1961 (11) TMI 56 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether liability of transferee requires transferor to be a registered dealer under section 19(2) of the Orissa Sales Tax Act, 1947.
2. Whether lease of business premises and utensils constitutes a complete transfer of business under the Orissa Sales Tax Act, 1947.

Analysis:

Issue 1:
The case involved a dispute regarding the liability of a transferee under section 19(2) of the Orissa Sales Tax Act, 1947, and whether the transferor needed to be a registered dealer for such liability to ensue. The Tribunal held that section 19(2) applies only to transfers by registered dealers, and since the transferor in this case was an unregistered dealer, the provision did not apply. The High Court agreed with the Tribunal's interpretation, emphasizing that section 19(2) applies to transfers contemplated under section 19(1) by registered dealers only. Therefore, the liability of the transferee in this case was not established due to the transferor's unregistered status.

Issue 2:
The second question pertained to whether a lease of business premises and utensils constituted a complete transfer of business under the Orissa Sales Tax Act, 1947. The facts revealed that the transferor had let out his hotel premises and furniture to the transferee on a rental basis, with renewals endorsed annually. The High Court analyzed the terms of the agreement and concluded that the transaction was a lease arrangement, not a transfer of business ownership. The Court held that the relationship between the parties was that of lessor and lessee, not transferor and transferee of a business. Therefore, it was determined that there was no complete transfer of business in this case, as the transaction was deemed a lease of premises and utensils, not a transfer of business ownership as required under section 19(1) of the Act.

In conclusion, the High Court answered the second question in the affirmative, rendering the first question academic and unnecessary for consideration in this case. While the Court did not explicitly accept the Tribunal's construction of section 19(2), the reference was disposed of accordingly, with each party bearing their own costs.