Firm assets must be exhausted before partner recovery; pendente lite transfers may be void against revenue claims.

Recovery of disputed sales tax dues against a partner was not sustained where the firm's land, building and machinery were available and the firm's assets had not first been worked against; the Court treated recovery from the partner as premature on the facts presented. Transfers of firm property made during the pendency of proceedings were also treated as prima facie hit by Section 59A of the Haryana General Sales Tax Act, 1973, which renders transfers intended to defraud revenue void against tax claims. The impugned notice was quashed and the matter remitted for fresh proceedings after hearing the concerned persons and considering objections.

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Issues: Whether the impugned recovery notice could be sustained when the disputed sales tax dues were sought to be recovered from a partner despite the existence of firm assets and where transfers of firm property were made during pendency of proceedings.

Analysis: The liability arose in proceedings under the Haryana General Sales Tax Act, 1973. The Court noted that the land, building and machinery used for the rice sheller belonged to the firm and that, even assuming the partnership disputes were unresolved, recovery of dues of the firm ought first to be worked out against the assets of the firm. It further held that the transfers made by respondent No. 4 during pendency of the proceedings were prima facie hit by Section 59A of the Haryana General Sales Tax Act, 1973, which renders transfers intended to defraud revenue void as against tax claims, though no final finding was recorded against transferees who were not before the Court.

Conclusion: The impugned notice was quashed and the matter was remitted to the authorities to proceed in accordance with law after hearing the persons concerned and considering their objections.

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