Tax assessment after firm dissolution requires express statutory power; liability rules alone cannot authorise assessment post-dissolution.

Under the unamended Bengal Sales Tax Act, 1941 as extended to Delhi, a dissolved firm could not be assessed after dissolution because the Act then contained no express or necessary implied power to do so. Rules imposing joint and several liability on partners for payment of tax were held insufficient to create substantive assessment jurisdiction, and the later insertion of Section 12F was treated as a new deeming provision rather than a merely clarificatory change. Applying strict construction of fiscal legislation, the Delhi HC held that the post-dissolution assessments had no legal basis and quashed the impugned assessment orders.

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Issues: Whether a firm dissolved before the assessment orders were made could be assessed under the unamended Bengal Sales Tax Act, 1941 as extended to Delhi, and whether the liability provisions in the rules or the later statutory amendment could sustain assessments for the pre-amendment assessment years.

Analysis: The Act, as it stood before the 1972 amendment, contained no express provision empowering assessment of a dissolved firm. Rule 39 and Rule 39(1A) imposed joint and several liability on partners for payment of tax, but they did not create the substantive power to assess a firm after dissolution. The later insertion of Section 12F showed that the legislature deliberately supplied a new deeming provision under which a discontinued firm could be assessed as if discontinuance had not occurred. The amendment was treated as significant and not merely clarificatory or retrospective. The reasoning in the Bombay Sales Tax cases was distinguished because the Bengal Act lacked the corresponding provisions that had influenced those decisions. Applying the strict rule of construction governing fiscal statutes, the Court held that nothing could be read into the unamended Act by implication to authorize assessment of a dissolved firm.

Conclusion: The dissolved firm was not assessable under the unamended Act, and the assessment proceedings and orders made after dissolution were bad.

Final Conclusion: The writ petition succeeded and the impugned assessments against the dissolved firm for the relevant years were quashed.

Ratio Decidendi: In a taxing statute, a dissolved firm cannot be assessed unless the statute expressly or by clear necessary implication confers that power; a rule imposing only joint and several liability for payment does not by itself authorize assessment after dissolution.

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