Reconstituted firm liability for prior sales tax dues upheld where change in constitution was found.

Where a firm is reconstituted and the later concern continues from the same premises with members of the same family, section 3-C of the Sales Tax Act permits recovery of prior sales tax dues from the reconstituted firm and its partners. The proviso to section 3-C was treated as fastening joint and several liability on the reconstituted firm and the earlier partners for tax and penalty due for the preceding period. On the facts, the material before the Sales Tax Officer was not displaced, so the challenge to recovery failed and the liability was upheld.

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Issues: Whether the sales tax dues of the earlier business could be recovered from the reconstituted firm and its partners under section 3-C of the Sales Tax Act.

Analysis: The material before the Sales Tax Officer showed that the later firm was carried on by members of the same family from the same premises after the earlier business had ceased, and the petitioners did not place convincing material to dislodge that conclusion. Section 3-C, including its proviso, fastens liability where there is a change in the constitution of the firm and makes the reconstituted firm as well as the partners of the earlier firm jointly and severally liable for tax, including penalty, due for the prior period. On that basis, recovery of the outstanding dues from the reconstituted concern was legally permissible.

Conclusion: The challenge to recovery failed and the liability of the reconstituted firm and its partners was upheld.

Final Conclusion: The petition was dismissed, while leaving the petitioners to pursue their objection before the Sales Tax Officer in accordance with law.

Ratio Decidendi: Where a firm is reconstituted or a change in constitution is found, the reconstituted firm and the former partners may be proceeded against jointly and severally for pre-reconstitution sales tax dues.

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