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TMI Blog1984 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal and succeeded. The Appellate Assistant Commissioner held that in view of section 17 of the Bengal Finance (Sales Tax) Act, 1941, as well as the terms of the lease deed between the parties, the assessee was entitled to claim the deduction. Being aggrieved, the Revenue went up to the Tribunal in appeal. The Tribunal held that in view of the provisions of section 17 of the Bengal Finance (Sales Tax) Act, 1941, and clause 2(A)(iii) of the lease deed, the order of the Appellate Assistant Commissioner was not right. It also held that in view of clause 7 of the said lease deed, the lessee had not accepted the past sales tax liabilities of the lessor. On this view, the order of the Income-tax Officer was restored. At the instance of the assessee, the Tribunal has submitted this statement of the case and has referred the following question of law for our opinion: " Whether on a proper construction of section 17 of the Bengal Finance (SalesTax) Act, 1941, section 37 of the Income-tax Act, 1961, and the deed of lease dated March 30, 1973, the assessee was under any statutory obligation to pay the sum of Rs. 50,507 as sales tax for the years 1969, 1970 and 1971, prior to the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x registration certificates and fulfilled other statutory requirements. Section 17 of the Bengal Finance (Sales Tax) Act, 1941, provides as follows : " Where the ownership of the business of a registered dealer is transferred absolutely (by sale, gift, bequeath, inheritance or otherwise) or transferred by way of lease and the transferee or the lessee carries on such business, either in its old name or in some other name, the transferee or the lessee shall for all the purpose of this Act (except for liabilities under this Act already discharged by such dealers) be deemed to be and to have always been registered (in the case of lease, for so long as the lease subsists) as if the registration certificate of such dealer had initially been granted to the transferee or the lessee; and the transferee or the lessee shall on application to the Commissioner be entitled to have the registration certificate amended accordingly." It will be seen that this section casts a statutory liability on the lessee in relation to the Sales Tax Act, i.e., the lessee, for all purposes of the Act, is liable even for the period the lessor had run the business and had incurred liabilities under the Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quence. The assessee is not a dealer. He has acquired the business of a dealer who had outstanding sales tax liability. The assessee's liability can be said to have arisen in two ways-one, under section 17 of the Bengal Finance (Sales Tax) Act, and the other under the agreement embodied in the lease deed itself. Section 17 provides: "Where the ownership of the business of a registered dealer is transferred absolutely (by sale, gift, bequeath, inheritance or otherwise) or transferred by way of lease and the transferee or the lessee carried on such business, either in its old name or in some other name, the transferee or the lessee shall, for all the purposes of this Act (except for liabilities under this Act already discharged by such dealers), be deemed to be and to have always been registered (in the case of a lease, for so long as the lease subsists) as if the registration certificate of such dealer had initially been granted to the transferee or the lessee ; and the transferee or the lessee shall on application to the Commissioner be entitled to have the registration certificate amended accordingly." It was argued on behalf of the Revenue that section 17 must be confined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be shifted by an agreement between the parties. By clause 3(iv) of the lease deed, the lessee has agreed: " To take over all the stock-in-trade and stock unfinished, semi-finished stock, raw materials, pending orders, quotas, etc., other benefits, if any, if not already taken over at the lessor's book value for which no cash payment will be made to the lessor by the lessee; but all creditors, bank overdraft and taxes payable by the lessor as per books should be paid and cleared by the lessee out of the sale proceeds of such stocks." This clause clarifies that the taxes payable by the lessor as per books should be paid by the lessee out of the sale proceeds of the stock-in-trade. Now, this clause embodied an agreement between the parties which cannot override the statutory liability of the assessee to make payment of taxes. But this clause is not in conflict with section 17. Under this clause, the liability of the lessor to pay taxes as per books shall be discharged by the lessee out of the sale proceeds of the stocks. It may be construed that the liability of the lessee to pay all creditors, bank overdrafts and taxes was limited to the amount of the sale proceeds of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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