of the taxpayer and the taxing authority could be brought to bear upon the construction of the Act and, therefore, the taxpayer had a right to stand upon a literal construction of the words used, whatever might be the consequences.The true implication of the principle that a taxing statute must be construed strictly is often misunderstood and the principle is unjustifiably extended beyond the legitimate field of its operation. Indeed, the more well-expressed the principle as in the Cape Brandy case [(1921) 12 Tax Cas. 358], greater the reluctance to see its limitations. In that famous passage marked by a happy turn of phrase, Rowlatt, J., said, "there is no equity about a tax. There is no presumption as to a tax". There is no equity about a tax in the sense that a provision by which a tax is imposed has to be construed strictly, regardless of the hardship that such a construction may cause either to the treasury or to the taxpayer. If the subject falls squarely within the letter of law he must be taxed, howsoever inequitable the consequences may appear to the judicial mind. If the revenue seeking to tax cannot bring the subject within the letter of law, the subject is free no matter that such a construction may cause serious prejudice to the revenue. In other words, though what is called equitable construction may be admissible in relation to other statutes or other provisions of a taxing statute, such a construction is not admissible in the interpretation of a charging or taxing provision of a taxing statute. Speaking for the court in Commissioner of Income-tax, Madras v. Ajax Products Ltd. [[1965] 55 I.T.R. 741 at 747 (S.C.); [1965] 1 S.C.R. 700 at 706], Subba Rao, J., after citing the passage from the judgment of Rowlatt, J., in the Cape Brandy case [(1921) 21 Tax Cas. 358], said : "To put it in other words, the subject is not to be taxed unless the charging provision clearly imposes the obligation."18. We are concerned in this case to determine not whether a particular turnover can be brought to sales tax but whether if the turnover was liable to be charged to sales tax, the firm can be assessed to tax after its dissolution. In other words, we are concerned with a provision which prescribes the machinery for the computation of tax and not with a charging provision of the Sales Tax Acts.In Commissioner of Income-tax, Bengal v. Mahaliram Ramjidas [[1940] 8 I.T.R. 442 at 448 (P.C.); 67 I.A. 239 at 247], it was held by the Privy Council that section 34 of the Income-tax Act, 1922, although a part of a taxing Act, imposed no charge on the subject but dealt merely with the machinery of assessment. Lord Normand who delivered the judgment of the Judicial Committee observed : "In interpreting provisions of this kind the rule is that that construction should be preferred which makes the machinery workable, ut res valeat potius quam pereat." In India United Mills v. Commissioner of Excess Profits Tax [[1955] 27 I.T.R. 20 at 25 (S.C.); [1955] 1 S.C.R. 810, 816], this court held that section 15 of the Excess Profits Tax Act was not a charging section but a machinery section, "and a machinery section should be so construed as to effectuate the charging sections". Section 15 was intended to vest in the Excess Profits Tax Officer a power to amend the assessment, when it was found that the relief granted was in excess of what the law allowed. One of the sections under which relief could be granted was section 26(3). This court held that section 15 must be so interpreted as to confer a power on the Excess Profits Tax Officer to revise the assessment when relief had been erroneously granted under section 26(3). In Gursahai Saigal v. Commissioner of Income-tax, Punjab [[1963] 48 I.T.R. 1 at 5 (S.C.); [1963] 3 S.C.R. 893 at 899], an assessee was called upon to pay interest under section 18A(8) of the Income-tax Act, 1922, for failure to make an estimate of his income and pay tax according to that estimate under section 18A(3). The assessee relied on the rule of construction formulated by Rowlatt, J., in the Cape Brandy case [(1921) 12 Tax Cas. 358], and contended that he could not be charged with interest as it was not possible to calculate interest in accordance with sub-section (6) by reason of his not having paid tax at all. This court approved the ratio of the Privy Council in Mahaliram Ramjidass case [[1940] 8 I.T.R. 442 (P.C.); 67 I.A. 239] and held that it was well-recognised that the rule of construction on which the assessed relied applied only to a taxing provision and had no application to all provisions in a taxing statute. The court observed that the rule did not apply to a provision not creating the charge for the tax but laying down the machinery for its calculation or procedure for its collection. Sarkar, J., speaking for the court, said : "The provisions in a taxing statute dealing with machinery for assessment have to be construed by the ordinary rules of construction, that is to say, in accordance with the clear intention of the legislature which is to make a charge levied effective" : Gursahai Saigal v. Commissioner of Income-tax [[1963] 48 I.T.R. 1 at 5 (S.C.); [1963] 3 S.C.R. 893 at 899]. Sub-section (6) was accordingly read by the court in a manner which made it workable, thereby preventing the clear intention of sub-section (8) being defeated.It is indisputable that the first appellant-firm was liable to be charged to sales tax on its business turnover. The charging provisions are contained in Chapter III of the Act of 1953 and Chapter II of the Act of 1959. In this appeal, we have to construe the machinery provisions of those Acts. In accordance with the view taken in the cases cited above, the machinery sections ought to be construed so as to effectuate the charging sections. The construction which we have placed on the machinery provisions of the 1953 Act will give meaning and content to the charging sections, in the sense that our construction will effectuate the provision contained in the charging sections. The resourcefulness and ingenuity which go into well-timed dissolution of firms ought not to be allowed to be used as convenient instruments of tax evasion. As observed by Lord Dunedin in Whitney v. Commissioners of Inland Revenue [(1925) 10 Tax Cas. 88] : "A statute is designed to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable." Far from there being any crucial omission or a clear direction in the present case which would make the end unattainable, the various provisions to which we have drawn attention leave it in no doubt that a dissolved firm can be assessed on its pre-dissolution turnover.19. The Bombay Sales Tax Act, 1959, presents no difficulty as its provisions are even clearer than those of the 1953 Act. Section 2(11) of the 1959 Act defines a dealer to mean "any person who carries on the business of buying or selling goods ...." Under section 2(19), "person" includes, inter alia, a firm. There is therefore no doubt that a firm is a distinct assessable entity under the 1959 Act also.Section 19(3) of the 1959 Act puts the matter under inquiry beyond all doubt by providing :"Where a dealer, liable to pay tax under this Act, is a firm, and the firm is dissolved, then every person who was a partner shall be jointly and severally liable to pay to the extent to which he is liable under section 18, the tax (including any penalty) due from the firm under this Act or under any earlier law, up to the time of dissolution, whether such tax (including any penalty) has been assessed before such dissolution but has remained unpaid or is assessed after dissolution."20. This provision in terms envisages the assessment of a dissolved firm by providing that erstwhile partners of a dissolved firm shall be liable jointly and severally to pay the tax and penalty due from the firm whether the tax, including any penalty, has been assessed before or after the dissolution. The assessment which the sub-section speaks of is assessment of the firm as such because where the assessment is made on the partners themselves, it was unnecessary to provide that they shall be liable jointly and severally to pay the tax assessed on them. The joint and several liability of the partners in respect of taxes which the firm is liable to pay is provided by section 18. The purpose of section 19(3) is to make the partners jointly and severally liable even if the firm is assessed to sales tax after its dissolution. Section 19(3) would otherwise be otiose. Thus, section 19(3) of the 1959 Act makes explicit what was implicit in the Act of 1953.21. It is relevant, though we did not refer to this aspect while dealing with the provisions of the 1953 Act, that section 19(3) of the 1959 Act contains a clear indication that the legislature intended that a dissolved firm could be assessed under the 1953 Act also. Section 19(3) speaks of the liability of partners for the tax due from a dissolved firm and provides that they shall be jointly and severally liable to pay the tax due from the firm under the Act of 1959 or "under any earlier law", whether such tax has been assessed before or after dissolution. Section 2(12) of the 1959 Act defines "earlier law" to mean, inter alia, the Bombay Sales Tax Act, 1953. Thus, one of the postulates of section 19(3) at any rate is that a dissolved firm could be assessed under the 1953 Act. Such a postulate accords with the principle that if the legislature provided for a charge of sales tax, if could not have intended to render that charge ineffective by permitting the partners to dissolve the firm, an easy enough thing to do. Nothing, in fact, would be easier to evade a tax liability than to declare that the firm, admittedly liable to pay tax, has been dissolved. Section 19(3) of the 1959 Act not only makes clear what was necessarily implied in the 1953 Act, but it throws additional light on the true construction of the earlier law. But we though it advisable to keep section 19(3) of the 1959 Act apart while construing the 1953 Act because it is the courts, not the legislature, who have to construe the laws of the land authoritatively. As said in Craies on Statute Law, "expect as a parliamentary exposition, subsequent Acts are not to be relied on as an aid to the construction of prior unambiguous Acts" (6th Ed., p. 146). The limited use which may be made of the language of section 19(3) of the 1959 Act, though such a course is unnecessary, is for saying that it serves to throw some light on the Act of 1953, in case the argument is that the Act of 1953 is ambiguous.Section 19(3) being quite clear and explicit, it is unnecessary to dwell on the other provisions of the Act of 1959 in order to show that a dissolved firm can be assessed under it. We may only point out that the Act of 1959 contains provisions similar to those in sections 15, 15A and 35 of the Act of 1953 on which we have dwelt at some length. Those provisions can be found in sections 35, 35A and 62 of the Act.22. The view taken by a Full Bench of the Madras High Court in Sales Tax Officer (XIX), Enforcement Branch, Bombay v. K. M. S. Mari Chettiar [[1975] 35 S.T.C. 148] that a dissolved firm can be assessed under the Act of 1959 is, in our opinion, correct though it was wholly unnecessary to say that the words "is assessed after dissolution" occurring in section 19(3) should be read as "is assessed after dissolution as if the firm exists". Such an addition is superfluous and serves to make the meaning of the sub-section no clearer than it is.

Decision:
0[ds]11. It is plausible that a distinction ought to be made between the death of an individual and the dissolution of a firm. Human beings, as assessees, are not generally known to court death to evade taxes. Death, normally, is not volitional and it is understandable that on the death of an individual, his liability to be assessed to tax should come to an end unless the statute provides to the contrary. With firms it is different, because a firm which incurs during its existence a liability to pay sales tax may, with a little ingenuity, evade its liability by the voluntary act of dissolution. The dissolution of a firm could therefore be viewed differently from the death of an individual and the partners could be denied the advantage of their own wrong. But we do not want to strike this new path because the Jullundur case [[1966] 17 S.T.C. 326 (S.C.); [1966] 2 S.C.R. 457] and the two cases which follow it have likened the dissolution of a firm to the death of an individual. Let us therefore proceed to examine the other provisions of the 1953 Act.This provision leaves no doubt that the dissolution of a firm cannot operate as a bar to a fresh assessment of the turnover which had escaped assessment, provided that the action contemplated therein is taken within the specified period. In substance, section 15(1) provides that if the Collector is satisfied that any turnover has escaped assessment or has beenor assessed at a lower rate or any deductions have been wrongly made therefrom, he can after serving a notice on the assessee proceed to assess or reassess the amount of the tax due from him. It is a clear and necessary implication of section 15(1) that even a dissolved firm can be assessed or reassessed within the period mentioned therein. The dissolution cannot operate as a bar to the exercise by the Collector of his power to reopen an assessment and indeed it is difficult to conceive that in matters as vital to the administration of sales tax as the assessment of suppressed turnovers, the legislature could have contemplated that the liability to reassessment could be avoided by the erring firm by the simple expedient of winding up its affairs.14. Section 15(1) contains an important clause that action thereunder can be taken by the Collector after giving a notice to the assessee under section 14(3) of the Act within the prescribed period. Once such a notice is given, the Collector gets the jurisdiction to assess or reassess the amount of tax due from the dealer and all the provisions of the Act "shall apply accordingly as if the notice were a notice served under" section 14(3). Section 14(3) speaks of the power of the Collector to assess the amount of tax due from the dealer after giving notice to him, if the Collector is not satisfied that the returns furnished are correct and complete. The jurisdiction to assess or reassess which is conferred by section 15(1) is thus equated with the original jurisdiction to assess the dealer under section 14. By this method, the continuity of the legal personality of the assessee is maintained in order to enable the assessment of turnover which has escaped assessment. It is no answer to a notice under section 15 that the partners having dissolved the firm, the assessment cannot be reopened. It puts a premium on ones credulity to accept that having created a special jurisdiction to assess or reassess an escaped turnover, the legislature permitted that salutary jurisdiction to be defeated by the device of dissolution. The argument of the appellants really comes to this : suppress the turnover, evade the sales tax, dissolve the firm and earn your freedom from taxation.Importantly, the notice dated November 21, 1963, for reopening the assessment for the period April 1, 1957, to March 31, 1958, was served on the firm under section 15. On reassessment, the firm was assessed to a sales tax of Rs. 1, 95, 582.47 on sales suppressed during thatsection contains a compelling implication that evident errors can be corrected no matter whether the firm is in existence or is dissolved. Dissolution is not a panacea for liability to pay sales tax. A difficulty was raised on behalf of the appellants that on the dissolution of the firm the principle of agency would cease to apply as amongst the partners and therefore no partner would have the right to represent either the firm or any of the other partners in the proceeding under section 15, commenced or continued after the dissolution of the firm. This question does not bear on the liability of a dissolved firm to be assessed or the power of the Collector to assess a dissolved firm under section 15. It may perhaps be that in the assessment of a dissolved firm, each of the erstwhile partners may have a right to be heard because each of them would be interested in warding off a liability which may fall on them jointly and severally. But that is more a matter of procedure which the assessing authority must adopt in the assessment proceedings in order to give efficacy to the order which may eventually be passed in the proceedings. Who, in the assessment proceedings against a dissolved firm, has the right to be heard will not determine whether a dissolved firm can be assessed under the Act of(3)(i) and (3)(ii) of section 26 provide that when a firm liable to pay the tax is dissolved, it shall be liable to pay the tax on the goods allotted to any partner "as if" the goods had been sold to such partner, unless he holds a certificate of registration or obtains it within the prescribed period. This provision in terms envisages the assessment of a dissolved firm, though only to the limited extent and for the limited purpose that the goods allotted to a partner at the time of dissolution shall be deemed to have been sold to that partner. By the use of the words "as if", section 26(3)(ii) creates a fiction that the allotment of goods to a partner on dissolution of the firm shall be deemed to be a sale made by the dissolved firm to that partner. The fiction cannot be extended further than thewarrants but there is no fiction in regard to the liability of the dissolved firm to be assessed to sales tax in respect of the goods thus deemed to be sold. The imposition of such a liability is in keeping with the general scheme of the Act, the various provisions of which show that the assessment of a dissolved firm is within the clear intendment of the statute.This provision in terms envisages the assessment of a dissolved firm by providing that erstwhile partners of a dissolved firm shall be liable jointly and severally to pay the tax and penalty due from the firm whether the tax, including any penalty, has been assessed before or after the dissolution. The assessment which thespeaks of is assessment of the firm as such because where the assessment is made on the partners themselves, it was unnecessary to provide that they shall be liable jointly and severally to pay the tax assessed on them. The joint and several liability of the partners in respect of taxes which the firm is liable to pay is provided by section 18. The purpose of section 19(3) is to make the partners jointly and severally liable even if the firm is assessed to sales tax after its dissolution. Section 19(3) would otherwise be otiose. Thus, section 19(3) of the 1959 Act makes explicit what was implicit in the Act of 1953.21. It is relevant, though we did not refer to this aspect while dealing with the provisions of the 1953 Act, that section 19(3) of the 1959 Act contains a clear indication that the legislature intended that a dissolved firm could be assessed under the 1953 Act also. Section 19(3) speaks of the liability of partners for the tax due from a dissolved firm and provides that they shall be jointly and severally liable to pay the tax due from the firm under the Act of 1959 or "under any earlier law", whether such tax has been assessed before or after dissolution. Section 2(12) of the 1959 Act defines "earlier law" to mean, inter alia, the Bombay Sales Tax Act, 1953. Thus, one of the postulates of section 19(3) at any rate is that a dissolved firm could be assessed under the 1953 Act. Such a postulate accords with the principle that if the legislature provided for a charge of sales tax, if could not have intended to render that charge ineffective by permitting the partners to dissolve the firm, an easy enough thing to do. Nothing, in fact, would be easier to evade a tax liability than to declare that the firm, admittedly liable to pay tax, has been dissolved. Section 19(3) of the 1959 Act not only makes clear what was necessarily implied in the 1953 Act, but it throws additional light on the true construction of the earlier law. But we though it advisable to keep section 19(3) of the 1959 Act apart while construing the 1953 Act because it is the courts, not the legislature, who have to construe the laws of the land authoritatively. As said in Craies on Statute Law, "expect as a parliamentary exposition, subsequent Acts are not to be relied on as an aid to the construction of prior unambiguous Acts" (6th Ed., p. 146). The limited use which may be made of the language of section 19(3) of the 1959 Act, though such a course is unnecessary, is for saying that it serves to throw some light on the Act of 1953, in case the argument is that the Act of 1953 is ambiguous.Section 19(3) being quite clear and explicit, it is unnecessary to dwell on the other provisions of the Act of 1959 in order to show that a dissolved firm can be assessed under it. We may only point out that the Act of 1959 contains provisions similar to those in sections 15, 15A and 35 of the Act of 1953 on which we have dwelt at some length. Those provisions can be found in sections 35, 35A and 62 of the Act.22. The view taken by a Full Bench of the Madras High Court in Sales Tax Officer (XIX), Enforcement Branch, Bombay v. K. M. S. Mari Chettiar [[1975] 35 S.T.C. 148] that a dissolved firm can be assessed under the Act of 1959 is, in our opinion, correct though it was wholly unnecessary to say that the words "is assessed after dissolution" occurring in section 19(3) should be read as "is assessed after dissolution as if the firm exists". Such an addition is superfluous and serves to make the meaning of theno clearer than it is.