1975 (1) TMI 69 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Date of Transfer of Business
2. Entitlement to Registration Effective Date
3. Interpretation of Deeds and Documents
4. Applicability of Bombay Sales Tax Act, 1959

Issue-wise Detailed Analysis:

1. Date of Transfer of Business
The primary issue revolves around determining the exact date on which the business of the partnership firm, Copper Rollers Corporation, was transferred to the applicant-company. The applicants contended that the transfer occurred on 5th November 1965, the date of the indenture of assignment. However, the Assistant Commissioner of Sales Tax and the Tribunal concluded that the transfer took place on 14th June 1965, based on certain recitals in the indenture of assignment.

2. Entitlement to Registration Effective Date
The applicants sought registration as a dealer under the Bombay Sales Tax Act, 1959, effective from 5th November 1965. The Sales Tax Officer issued the registration certificate effective from 23rd November 1965. The applicants appealed, asserting that the effective date should be 5th November 1965. The Tribunal upheld the Assistant Commissioner's view that the transfer occurred on 14th June 1965, thus rejecting the applicants' claim for an earlier effective registration date.

3. Interpretation of Deeds and Documents
The court's determination hinged on the construction of two critical documents: the agreement dated 14th June 1965 and the indenture of assignment dated 5th November 1965. The court emphasized the need to refer to the relevant recitals and clauses of these documents. The agreement dated 14th June 1965 was found to be executory, meaning it was an agreement to transfer the business at a future date, and no assets were transferred at that time. The indenture of assignment dated 5th November 1965 was the operative document that effectively transferred the business, assets, and liabilities to the applicant-company.

4. Applicability of Bombay Sales Tax Act, 1959
The applicants claimed entitlement to registration under sub-section (4) of section 19 of the Bombay Sales Tax Act, 1959. The court examined sub-sections (4) and (6) of section 19 and rule 8(3) of the Bombay Sales Tax Rules, 1959. Sub-section (4) requires that the business be transferred or disposed of, resulting in a change in ownership. Sub-section (6) mandates that the successor apply for registration within thirty days of such succession. Rule 8(3) specifies that if the application is made within the prescribed time, the registration takes effect from the date the dealer became liable to pay tax.

Conclusion
The court concluded that the business transfer and change in ownership occurred only upon the execution of the indenture of assignment on 5th November 1965. The fact that the indenture referred to an earlier date (14th June 1965) for certain transactions was deemed irrelevant. The operative part of the indenture of assignment was clear and unambiguous, and it prevailed over the recitals. Consequently, the applicants were entitled to registration effective from 5th November 1965.

Final Judgment
The court answered the question submitted in the negative, indicating that the Tribunal was not justified in concluding that the applicants were not entitled to registration effective from 5th November 1965. The respondent was ordered to pay the applicants' costs for the reference. The reference was answered in the negative.