KALARIA OIL MILLS Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE first petitioner in this special civil application is a partnership firm registered under the Indian Partnership Act and the second petitioner is a partner of the first petitioner -firm. The respondent is the Sales Tax Officer at Jamnagar. The first petitioner was constituted as a partnership firm on 8th November, 1960, with the object of carrying on the business of manufacturing and selling vegetable oils. On 8th November, 1960, the first petitioner -firm purchased the machinery of M/s. Kailas Oil Mills by a sale deed also bearing the date 8th November, 1960. The amount paid by the first petitioner -firm for the purchase of that machinery was Rs. 35,001. M/s. Kailas Oil Mills from whom the petitioner -firm purchased the machinery was a partnership firm engaged in the business of manufacturing vegetable oils and also in the business of purchasing and selling groundnuts and groundnut oil. According to the petitioners, at the time when the machinery was purchased on 8th November, 1960, by the first petitioner -firm, M/s. Kailas Oil Mills had already stopped their business and had already disposed of their stock of groundnut and groundnut oil, as well as other furniture and fixtures and thereafter on 8th November, 1960, the machinery was sold by M/s. Kailas Oil Mills to the first petitioner -firm. According to the averments in the petition, the machinery was not in a working condition and the petitioners had to repair and oil the machinery in order to put it in a working condition. M/s. Kailas Oil Mills was being run in the premises taken or lease from one Haji Musa Ismail. After purchasing the machinery, the first petitioner -firm negotiated with the landlord of the premises for the lease of the land on which the machinery of Kailas Oil Mills was installed. The said landlord agreed to lease out the premises to the first petitioner -firm at the rent of Rs. 200 p.m.; and after purchasing the necessary raw materials and employing the technicians and workers, the first petitioner -firm started the manufacturing process after about a month's time from the date of the purchase. After purchasing the machinery, the petitioners applied for a licence under the Central Excises and Salt Act, 1930, in their own names and they also applied for registration under the provisions of the Bombay Sales Tax Act, 1959, for being registered as a dealer; and they applied to the Sales Tax Officer, Jamnagar, to register them as registered dealers and issue the necessary registration certificate. The petitioners were issued a registration certificate, bearing No. N -55 -JMC -1190; and the registration number of M/s. Kailas Oil Mills was N -55 -JMC -471. It is the contention of the petitioners, that the first petitioner -firm had only purchased the machinery and not the business of M/s. Kailas Oil Mills. They had not agreed to take over the liability of M/s. Kailas Oil Mills and had also not purchased M/s. Kailas Oil Mills as a running concern with goodwill; none of the employees of M/s. Kailas Oil Mills was employed by the petitioner -firm after they purchased the machinery and the petitioners had started the business in the name and style of M/s. Kalaria Oil Mills.

(2.) ON 24th November, 1966, the petitioners were served with an order of assessment, in connection with the sales tax dues of M/s. Kailas Oil Mills for the period commencing from 1st January, 1960, to Aso Vad 30 of S.Y. 2016, and with a notice, dated 24th November, 1966, calling upon the petitioners to pay up the sales tax dues of M/s. Kailas Oil Mills on or before December, 1966. The petitioners were informed by the said notice that if they failed to pay the amount of the sales tax dues of M/s. Kailas Oil Mills, the process of coercive recovery would be set in motion. The notice was issued by the respondent herein and the respondent had stated in the notice that the petitioners had purchased the business of M/s. Kailas Oil Mills and were therefore the transferees of the business of M/s. Kailas Oil Mills and were, therefore, liable for the sales tax dues of M/s. Kailas Oil Mills.

(3.) IN his affidavit -in -reply in para. 6, the respondent states that the facts stated in para. 4 of the petition are substantially correct, viz., that M/s. Kailas Oil Mills were being run in the leasehold premises of Haji Musa Ismail and that the landlord of the said premises had created a new lease in favour of the petitioners and that the petitioners were tenants of Haji Musa Ismail and were occupying the premises of Haji Musa Ismail as tenants on a monthly rent of Rs. 200 p.m.; and these statements regarding the premises are stated to be substantially correct so far as the affidavit -in -reply is concerned.