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TMI Blog1974 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of the said hotel in those premises. During the time that Bharucha was in the management of the said hotel, he incurred certain sales tax liabilities and he was assessed to pay sales tax in November, 1958. The sales tax department has contended that Davierwalla and Boywalla are liable to pay this amount as the transferees of the business under the provisions of section 26(1) of the said Act. The contention of Davierwalla and Boywalla, the owners of the respondents, was that there was no transfer at all as contemplated under section 26(1) of the said Act and they were, therefore, not liable to pay the dues of Bharucha. This contention has been accepted by the Tribunal. The question referred to us for our consideration is as follows: "Whether, on a true and proper interpretation of section 26(1) of the Bombay Sales Tax Act, 1953, and the agreement dated 31st August, 1953, the Tribunal was justified in law in coming to the conclusion that the respondents were not the transferees as contemplated by section 26(1) of the Bombay Sales Tax Act, 1953?" Section 26(1) of the said Act seeks to make the transferee liable for payment of the tax payable by the transferor. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every month to the owners monthly sum of Rs. 350 (Rupees three hundred and fifty only) as hire for the use of the said furniture, fixtures, fittings, cooking and other pots and pans, sigdies, crockery, cutlery and other paraphernalia of the said 'Regal Parsi Hotel' more particularly mentioned in the schedule hereunder written, and also as 'the owners' fixed share in the profits of the said business (whether the business may or may not make profits)." Clauses (6), (8), (12), (15) and (16) of the said agreement are as follows: "(6) During the subsistence of this contract, 'the contractor' shall not do any act or omission whereby 'the owners' rights and/or interest in the said eating-house and restaurant are, may, or can be affected or prejudiced in any manner whatsoever. 'The contractor' hereby fully and effectually indemnifies 'the owners' against any loss or damage which 'the owners' may incur or suffer by reason of any act or omission, or conduct on the part of the contractor. (8) 'The contractor' shall during the subsistence of this contract pay all income-tax and sales tax, licence fees and other charges which he may be liable for and/or called upon to pay to the income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, furniture and goodwill but neither the assets nor the liabilities of the proprietor. It was held that although a portion of the assets and the liabilities were excluded from the scope of the transfer, the petitioner was a transferee within the meaning of section 17 of the Bengal Finance (Sales Tax) Act, 1941. In the first place, under section 17 of that Act, as it stood at the relevant time, the transferee became liable for tax when the ownership of the business of a registered dealer was transferred to him. There were no words in that section showing that the transfer must be entire as in the case of the section before us. In fact, the said section of the said Bengal Act has been amended as from 17th January, 1952, and after amendment it reads in the same manner as the provision before us, viz., restricting the liability of the transferee to cases when the ownership of the business of a registered dealer is entirely transferred. It was sought to be contended on the basis of this decision that a business is different from the assets with which it is carried on. We are afraid that this decision does not help Mr. Cooper in this contention. All that it lays down is that even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of course anything that was expressly excluded from the operation or scope of the transfer, and it was in that context that it was held that although there was no transfer of the assets and liabilities of the transferor, there was yet a transfer of the ownership of the business. Reliance was next placed by Mr. Cooper on the decision of the Madras High Court in Tools and Machineries Ltd. v. State of Madras[1956] 7 S.T.C. 740. In that case, it was held that where a dealer sold his entire stock-in-trade, but continued to be in business and retained in his hands certain assets of the business which would be included in the words "whole of the business" used in rule 5(1)(h) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, there could be no sale of the "business as a whole" within the meaning of that rule. In fact, this decision, in our view, goes against the argument of Mr. Cooper. It was held in that case that there was a sale no doubt by the dealer of its entire stock-in-trade, but there was "no sale of his business as a whole", because (1) the seller continued to be in business and (2) it was retaining in its hands certain of the assets of the business whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the employees in his discretion in the interest of the business. There is a further liability imposed on Bharucha to take over all monthly customers of the owners and to supply them with meals at the same rates and maintain the same quality of food with a limited right given to increase the rates in case the conditions set out in clause (16) are satisfied. In these circumstances, in our view, it cannot be said that Bharucha became the owner of the business of the said hotel at all. In fact, the entire tenor and terms of the agreement clearly show that there was no transfer of the ownership of the said business or anything at all to Bharucha under the said agreement. As Bharucha never became the owner of the business of Regal Parsi Hotel, there could be no question of the retransfer of the ownership of that business to the owners. Even assuming that certain rights of ownership were transferred to Bharucha under this agreement, which, according to us, is not correct, there is no provision in the agreement for retransfer of the same. In fact, the agreement only creates certain rights which fall far short of the ownership in Bharucha for a limited duration. On the expiry of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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