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TMI Blog1968 (7) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... n 18th August, 1963, as the petitioner was not registered and had not been assessed. The respondent Sales Tax Officer thereafter issued a notice at annexure A, dated 31st October/2nd November, 1963, to the said Champaklal Shivratan as partner of the petitioner-firm asking him to show cause why the petitioner-firm should not be assessed with effect from 1st April, 1954, as the said Champaklal's father's business was of more than Rs. 25,000 and as Champaklal was his legal heir and had continued the business of the said Shivratan after his death. The said Champaklal in his reply to the said notice stated that he had no connection with his father's business. Thereafter the respondent issued another notice, dated 23rd March, 1965, at annexure B, again to Champaklal as partner of the petitioner-firm on the very same ground that he continued the business of his father after his father's death, which fact was admitted by him in his statement dated 18th June, 1963. The notice asked Champaklal to show cause why the firm should not be assessed, taking the sales for the year 1953-54 as exceeding Rs. 25,000 with effect from 1st April, 1954. Again, the petitioner reiterated the original contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the information furnished under section 25 or otherwise received. Section 11(6) provides that when"(a) any business in respect of which a certificate has been granted under this section has been discontinued or transferred, or (b) in the case of a dealer, neither his turnover of sales nor his turnover of purchases has during any year exceeded the limits specified in sub-section (1) of section 5 and the dealer has applied in the prescribed manner for cancellation of his registration, the prescribed authority shall cancel the registration, with effect from the prescribed date." Section 25 provides that if any dealer to whom the provisions of the Act applied: "(a) sells or otherwise disposes of his business or any part of his business, or effects or comes to know of any other change in the ownership of the business, or (b) discontinues his business or changes his place of business or opens a new place of business, or (c) changes the name or nature of his business or effects any change in the classes of goods sold by him, (d) enters into partnership in regard to his business, he shall, within the prescribed time, inform the prescribed authority accordingly; and where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... death and the names and addresses of his legal heirs. From the aforesaid provisions of the Act and the Rules it is clear that the "dealer" is defined as a person who carries on the business of selling or buying goods in the State. There is no inclusive definition to include within the definition of dealer his heirs or legal representatives. The charging section 5 makes every dealer whose turnover exceeds the specified limit liable to pay tax under the Act. Therefore, on a plain construction of this charging section, the liability to pay tax is of the dealer, who must be a living person and there is nothing in the charging section 5 or in the definition of the word "dealer", which would include within the ambit of this charging section, an heir or a legal representative. The learned Assistant Government Pleader, however, argued that sections 25 and 26 when read together would show that the Legislature has included heirs or legal representatives by providing for the liability of a transferee even by operation of law in the same manner as the original transferor, when the ownership of business has been entirely transferred even by reason of operation of law, including succession. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nct transferor and a distinct transferee who must be living persons. If the cases of succession were to be covered, the transferor would be already dead, when the heirs or the legal representatives would get ownership of the business transferred to them by operation of law. There is also a further indication in section 26(2), which shows that section 26 contemplates a transfer between a dealer and his purchaser, for the later part of section 26(2) provides a fiction that the transferor would be liable to pay tax as if the goods had been sold. That also indicates that the transaction of transfer which is contemplated is as between a dealer and a purchaser, i. e., it must be one of voluntary transfer inter vivos. It was also argued on behalf of the Government that section 25 provides for all cases of transfers, where information has to be sent. Clauses (a), (b), (c) and (d) contemplate cases of sale or disposal by the dealer of the business, while in the case of a death, the legal representative is under an obligation to inform the authority of the death of the original dealer. The scheme of section 25 itself shows that the Legislature contemplates a distinction between cases of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of amendment applied, in that case, there would have been no necessity to provide in section 11(6) for cancelling the original certificate and for giving a fresh registration. We cannot, therefore, accept any of these contentions that on a plain reading of section 26, even in the context of sections 25 and 11(4), it is possible to hold that section 26(1) contemplates cases of transfer by operation of law, including succession. The section could be given full effect on the narrow construction that it covers voluntary transfers inter vivos only and that narrow construction would not make even the clause regarding transferor and transferee being jointly and severally liable redundant and which must be preferred. We are interpreting the charging section itself because according to this contention the effect of section 5 is enlarged by section 26 so as to fasten the tax liability on the transferee, which in this case would be the heir and legal representative. Therefore, the said charging section must always be strictly construed. In this context we must always bear in mind the distinction between the charging section and the section relating to the workability of the Act. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly empowering the authority to assess a dissolved firm in respect of its turnover before its dissolution. At page 329 the Supreme Court pointed out that it was a settled rule of construction that in interpreting a fiscal statute the Court could not proceed to make good the deficiencies, if there be any, in the statute ; it should interpret the statute as it stood and in case of doubt, it should interpret it in a manner favourable to the taxpayer. In considering a taxing Act, the Court was not justified in straining the language in order to hold a subject liable to tax. It was, therefore, held at page 331 that on the dissolution of the firm, it ceased to be a legal entity and on principle, thereafter, unless there was a statutory provision permitting the assessment of a dissolved firm, there was no longer any scope for assessing the firm, which ceased to have legal existence. Therefore, unless we interpret this section 26(1) as a specific provision, we cannot hold that after the death, an heir or legal representative of the deceased dealer could be taxed under the Act. In fact, section 26(1) had been interpreted by K.K. Desai, J., in Rambali Bhuleshwar v. Sales Tax Officer[1961] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in The Commissioner of Sales Tax v. M/s. Allimullah Haji Salamat', in Sales Tax Reference No. 47 of 1965, decided on 9th February, 1968, by the Division Bench, consisting of Abhyankar and Vimadalal, JJ. It is to be found at page 445 of the Compilation of Bombay Sales Tax Act, 1959, published by the Sales Tax Practitioners' Association, Bombay. The Division Bench in that case held that a legal heir could not be held liable to pay tax in respect of the business conducted by his father and that he could not be held to be a transferee within the meaning of section 26(l). We are in complete agreement with the said ratio. The learned Assistant Government Pleader relied upon the decision in Collector of Sales Tax v. Parimal Brothers' by the Maharashtra High Court. That was a case of a transfer. The Division Bench, consisting of Tambe and V. S. Desai, JJ., had only to interpret section 26(l) in the context of the liability fastened on the transferee. The Division Bench in that case held that section 26(l) dealt with the libility to pay tax and not with the quantified tax liability and, therefore, if the transferor at the date of transfer failed to discharge any tax obligation in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate[1966] 17 S.T.C. 326. is not a question on which we need express an opinion. It would be sufficient to say that this decision of the Calcutta High Court proceeds on a totally different footing. Section 17 in terms provides a fiction that the transferee shall be deemed to be and to have always been registered as if the registration certificate of such dealer had been granted to the transferee. As pointed out by Chatterjee, J., at page 289 there was provision in section 16(2) for information being provided in case of death and on such information the authority would amend the registration certificate under section 7(4) and, consequently, the legal representative would be liable under sections 10(2) and 11 to pay tax. In that context the extent and the liability of the legal representative both remained undefined and uncertain, if section 17 was to be confined only to transfer by act of parties. In that context it was held that the transfer could not be construed in the restricted sense of transfer by act of parties but should include transfer by operation of law as well. The Division Bench had further relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business carried on by the deceased dealer. In the absence of any express provision in that behalf the taxpayer must escape the tax and an ambiguous provision cannot be interpreted or stretched by us in favour of the revenue by holding that transfer in section 26(1) includes succession, where there would be no question of transferor and transferee being jointly and severally liable. We must interpret the "transfer" in section 26(1) only as a voluntary transfer inter vivos by the act of parties. Therefore, in the absence of any statutory provision extending the charging section, the present order of assessment against the heir or legal representative cannot be supported. It was argued on behalf of the Government that the order was a composite order and even if there was no provision to tax heir or legal representative for the period till the death of Shivratan in November 1957, the subsequent part of the order would remain intact. The order in the present case is a composite order and is not a severable one. The assessment proceedings were initiated in this case by a notice of the respondent on the basis that the assessee as an heir got the business from the father and continu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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