Invalid tax assessments and dissolved firm liability fail where the rule is ultra vires and no statutory power exists.

Assessment orders founded on rule 16(2) of the Madras General Sales Tax rules could not survive once that rule was declared ultra vires, because the legal basis for the demands disappeared and the assessments became void and unenforceable. A dissolved partnership firm also could not be assessed after dissolution in the absence of an express statutory provision authorising such assessment; the saving clause relied on did not create fresh jurisdiction over a defunct firm. On both grounds, the impugned assessments lacked legal authority and were unsustainable.

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Issues: (i) Whether assessment orders made under rule 16(2) could survive after that rule was struck down as ultra vires; (ii) whether a dissolved partnership firm could be assessed after dissolution in the absence of an express statutory provision.

Issue (i): Whether assessment orders made under rule 16(2) could survive after that rule was struck down as ultra vires.

Analysis: The assessments for the relevant years were founded on rule 16(2) of the rules framed under the Madras General Sales Tax Act, 1939. Once that rule was declared ultra vires, the foundation of the assessments disappeared. An order made under a rule later held invalid cannot be enforced as a valid demand, and the prior finality of the assessment did not save it from the consequence of being rendered void.

Conclusion: The assessments made on the basis of rule 16(2) were void and unenforceable, and the answer is in favour of the assessee.

Issue (ii): Whether a dissolved partnership firm could be assessed after dissolution in the absence of an express statutory provision.

Analysis: The firm had already become defunct before the assessment orders were passed. In the absence of a statutory provision authorising assessment of a dissolved firm, the taxing authority had no power to bring the dissolved firm within the tax net. The saving provision in section 61(1)(ii)(e) did not confer a fresh power of assessment against a firm that had ceased to exist.

Conclusion: The assessment against the dissolved firm was without authority of law, and the answer is in favour of the assessee.

Final Conclusion: The writ petition succeeded because both the impugned assessments lacked legal foundation, one by reason of the invalidity of the rule on which they rested and the other because the firm had already dissolved.

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