1968 (2) TMI 98 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of legal heir to pay tax for business conducted by deceased father.
2. Liability of respondent as a transferee under section 26(1) of the Bombay Sales Tax Act, 1953.

Detailed Analysis:

Issue 1: The judgment addressed whether the respondent, as the legal heir of his deceased father, could be held liable to pay tax for the business conducted by his father. The Court highlighted that the legal representative of a deceased person does not fall under the definition of a "dealer" as per the Bombay Sales Tax Act, 1953. It was emphasized that without a specific statutory provision, no individual could be held accountable for tax dues of another. Referring to past judgments, including Ellis C. Reid v. Commissioner of Income-tax, the Court concluded that assessment proceedings against a legal representative cannot be initiated without a clear statutory provision. The decision in Kishenchand Tolaram v. A.B. Ghanekar further supported the notion that liability does not automatically transfer to legal heirs in the absence of explicit legislation. Consequently, the Court ruled in favor of the respondent, stating that no tax liability could be imposed on him as the legal heir of his deceased father.

Issue 2: The second question revolved around whether the respondent could be considered a transferee under section 26(1) of the Bombay Sales Tax Act, 1953. Section 26 mandates joint liability for tax payment in cases of complete business ownership transfer. The Court interpreted "transfer" in this context to encompass only voluntary transfers inter vivos, excluding transfers by devolution of law or succession. Citing the case of Rambali Bhuleshwar v. Sales Tax Officer, Bombay, the Court clarified that section 26 applies strictly to voluntary transfers between living parties. Forced sales or transfers by operation of law were deemed outside the scope of this provision. Consequently, the Court held that the respondent could not be classified as a transferee under section 26(1) and was not liable to pay tax for his father's business. The judgment favored the respondent on this issue as well.

In conclusion, the Court answered both questions in favor of the respondent, ruling that he was not liable to pay tax either as a legal heir or as a transferee under the Bombay Sales Tax Act, 1953. The Commissioner was directed to bear the respondent's costs for the reference.