Post-dissolution sales tax assessment remains valid when liability arose earlier and no dissolution notice was given

A firm that carried on taxable business during the relevant period remained liable to sales tax even after dissolution. Where assessment proceedings had already begun before dissolution and no notice of dissolution was given to the Sales Tax Officer within the prescribed time, the assessing authority could validly complete the pending assessment. The firm was treated as a compendious name for its partners, so dissolution did not extinguish the tax liability already incurred. On that basis, the post-dissolution assessment was upheld and the challenge failed.

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Issues: Whether a firm registered as a dealer under the Hyderabad General Sales Tax Act could be validly assessed to sales tax for a period when it carried on business, even though it had been dissolved before the assessment order was made.

Analysis: The petitioners' firm had carried on business during the relevant period and had become liable to tax for that business. Assessment proceedings had commenced before dissolution and continued thereafter without any intimation of dissolution being given to the Sales Tax Officer, although rule 35 required such notice within thirty days. A firm is only a compendious name for its partners and does not lose liability for tax on dissolution. The absence of notice of dissolution meant that the assessing authority did not act without jurisdiction in completing the pending assessment.

Conclusion: The firm could be assessed after dissolution, and the challenge to the assessment failed.

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