Law: Sales Tax Act, (III of 1951)

Section: 3,31,28,10(3)

Law: Income Tax Act, 1922

Section: 44,25,41,3(1)(a)

Sales-tax Act, 1951 -- Sections 3(1)(a), 28, 31 -- Company -- Manufacturer -- Discontinuance of business -- Levy of sales-tax -- Goods manufactured by company liable to sales-tax -- Subsequently company going into liquidation and business discontinued -- Whether a bar to levy of sales-tax on goods manufactured -- Held no -- Whether sales-tax can be levied on defunct company -- Held yes -- Provisions of Section 31 of the Act and rule 41 of the Sales-tax Rules -- Whether applicable -- Held no -- Income-tax Act, Section 44 -- ORDER The order was passed by M.T. SIDDIQUI, Judicial Member.--- This appeal challenge in a nut-shell the very legality of the assessment made. 2. The facts indicate that the appellant who was a manufacturer within the meaning of Section 3 of the Sales-tax was not found as taxable for the charge year 1959-60 according to the orders passed by the Sales-tax Officer on 31.12.1963. Later on it was discovered that in fact the appellant was liable to tax and consequently proceedings under Section 28 were initiated. The appellant complied with the requisitions and the Sales-tax Officer in consequence adopted the taxable sales at Rs. 16,021 and subjected the same to tax at the rate of 25%. The quantum of the sales or the rate are not in dispute. An appeal was however taken to the Appellant Assistant Commissioner on the ground that since the business in this case has been discontinued the assessee company having gone into liquidation on 11.7.1964 the proceedings started by the Sales-tax Officer were invalid within the meaning of Section 31 of the Sales-tax Act, 1951 and rule 41 made thereunder. Neither of the two pleas found favour with the Appellate Assistant Commissioner and the appeal was accordingly dismissed. 3. Before us besides taking the above two pleas the appellant's representative further contended that assessment could not be framed this case as the business had ceased to exist and the appellant company had gone into liquidation. He contended that Section 3 of the Sales-tax Act which is the charging section provided an immunity to the appellant as at the time the action as initiated, no tax was payable by the appellant and this condition…

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