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TMI Blog1973 (8) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... d 5th August, 1955, followed the agreement. After running the factory and business for some time, Mehta Brothers transferred it to Babu and Company in pursuance of an agreement dated 2nd April, 1956, entered into between them. This agreement was also followed by a sale deed dated 11th March, 1959. The name and style of Babu and Company running the factory and business was changed to Hajipur Plywood Factory, the petitioner, at whose instance this reference has been made. 3.. Sales tax under the Act was assessed against Indian Forest Industries Ltd. for the years 1947-48, 1948-49 and 1949-50. The managing director of this company was one Shri D.N. Sahay. Certificate proceedings were started against the company and the managing director for realisation of the sales tax dues. A part could be realised and a part remained unpaid. Treating the petitioner to be liable to pay the unpaid sales tax dues due from Indian Forest Industries Ltd. under section 20 of the Act, a notice was served upon it directing it to show cause why the said dues should not be realised from it. A show cause petition was filed on behalf of the petitioner. The Assistant Superintendent of Commercial Taxes made an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 20 and to fasten the liability on the transferee, it has to be proved by the department that the ownership of the business in respect of which any tax had remained unpaid has been entirely transferred to the transferee. If the liability is sought to be fastened on the second or the third transferee then at each stage of transfer it must be shown that the ownership of the business has been entirely transferred. One of the points taken on behalf of the assessee before the authorities below was that section 20 does not cover the case of a second transferee as the petitioner was. This argument has been repelled on the basis of the Bench decision of the Bombay High Court reported in Collector of Sales Tax, Bombay State v. Parimal Brothers[1962] 13 S.T.C. 647. Just a few days ago, this Bench had taken an identical view while interpreting almost an identical provision of law contained in section 17 of the Bihar Sales Tax Act, 1944. In Messrs. Doma Sao Mohan Lal v. The State of Bihar through the Collector, PatnaC.W.J.C. No. 1241 of 1965 decided on 24th August, 1973; since reported at [1974] 34 S.T.C. 38., it was said: "Section 17 of the Bihar Sales Tax Act, 1944, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss' has a more extensive meaning than the word 'trade', on the other hand, It has been said that ordinarily speaking, business is synonymous with 'trade'." At page 368 it Is mentioned: "A bequest of the testator's 'business' of the undertaking or enterprise. It will normally include the assets of the business, the stock-in-trade, cash at the bank and so on, subject to its liabilities................" In the case of In re Rhagg: Eastern v. Boyd[1938] 1 Ch. 828., Simonds, J., as he then was, on a review of various authorities, has pointed out that the word "business" in the context in which it was used in the will which was the subject-matter of consideration before the court "bears much the same meaning as when it is said that a man has sold his business. It means the undertaking or enterprise itself, not the process of carrying it on. When, therefore, a solicitor bequeathes his business, or as the bequest must in the present case be read, his share of the business carried on by him in partnership with another, I see no reason for saying that goodwill rather than any other asset passes. If anything passes which is an asset of the business, why should not everything pass whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to insist that a purchaser must purchase the whole of the property of the vendor concern before he can be regarded as a successor-in-interest, it is quite likely that just an insignificant portion of the property may not be the subject-matter of the conveyance and it may be urged that the exclusion of the said fraction precludes industrial adjudication from treating the purchaser as a successorIn-interest. Such a plea, however, cannot be entertained for the simple reason that in deciding this question, industrial adjudication will look at the substance of the matter and not be guided solely by the form of the transfer. What we have said about the entirety of the property belonging to the vendor concern will apply also to the goodwill which is an intangible asset of any industrial concern. If goodwill along with the rest of the tangible property has been sold, that would strongly support the plea that the purchaser is a successor-in-interest; but It does not follow that if goodwill has not been sold, that alone will necessarily show that the transferee is not a successor-in-interest. The decision of the question must ultimately depend upon the evaluation of all relevant factors and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority the business in question of Indian Forest Industries Ltd. was the business of plywood factory, meaning thereby manufacturing certain articles, such as boxes, etc., in the factory and selling them and there was no other kind of business which was being carried on in the premises of the factory. The argument advanced on behalf of the petitioner before this first revisional authority indicates that, according to the petitioner, certain articles of furniture and minor office equipments were retained by the transferor and on that basis it was sought to be argued that the ownership of the business was not entirely transferred. This argument was rejected by the Assistant Commissioner. 9.. Coming to the second revisional order (annexure E) passed by the Additional Deputy Commissioner, it would be found that he also agreed with the finding recorded by the Assistant Commissioner. The same kind of argument was advanced before him, meeting the same fate as it did before the first revisional authority. Before him was cited the decision of the Madhya Pradesh High Court in Bajranglal Bajaj v. The State of Madhya Pradesh [1965] 16 S.T.C. 350. This case was distinguished and the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the factory and selling the products in the same premises; so did the petitioner. In the background of the terms of the agreement, the expression"transfer the property" -occurring in the preamble of the sale deed must mean the transfer of the business including all rights, title and interest In the business-and the factory. On the basis of these documents, the conclusion of the Tribunal is: "........it is clear that M/s. Indian Forest Industries Ltd. transferred the entire business of the factory to M/s. Mehta Brothers within the meaning of section 20 of the Bihar Sales Tax Act, 1947." In my opinion, the finding has been recorded on the two materials referred to in the judgment of the Tribunal. The materials were relevant. The conclusion drawn on the basis of the two documents is not vitiated in law. it could not be shown to us that the conclusion drawn by the Tribunal on the wordings of the two documents as to the transfer of the various assets of the business was wrong. If it was not so, the conclusion drawn by the Tribunal that the entire business of the factory was transferred by Indian Forest Industries Ltd. to Mehta Brothers is not vitiated in law. 11.. In paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X
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