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TMI Blog1966 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Certificate Officer was set aside by the Additional,Collector, 24-Parganas, by his order dated 24th September, 1962, and the same in its turn was set aside by the Commissioner, Presidency Division, by his order dated 11th July, 1963, with the result that the order of the Certificate Officer setting aside the certificate was restored. Against the said order of the learned Commissioner a petition in revision was made by the State of West Bengal, the opposite party No. 1 before us, before the Board of Revenue and by his order dated 20th March, 1964, the learned Member of the Board of Revenue set aside the order of the Divisional Commissioner and restored the certificate. The present petition under Article 227 of the Constitution is directed against the said order of the learned Member of the Board of Revenue dated 20th March, 1964. The petitioner used to carry on business in stationery goods and other articles under the name and style of "K.S. and Co." at 156/1-B, Harish Mukherjee Road, Bhowanipore, Calcutta, within the jurisdiction of the Commercial Tax Officer, Alipore Charge. In or about January, 1960, the petitioner shifted the place of business to No. 58/1, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y discharged by such dealer) be deemed to be and to have always been registered as if the registration certificate of such dealer had initially been granted to the transferee. The section further lays down that the transferee shall be entitled to have, the registration certificate amended accordingly. The section primarily deals with the position of the transferee after the transfer. For all purposes of the Act the transferee shall be deemed to be the registered dealer as if the registration certificate of the transferor had initially been granted to the transferee, but in case of liabilities already discharged by the transferor the fiction, namely, as if the registration certificate of the transferor had initially been granted to the transferee shall not apply. It should be noted that the expression used is "already" and not "before the transfer". This implies that even when the transferor discharges any liability even after the date of transfer the registration certificate of the transferor shall not be deemed to have been initially granted to the transferee in respect of such liability. That is to say, if any liability in respect of the transferred business is discharged by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable Is the transferee. In our opinion, the words within parenthesis in section 17, namely, "except for liabilities under this Act already discharged by such dealer", clearly indicate that the liabilities incurred by the transferor during his ownership of the business, continues even after transfer and that the transferee is liable in so far as they remain undischarged by the transferor. The fiction has been introduced in order to impose upon the transferee liabilities incurred at a time when he had no concern with the business transferred. Simply because the transferee has been made liable with retrospective effect from that it cannot be inferred that the liabilities of the transferor in respect of the business during his ownership become extinguished. Section 17 merely imposes an additional liability on the transferee so that any liability remaining undischarged by the transferor may be enforced against the transferee. This section has been introduced in order to protect the revenue. If we refer to the deed of sale (annexure 'A' to the petition) we find that the purchaser of the business took up all the past and outstanding sales tax liabilities of the business transferred. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose that liability vicariously upon a third party is that the original liability of the person does not come to an end." We have indicated above that the words within parenthesis in section 17 lends ample support to this construction. We are asked to hold by the learned Advocate for the petitioner that section 17 absolves the transferor from liability to pay the outstanding taxes as soon as he transfers his business and makes the transferee alone liable for such taxes. Chagla, C.J., on being asked to put a similar construction on section 18 of the Bombay Sales Tax Act, 1946, which in our opinion is in Pari materia with section 17 of the Bengal Finance (Sales Tax) Act, 1941, observed as follows: "The construction suggested by the transferor imposes an unconscionable burden upon the transferee, because the result of this construction is that the transferee alone in law is liable to pay the tax which was due by the assessee and that if the transferee pays the tax he would not be entitled to recover that tax from the transferor because it is only if he discharges a liability, which in law is payable by the transferor that the transferee would be entitled to recover the tax......No c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered the judgment in Veerappa's case(1), observed as follows: "Section 18(1), which as I understand it, is supplementary to section 5, directs that if a dealer transfers his business in respect of the turnover relating to the business transferred, the transferee shall pay the tax. But section 18(1) does not supersede section 5.....That being so, all that section 18(1) does is to make the transferee also liable for payment of the sales tax in addition to the transferor-dealer .....The liability is an additional liability imposed upon the transferee, preserving the liability of the dealer which section 5 brings into existence." On behalf of the petitioner reliance was placed upon Nandi Charan v. Certificate Officer(1960) 64 C.W.N. 484. decided by Sinha, J., as his Lordship then was. His Lordship points out that under section 17 the transferee remains liable as a transferee from the original registered dealer. His Lordship however does not say that the transferor will be absolved from his liability to pay the tax to which he, and not the transferee, was originally assessed. There two brothers carried on business in partnership under the name and style of Nandi Charan Paul and Broth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n my opinion, simply by adding those words in the certificate behind the back of the company, the company could not be turned into a certificate debtor........" His Lordship quashed the certificate proceedings as against the company without quashing the original certificate issued in the name of the firm. Even though his Lordship was not called upon to quash the certificate against the firm, the original registered dealer, still if his Lordship thought that the liability of the firm was extinguished by the transfer of the business, his Lordship would have quashed the certificate against the firm itself. In refusing to do so, his Lordship proceeded on the footing that the liability of the firm continued even after the transfer. So, in a sense, this case is against the petitioner. The petitioner also relied on the case of Major Soap Co. Ltd. v. Assistant Commissioner of Commercial Taxes, Calcutta[1952] 3 S.T.C. 444. , decided by Bose, J., as his Lordship then was. There the petitioner-company was registered in May, 1948, and got itself registered as a dealer in July, 1948. The petitioner acquired and took over as a going concern the business of Major Soap Company, a proprietary con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was a transfer. The Certificate Officer called for a report from the Commercial Tax Officer on the objection filed by the petitioner under section 9 of the Public Demands Recovery Act whereupon the Commercial Tax Officer submitted the following report: "The transfer is not considered to be bona fide and admissible. The dealer has failed to show cause why the transfer claim should not be rejected as the concern was not found in any one of the addresses and also the transferee was not found at reported addresses and the information supplied appeared incorrect. The transfer document was made after receipt of demand notice by the dealer as also notice for four subsequent periods and hence appears to have been an instrument to evade payment of tax, and therefore, seems to be non-acceptable and apparently a void document." It is not clear whether the Commercial Tax Officer submitted the above report after serving notice on the petitioner to show cause why the transfer should not be ignored. In Nandi Charan's case(1), on receiving intimation from the Certificate Officer, the Commercial Tax Officer issued a show cause notice on the petitioner-company asking it to show cause w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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