T.L. Viswanatha Iyer, J.
1. The question involved turns upon the interpretation of Rule 5(8) of the Kerala General Sales Tax Rules, 1963, the Rules in brief. Heard Sri P. Raghunath for the petitioner and Sri T. Karunakaran Nambiar, Special Government Pleader (Taxes) for the respondents.
2. One Krisp Biscuit Company was a partnership with six partners, namely, Mrs. V.K. Kunhikadeeja and others, which was carrying on business at Calicut with effect from 14th April, 1980. The petitioner Pramod Foods Pvt. Ltd. is a private limited company registered under the Indian Companies Act, 1956. On 1st July, 1985, five of the partners of the firm Krisp Bisuit Company retired, the petitioner joined the firm as a partner to carry on the business in partnership with Mrs. V.K. Kunhikadeeja. As per the deed of partnership, copy of which is exhibit PI, the major share in the partnership was that of the partner, and it was entitled to 95 per cent of the profits and losses of the firm. This partnership carried on business till 1st April, 1986, when it was dissolved. The business, with all its assets and liabilities, was taken over by the petitioner as a going concern.
3. Krisp Biscuit Company had been registered as a dealer under Section 14 of the Kerala General Sales Tax Act, 1963 (the Act for short). The registration was being renewed from year to year.
4. The petitioner who was carrying on the business after 1st April, 1986, was submitting returns and remitting the amount of tax and surcharge every month as if the registration of the firm continued. The second respondent, namely, the assessing authority, discovered during the course of checking of the accounts that the firm consisting of the petitioner and Kunhikadeeja had been dissolved with effect from 1st April, 1986. He therefore, called upon the petitioner to apply for fresh registration with effect from 1st April, 1986. His point was that in the event of dissolution of a partnership and the business being taken over by an individual the latter must apply for fresh registration. He quoted Rule 6(8)(d) in support of his demand. The petitioner contested this demand for various reasons, which did not however, find favour with the second respondent. The petitioner contests in this original petition the claim made by the second respondent that the petitioner is bound to apply for fresh registration with effect from 1st April, 1986.
5. The facts are clear. There was a partnership in existence between the petitioner and Kunhikadeeja up to and inclusive of 31st March, 1986. The said partnership was admittedly dissolved with effect from 1st April, 1986. The business was taken over by the petitioner, which is a private limited company. The question is whether on these facts, the petitioner is obliged to apply for fresh registration or was entitled to renewal of the old registration.
6. The relevant provisions relating to registration are comprised in Section 14 of the Act and in Rule 5 of the Rules. Shorn of details, Rule 5 requires dealers carrying on business before the commencement of the Act, and those commencing business after the commencement of the Act, whose total turnover was, or reaches, the limit specified to submit to the assessing authority of the area in which his principal place of business is situate, an application for registration. Sub-rule (7) prescribes the mode of signing and verification of the application. Sub-rule (8) with which we are concerned, deals with firms, companies, association of persons or body of individuals. As per Sub-clause (a) of this sub-rule, a partnership firm has to file a copy of the partnership deed and a declaration in form 2 signed by all the partners stating the names and addresses of all the partners and their respective shares in the business, along with the application for registration. Similarly every company or association of persons or body of individuals should file a copy of the memorandum, and articles of association along with the application. Sub-clause (b) provides that if a partner retires from the firm without the partnership being dissolved, he should send a declaration in form 3 to the registering authority within thirty days of his retirement along with a copy of the deed of retirement. Sub-clause (c) provides for an existing dealer forming a partnership in regard to his business in which case he should, within thirty days, send a fresh application for registration in form 1 along with copies of the partnership deed and declaration in form 2. Sub-clause (d) makes provision for dissolution of the firm without the business being discontinued. In such cases where the partnership is dissolved, and the business is taken over by an individual, the latter should apply for fresh registration as provided for in Sub-rule (7). It is under this clause that the second respondent called upon the petitioner to apply for fresh registration.
7. The petitioner's case is twofold. Firstly, it is stated that the business has been taken over not by an individual, but by a private limited company. Secondly, it is stated that Clause (d) of Sub-rule (8) can apply only in cases where a business is taken over by a stranger to the partnership, and not when one of the partners himself takes over, and carries on, the business. A full fledged enquiry is conducted, even at the time the firm is granted registration, into the bona fides of the partners, their solvency, and the like. The same type of enquiry will have to be conducted in the case of a fresh application for registration, which in the case of a partner will be only a duplication of the enquiry already held earlier. This could not have been postulated by the rule-making authority. So runs the argument.
8. The fact that the business is taken over by a private limited company does not exclude the operation of Rule 5(8)(d). 'Individual' in the context of Sub-clause (d) refers generally to the person taking over the business rather than to the characteristic of the said person. A partner need not necessarily be a natural human being. The word 'person' in Section 4 of the Indian Partnership Act contemplates both natural and artificial (i.e., legal) persons [vide Dulichand Laxminarayan v. Commissioner of Income-tax [1956] 29 ITR 635 ]. Further, under Section 12(2) of the Interpretation and General Clauses Act, 1125, the term 'individual' can be read in the plural and as such would include a group of individuals also. It need not therefore be limited to a natural human being in its application to Rule 5(8)(d). Moreover, the term 'individual' has not been defined in the Act. There is authority for the proposition that the word 'individual' is wide enough to include a group of persons forming a unit and not merely a natural human being [vide Commissioner of Income-tax v. Sodra Devi : [1957]32ITR615(SC) ]. It was thus held in Wealth-tax Officer v. C.K. Mammed Kayi : [1981]129ITR307(SC) that the expression 'individual' in Section 3 of the Wealth-tax Act, 1957 includes within its ambit Mappilla Marumakkathayam tarwads also. There is no reason why this term should not therefore be read as comprehending a company also for purpose of Rule 5(S)(d) having regard to the context and the purpose of the said rule. The main ingredient of the sub-clause is the dissolution of the firm. When once there is dissolution, the sub-clause stands attracted. It is immaterial whether the person taking over is an individual or a non-individual.
9. There is also no substance in the contention that this rule only postulates cases of strangers taking over the business. It is true there is some force in the contention that since all the necessary enquiries have already been made, when the erstwhile firm was granted registration, a fresh enquiry on a fresh application for registration will be a duplication, when the business is taken over by a partner himself. But that is not sufficient reason to whittle down the requirement of the rule, the language of which is clear and unambiguous.
10. The very object of registration is to carry out and achieve the object of the Act, namely, the levy and collection of tax for purposes of the State, and to make known to the State the persons on whom the liability to pay tax under the Act lies, so that it may realise the tax from them (vide M.A. Rahman v. State of Andhra Pradesh : [1962]1SCR694 ). This purpose will stand defeated if the person who takes over the business of a firm on its dissolution is not bound to apply for fresh registration. The department may then be totally in the dark as to the persons liable for payment of the tax, and the collection process may well nigh stand delayed, if not defeated.
11. In passing, I may also refer to explanatory note to G.O. Ms. No. 9/83/TD dated 9th February, 1983, by which Rule 5(8) in its present form was introduced, after omitting Sub-rule (23). The relevant portions of the note read as follows :
In W. A. 456/71 (0. P. 4623/69) and W. A. 288/73 (O. P. 151 of 1973) the department held the view that a fresh application for registration in form 1 was necessary when a partnership business was changed into a proprietary business and when a proprietary business was changed into a partnership business. But the High Court of Kerala held that Rule 5(23) requires the assessee only to submit an application for fresh certificate of registration. As the transfer of the business by a firm to an individual and individual to a firm, cannot be considered as a continuation of the business it is considered necessary to make necessary amendments in Sub-rule (8) of Rule 5.
It is obviously from this that Sub-clause (d) was intended to introduce an obligation to apply for fresh registration in all cases of dissolution of the firm followed by taking over of the business by an individual.
12. The petitioner is stated to be a dealer who is prompt in the payment of his taxes. It will be open to the petitioner to make application for fresh registration and the assessing authority will consider and pass orders on the same expeditiously.
The original petition is dismissed. No costs.