1973 (7) TMI 97 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of sales tax law in Delhi regarding assessment of sales tax liability on the heir of a deceased dealer.

Analysis:
The case involved a widow who inherited her deceased husband's business of manufacturing steel doors and windows. The petitioner contested the sales tax assessment proceedings initiated against her deceased husband's business for the year 1962-63. The main argument raised was the absence of a provision in the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi, allowing the assessment of an heir of a deceased dealer, especially when the deceased was the one conducting the business during the relevant accounting year.

The petitioner relied on the absence of a similar provision in the income tax law before the introduction of section 24B of the Income-tax Act, 1922, permitting the assessment of legal representatives or heirs of a deceased assessee. However, the respondents, including the Sales Tax Officer and the Assistant Commissioner, relied on section 17 of the Bengal Finance (Sales Tax) Act, 1941, which dealt with the transfer of business. This section stated that on the transfer of a business, the transferee is deemed to be the dealer and registered as such.

The court referred to a Division Bench judgment of the Calcutta High Court, which held that the term "transfer" in the provision includes transfer by operation of law, such as in cases of intestate succession. The court rejected the petitioner's argument that the provision should be limited to transfers inter vivos and emphasized that the State's interest lies in taxing the business, regardless of the mode of transfer. The court concluded that the provision applies to transfers made by a living person or by a deceased person through will or succession.

Additionally, the court referenced a Bombay High Court decision regarding the liability to pay tax for periods prior to succeeding the business. It was clarified that the transferee is liable to pay arrears of sales tax and be assessed for prior periods if the previous owner had not paid the tax, and if the business is continued under the same or a new name. As the petitioner continued the business after her husband's death, the court dismissed the writ petition, stating that she was liable under section 17 of the Act.

In conclusion, the court held that the petitioner cannot succeed in challenging the sales tax assessment as the legal provisions clearly establish the liability of the heir of a deceased dealer to pay sales tax and be assessed for prior periods if certain conditions are met. The court dismissed the petition, leaving each party to bear their own costs.