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Issues: Whether, after dissolution of a firm, individual notice of demand to each ex-partner under section 13(1) of the Karnataka Sales Tax Act, 1957 was necessary before initiating recovery proceedings under section 13(3) against that ex-partner, despite section 15(2) making ex-partners jointly and severally liable and rule 43(2) permitting service on one ex-partner.
Analysis: Section 15(2) authorises assessment of a dissolved firm as if no dissolution had taken place and declares the liability of former partners to pay the tax assessed. However, liability to pay tax and liability to be proceeded against as a defaulter are distinct stages. A person becomes a defaulter only after a demand notice under section 13(1) is served and payment is not made within time. The provision in rule 43(2) permitting service of demand on any ex-partner does not dispense with individual service for the purpose of proceeding under section 13(3), nor does it deem service on one ex-partner to be service on all. After dissolution, the partners are no longer agents of one another, and notice to one cannot bind the others for recovery proceedings.
Conclusion: Individual notice of demand to the petitioner was mandatory before an application under section 13(3) could be maintained. In its absence, the recovery proceedings were not maintainable and the Magistrate lacked jurisdiction to continue them.
Ratio Decidendi: Where statutory recovery proceedings depend on the recipient becoming a defaulter, a dissolved firm's ex-partner cannot be proceeded against under the recovery provision unless a demand notice is individually served on that ex-partner and payment is then defaulted; joint and several liability for tax does not by itself dispense with the statutory notice requirement.
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