1979 (3) TMI 195 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the civil court to try the suit.
2. Validity and legality of the impugned certificate.

Detailed Analysis:

1. Jurisdiction of the Civil Court to Try the Suit:
The plaintiffs contended that the civil court had jurisdiction to entertain their suit despite the provisions of section 19 of the Bengal Finance (Sales Tax) Act, 1941. They argued that the certificate issued under the Public Demands Recovery Act was illegal and beyond the jurisdiction of the commercial tax authorities. The plaintiffs relied on the principle that civil courts have jurisdiction to examine cases where statutory provisions have not been complied with or where fundamental principles of judicial procedure have been violated, as established in the cases of Secretary of State for India v. Mask & Co. and Union of India v. A.V. Narsimhalu.

The court examined sections 11, 14, 17, and 19 of the Act. Section 19 bars civil courts from exercising jurisdiction in respect of assessments and orders passed under the Act, except as provided in section 20, which allows for appeals and revisions. The court considered whether the assessment order was without jurisdiction, which would allow the civil court to entertain the suit despite section 19.

The court concluded that the assessment order was not without jurisdiction. The authorities had the power under section 7(6) of the Act to determine whether the business was closed and to cancel the registration. The determination that there was an absolute transfer of the business to the plaintiffs was within the jurisdiction of the authorities, even if it was an erroneous decision. Therefore, the suit was barred by section 19 of the Act, and the civil court did not have jurisdiction to entertain it.

2. Validity and Legality of the Impugned Certificate:
The plaintiffs argued that the certificate issued for the realization of sales tax dues was invalid because there was no absolute transfer of the business from Nityananda Nag to them. They claimed that only the goodwill of the business was transferred, not the entire business, and thus they were not liable for the sales tax dues of Nityananda Nag.

The court analyzed the deed of gift and the evidence presented. It found that the authorities had interpreted the deed of gift as an absolute transfer of the business, not just the goodwill. Under section 17 of the Act, when the ownership of a business is transferred absolutely, the transferee is deemed to be registered and liable for the sales tax dues of the transferor. The court held that the authorities' interpretation and subsequent assessment were within their jurisdiction under the Act.

The court upheld the findings of the lower courts that the plaintiffs were liable to pay the sales tax as transferees of the business. The assessment order and the certificate issued were valid and legal.

Conclusion:
The court dismissed the appeal, holding that the civil court did not have jurisdiction to entertain the suit due to the bar under section 19 of the Act. The impugned certificate was found to be valid and legal, and the plaintiffs were liable to pay the sales tax dues as transferees of the business. The appeal was dismissed without any order as to costs due to the absence of the respondents.