JUDGMENT

SATYANARAYANA RAJU, J.

This is a revision petition filed by the State of Andhra against the decision of the Sales Tax Appellate Tribunal in T.A. No. 56-A of 1953.

The respondent is the son of one K. Janakiram Naidu, who was a railway contractor doing business under the name and style of K. Janakiram Naidu and Sons at Kodur. The father having died, the five sons of the said Janakiram Naidu, of whom the 3rd is the respondent herein, executed a deed of partnership on the 7th of July, 1943, in and by which they had mutually agreed to become partners subject to terms contained in the deed. The deed provides inter alia that the partnership shall be in force for a period of five years from 20th May, 1943, and on the expiry of the period, for such further time as the partners may mutually agree. The partnership was dissolved on the 17th of December, 1951, by a memorandum of agreement entered into at Madras between the respondent and his brothers. It recites that the brothers have been carrying on partnership business under the name and style of Messrs K. Janakiram Naidu and Sons, that disputes have arisen between them regarding the sharing of the assets and liabilities of the abovesaid partnership and that they agree that as from that date they should become divided in status from each other and that the partnership shall also stand dissolved as from that date. It was further agreed that certain sums payable to the aforesaid partnership by the Southern Railway, Madras, in respect of two bills drawn in respect of contract works carried out by Kothandaram Naidu and Bhaktavatsalam Naidu (respondent) on behalf of the partnership should be drawn by another brother Muthyala Narayana Rao Naidu.

In the year of assessment 1949-50, there was a contract with the railway in the same of the partnership of the construction of running rooms at Kondapuram. The Deputy Commercial Tax Officer assessed the respondent on a sum of Rs. 54,745 allowing a deduction of 30 per cent. on his contract work as prescribed. The respondent preferred an appeal to the Commercial Tax Officer contending inter alia that the firm of Janakiram Naidu and Sons also should have been assessed as the business was that of the partnership and not his individual business. The Commercial Tax Officer, however, dismissed his appeal. On a further appeal before the Sales Tax Appellate Tribunal, it was held by the majority of the members that the business was conducted as a partnership business and that therefore the assessment ought to have been properly made only against Messrs. Janakiram Naidu and Sons.

The learned Government Pleader has taken us through the relevant documents. We are satisfied that there was a subsisting partnership during the year of assessment (1949-50) and until its dissolution on the 17th of December, 1951. The contract with the railway itself was entered in the name of the partnership and not in the individual name of the respondent. The contract was entered into on the 24th of November, 1949, during the subsistence of the partnership. The partnership was dissolved by a deed of dissolution on the 17th of December, 1951. It is not suggested that this deed of dissolution is a collusive transaction. So far as the railway is concerned, the contract was with the partnership. What has been urged by the learned Government Pleader is that the deed of partnership provides for a five year term and that there is no document evidencing a renewal of the term. The partnership deed itself provides that the partnership shall be in force for a period of five years and on the expiry of the period, for such further period as the partners may mutually agree. There is nothing in law to prevent the parties by mutual agreement from continuing the partnership after the expiry of the term. The deed of dissolution dated 17th December, 1951, itself provides an effective and complete answer to this contention. The recitals is the deed of dissolution are unambiguous and clear. They show that the brothers had been carrying on the partnership business but that disputes had arisen between them regarding the sharing of the assets and liabilities. It further provides for dissolution as from that date. This contention of the State, therefore, fails.

The learned Government Pleader contends that assuming that the partnership was in existence, the firm is a "dealer" and that the liability of the partners is both joint and several, and that therefore the department is entitled to proceed for the realisation of the tax from the respondent. At the outset, it may by observed that there is an essential distinction between an assessment and the mode of realisation. The definition of "dealer" in section 2(b), which is relied upon by the counsel for the State, itself provides that "dealer" means any person who carries on the business of buying or selling goods.

"Explanation : A co-operative society, a club, a firm, or any association which sells goods to its members is a dealer within the meaning of this clause."

The Explanation to section 2(b) cannot be read distributively. The disjunctive comes after the word "firm" and so read "a firm" is a "dealer" within the meaning of section 2(b). Section 3 is the charging section, and it provides that "every dealer shall pay for each year a tax on his total turnover for such year". A combined reading of section 2(b) with its Explanation and section 3 leaves no room for doubt in our minds that it is the firm that is treated as a "dealer" and that must be assessed to tax.

The learned Government Pleader then relied upon rule 19 of the General Sales Tax Rules, which reads as follows :-

"If a dealer or licensee enters into partnership in regard to his business he shall report the fact to the assessing authority within 30 days of his entering into such partnership. The dealer or licensee and the partner shall jointly and severally be responsible for the payment of the tax leviable under the Act."

A plain reading of this rule shows that it is intended to apply to a case of subsequent partnership. So rule 19 does not support the contention of the learned Government Pleader.

Our attention has also been drawn to the decision in Gannon Dunkerley & Co. v. State of Madras ([1954] 5 S.T.C. 216) where it has been held that if the amendments relating to taxing of works contracts introduced in 1947 by the Madras Legislature are intended to catch in the net of tax the aforesaid building contracts, to that extent the amendments are ultra vires the Madras Legislature. The correctness of the assessment has not been raised before the Tribunal or in this Court, and it is unnecessary, therefore, to decide the question in this case.

In the result, the majority decision of the Sales Tax Tribunal is affirmed and this Revision Case is dismissed with costs, Rs. 250.

Petition dismissed.