Partnership assets cannot be seized for an individual partner's tax arrears; recovery must follow the prescribed procedure.

Movable assets of a continuing partnership firm cannot be seized for recovery of sales tax arrears due from an erstwhile firm merely because one partner continues in the new firm. Although a partner's liability for the old firm's arrears was recognised under section 21A of the Kerala General Sales Tax Act, the recovery method adopted was impermissible because a partner has no definite assignable interest in specific firm property during the subsistence of the partnership. Recovery, if pursued against a partner's interest, must follow the prescribed procedure under Order XXI Rule 49(2) CPC or the corresponding income-tax recovery rule, not direct attachment of the firm's movables.

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Issues: Whether the movable assets of a continuing firm can be attached and seized for recovery of sales tax arrears due from an erstwhile firm, merely because one partner of the old firm continues as a partner in the new firm.

Analysis: The liability of the partner for the arrears of the old firm was accepted under section 21A of the Kerala General Sales Tax Act, 1963, but the method adopted for recovery was held to be impermissible. During the subsistence of a partnership, no partner has a definite assignable interest in any specific asset of the firm, and therefore specific firm property cannot be proceeded against for the personal dues of one partner. The proper course, where a partner's interest is to be reached, is the procedure recognised in Order XXI Rule 49(2) of the Code of Civil Procedure, 1908, or the corresponding provision in rule 32 of Schedule II of the Income-tax Act, 1961, and not outright seizure of the firm's movables. The authorities had seized the movables of the new firm to recover dues of the erstwhile firm, which was not legally sustainable.

Conclusion: The seizure of the movables of the new firm for recovery of the old firm's dues was illegal and improper, and relief was due to the assessee.

Final Conclusion: Specific assets of a continuing partnership firm are not liable to be attached or sold for recovery of the personal tax dues of one partner, and recovery must follow the legally permitted mode against the partner's interest.

Ratio Decidendi: Partnership assets of a going firm cannot be attached for the personal dues of an individual partner unless the statute authorises recovery against the firm itself or the partner's attachable interest is reached through the prescribed procedure.

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