Deemed partner liability after firm dissolution permits recovery of sales tax arrears without fresh demand notice.

Section 3-C of the U.P. Sales Tax Act preserves the tax liability of a firm after dissolution by legal fiction, treating the dissolved firm's tax as still assessable and deeming partners at the time of dissolution to be jointly and severally liable as dealers. On that basis, recovery machinery continues against the firm and its partners, and a separate fresh notice of demand to each partner is not required where notice had already been served on the firm. The court held that arrears could be recovered from a partner as arrears of land revenue, and authorities arising under different statutory settings were inapplicable because the statute itself provided the deeming and recovery scheme.

---

---

Issues: Whether, on dissolution of a firm, the arrears of sales tax payable by the firm could be recovered from a partner without serving a fresh notice of demand on him.

Analysis: Section 3-C of the U.P. Sales Tax Act creates a legal fiction that on discontinuance or dissolution the tax liability of the firm continues to be assessable as if no discontinuance had taken place, and every partner at the time of dissolution becomes jointly and severally liable for the tax payable by the firm and is deemed to be a dealer. The machinery for assessment and recovery therefore continues against the dissolved firm and its partners without requiring a fresh notice of demand to each partner. Once a notice of demand has been served on the firm, the partner can be proceeded against for recovery of the arrears as arrears of land revenue. Authorities dealing with different statutory settings, including a legal representative of a deceased assessee, were held inapplicable because the present provision itself contains the deeming fiction and recovery machinery.

Conclusion: A fresh notice of demand was not required before recovering the arrears from the partner of the dissolved firm, and the question was answered in the negative in favour of the revenue.

Ratio Decidendi: Where the statute deems the partner of a dissolved firm to be a dealer and preserves the tax liability of the firm by a legal fiction, recovery of arrears may proceed against the partner without a separate notice of demand.

---