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TMI Blog1967 (4) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... w that there is a liability created inter se between the State Government on the one hand and the transferee on the other hand. To put it differently, it is not open to the State Government to rely on the instrument inter vivos between the transferor and the transferee and to contend that there is any contractual obligation between the transferee and the State Government who is not a party to the instrument - Civil Appeal No. 696 of 1966 - - - Dated:- 17-4-1967 - SHAH J.C. AND SIKRI S.M. JJ. P. Rama Reddy, Senior Advocate (A.V. Rangam with him), for the appellants. R. Ganapathy Iyer, for the respondent. -------------------------------------------------- The judgment of the Court was delivered by RAMASWAMI, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o quash the orders of the Commercial Tax Officer and the Board of Revenue. Ganapatia Pillai, J., who heard the petition, dismissed it. The respondent took the matter in appeal under the Letters Patent. The Division Bench consisting of S. Ramachandra Iyer, C.J., and Ramakrishnan, J., reversed the judgment of the Single Judge, holding that rule 21-A of the Sales Tax Rules was illegal and ultra vires and the respondent was not liable to pay the sales tax due from his predecessor-in-title, Purushottam Raju. This appeal is brought, by special leave, from the judgment of the Division Bench of the Madras High Court dated September 13, 1963, in Writ Appeal No. 10 of 1962. Rule 21-A was framed by the State Government under the rule- making pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Section 3(1) of the Act is the charg- ing section. It imposes a liability to pay sales tax on every dealer for each year, and the tax is to be calculated on his total turnover for that year. Section 2(b) of the Act defines a "dealer" as "a person who carries on the business of buying, selling.....goods." The word "turnover" is defined in section 2(i) of the Act to mean "the aggregate amount for which goods are either bought or sold by a dealer, whether for cash or for deferred payment or other valuable consideration.........." It is manifest that a person who purchases a business as a "dealer" can be assessed to sales tax only in respect of his turnover and under the scheme of the charging provision of the Act the purchaser of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is true that the word "assessment" in the scheme of sales tax and income-tax legislation is a term of varying import. The word is used sometimes to mean the computation of income, sometimes the determination of the amount of tax payable, and sometimes the whole procedure laid down in the Income-tax Act for imposing liability on the taxpayer. As the Judicial Committee, however, said in Badridas Daga v. Commissioner of Income-tax [1949] 17 I.T.R. 209, 211., the words "assess" and "assessment" refer primarily to the computation of the amount of income. In Chatturam v. Commissioner of Income-tax, Bihar [1947] F.C.R. 116; 15 I.T.R. 302., the Federal Court pointed out, relying upon the decision of the House of Lords in Whitney v. Commissioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a charge on the properties of the person or persons liable to pay the tax under this Act." It was contended that under this section the whole of the amount outstanding on the date of default is charged on the property of the person liable to pay the tax. In the present case, the business which was transferred to the respondent was hence charged with the payment of sales tax and it was open to the Sales Tax Authorities to proceed against the assets of the business for realising the amount of sales tax due. In our opinion, there is no justification for this argument. Section 10 of the Act as it stood before the Madras General Sales Tax (Third Amendment) Act, 1956 (Act No. 15 of 1956) read as follows: "The tax assessed under this Act shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o come into operation on a particular day, then, it shall come into operation on the day on which the assent thereto of the Governor, the Governor-General or the President, as the case may require, is first published in the Official Gazette." In the present case, the Act is not expressed to come into operation on any particular date, but as it was published in the Madras Gazette on October 8, 1956, the Act came into operation on that date and not before. In the present case, the registered instrument by which the business was transferred to the respondent is dated October 5, 1956, and the amending Act has therefore no application. We accordingly reject the argument of the appellants on this aspect of the case and hold that rule 21-A is ul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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