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TMI Blog1986 (3) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... rence as a single reference. No objection has been raised to our following this course. 2.. The two questions posed for our determination in this reference are as follows: (i) Whether, on the facts and in the circumstances of the case and on a true and proper interpretation of section 18(1) of the Bombay Sales Tax Act, 1953, the Tribunal was correct in law in holding that the transferee was not liable for the assessed dues of the transferor? (ii) Whether, on a proper construction of the assignment dated 16th October, 1952, the Tribunal was justified in concluding that there was entire transfer of business as contemplated under section 26(1) of the Bombay Sales Tax Act, 1953? 3.. The facts giving rise to the reference are as follows: One Sunderdas Dharamsi was carrying on business in the firm name and style of Messrs. Sunderdas Harjivan and had obtained a registration certificate No. BC-28. The registered dealer was Messrs. Sunderdas Harjivan. It appears that Mrs. Valibai Morarji, the wife of Sunderdas Dharamsi obtained a decree in Suit No. 970 of 1952 in this Court against her husband Sunderdas. On 16th October, 1952, Sunderdas Dharamsi executed a deed of assignment assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause. However; Valibai preferred an appeal to the Assistant Collector of Sales Tax against the aforesaid order of the Sales Tax Officer. But that appeal was dismissed. She preferred a revision application to the Deputy Commissioner of Sales Tax against the said order, but that was also dismissed. She then filed a revision application, namely, Revision Application No. 33 of 1975 before the Sales Tax Tribunal. It was contended on behalf of Valibai before the Tribunal that there was no transfer of the entire business of Messrs. Sunderdas Harjivan in favour of Valibai, and hence the taxes and penalty claimed against the said registered dealer were not recoverable from Valibai. It was also contended on behalf of Valibai that the assessment orders were not binding on Valibai and could not be enforced against her, because she had a right to be heard before the assessment orders were passed and the assessment orders were passed without any notice to Valibai. The Tribunal came to the conclusion that under the aforesaid deed of assignment, the entire business of the registered dealer had been transferred to Valibai. The Tribunal thus confirmed the order holding Valibai as the transferee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, unless he already holds a certificate of registration." (emphasis* supplied by us). Sub-section (3A) of section 12 provides that if any tax payable under the Act is not paid by any dealer within the prescribed time, the dealer shall pay, by *Here italicised. way of penalty in addition to the amount of tax a sum not exceeding threefourth per cent of the amount of tax for every month after the expiry of the prescribed period during which he continues to make default in the payment of the tax. Clause (i) of sub-section (1) of section 24 provides that whoever neglects to furnish any information required by section 17, shall, in addition to the recovery of any tax that may be due from him, be punishable with simple imprisonment which may extend to six months or with fine not exceeding one thousand rupees or with both. Coming to the Bombay Sales Tax Act, 1953, subsection (18) of section 2 of that Act defines the term "tax" as meaning sales tax, general sales tax or purchase tax payable under that Act. The relevant portion of section 25 runs thus: "If any dealer to whom the provisions of this Act apply- (a) sells or otherwise disposes of his business or any part of his business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of Mr. Jetly, learned counsel for the Revenue, is that in the present case the Tribunal has erred in holding that the orders of assessment in question could not be held binding as against Valibai, the transferee, as no notice has been issued to her before the orders were passed. It was submitted by him that, in the present case, neither the transferor Sunderdas Dharamsi nor the transferee Valibai gave notice of the transfer of the business as they were bound to do. Thus, there was nothing to indicate to the sales tax authorities including, in particular, the Sales Tax Officers concerned that the transferee Valibai had any interest in the business of the registered dealer. In such a case to insist on a prior notice being given before the assessment orders could be made against Valibai would be to put Valibai at an advantage by reason of her own wrong. We find that there is substance in this argument of Mr. Jetly. It is true that principles of natural justice have to be complied with before an order of assessment, which imposes a liability on an assessee, can be passed. However, where the assessee, by his own wrongful conduct, renders it impossible for a notice to be given bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessment orders in a case like the one before us. Moreover in connection with the aforesaid decision we may observe that in the judgment all the relevant provisions of the Mysore Sales Tax Act, 1957 have not been set out. Neither counsel has drawn our attention to the provisions of that Act or to the scheme of that Act. We may only point out that, whatever may be the position under the Mysore Sales Tax Act, under the scheme of the Bombay Sales Tax Act 1959, the liability to pay tax arises as soon as the turnover of the sales or purchases made by the dealer exceeds the prescribed limit. In any case, a registered dealer is bound to pay the tax payable by him according to the returns filed by him prior to the filing of the returns. In view of this, it cannot be said that under the Bombay Sales Tax Act, 1959, the liability to pay tax arises only when the assessment orders are made. The liability to pay penalty stands on a different footing. 7.. The next question which arises is to what extent the transferee is liable. In this connection it has to be borne in mind that the deed of assignment is dated 16th October, 1952. On a plain reading of section 18(1) of the Bombay Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three-fourth per cent of the amount of tax for every month after the expiry of the prescribed period during which the assessee continues to make default in the payment of the tax. Thus penalty is not automatic as such nor is it a penalty, the quantum of which can be ascertained merely by calculation as directed in law. The rate at which the penalty is to be imposed will have to be determined by the officer concerned. In these circumstances, the liability to pay the penalty can only arise when it is imposed. In the present case, the penalty was imposed along with the assessment order which was passed on 1st October, 1953, long after the deed of assignment was executed. Hence the penalty cannot be enforced against the transferee, Valibai. 9. What we have stated above would clearly show that it is not possible to answer question No. (i) as it is framed and in order to bring out clearly the controversy between the parties and determine the same, it will be necessary to reframe the said question by breaking it up. This we shall do at the conclusion of the judgment. 10.. This brings us to question No. (ii). In regard to this question, the submission of Mr. Jetly was that we shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal must affect his liability as a dealer to pay tax under the Act. In the present case, the order of the Tribunal imposed no such liability, and therefore, the assessee could not have applied for making any reference to this Court under the Bombay Sales Tax Act, 1946 or the Bombay Sales Tax Act, 1953. In these circumstances, we fail to see how she could have been precluded from raising the aforesaid question No. (ii) on a reference application made by the Commissioner. In fact, the very judgment relied upon by Mr. Jetly clearly shows that the assessee was not precluded from making such application. 11.. Before considering the merits of question No. (ii), it is desirable to take a brief note of the provisions of the said deed of assignment under which the transfer of business has been effected. The said deed of assignment is dated 16th October, 1952 and is a registered document. The assignor is Sunderdas Dharamsi and the assignee is his wife Valibai, the assessee before us. The recitals in the said deed of assignment show that what Sunderdas assigned to his wife was the said business carried on in the name and style of Messrs. Sunderdas Harjivan as a going concern togethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ownership of the business had been entirely transferred to the respondents within the meaning of section 26(1) of the Bombay Sales Tax Act, 1953. We are afraid that this decision is of no assistance to the assessee in the present case. In fact it has been held in that decision that, in order to attract the liability under section 26(1) of the Bombay Sales Tax Act, 1953, it is necessary to establish that the business as a running concern was transferred and nothing substantial was kept back by the vendor to impair the running of the business by the transferee (see page 133 of the report). Thus, on a proper analysis of the said judgment, it is not as if, in order that the ownership of the business should be held to be transferred, it is required that nothing should be kept back whatever; but where something is kept back from the transfer which is an essential part of the business as a running business, then the transfer cannot be said to be of the entire business or that the ownership of the business was entirely transferred. In the case of Commissioner of Sales Tax v. K. Tajkhanji Co. [1975] 36 STC 130 (Bom) what was kept back by the assignor was the right to perform the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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