CHAMPAKLAL SOHANLAL Vs. J H SHAH

JUDGEMENT

(1.) THIS petition under Articles 226 and 227 of the Constitution raises an interesting question as to whether on the death of a dealer his heir or legal representative could be assessed to sales tax under the provisions of the Bombay Sales Tax Act, 1953, hereinafter referred to as "the Act", on the ground that he continued the deceased dealer's business.

(2.) THE short facts which have given rise to this petition are as under :- THE petitioner is the partnership firm of Messrs Champaklal and Sohanlal which carries on business of selling biris and cigarettes in Ahmedabad. Shivratan, the father of one of the partners, Champaklal, had migrated from Pakistan in 1947-48 and was carrying on business in biris, cigarettes etc. as a proprietor. He died in November, 1957, when Champaklal was aged about 13 or 14 years. Champaklal since 1958 continued this business in alleged partnership with Sohanlal. It appears that the premises of the business of the petitioner were raided on 18th August, 1963, as the petitioner was not registered and had not been assessed. THE respondent-Sales Tax Officer thereafter issued a notice at annexure A, dated 31st October/2nd November, 1963, to the said Champaklal Shivratan as partner of the petitioner-firm asking him to show cause why the petitioner-firm should not be assessed with effect from 1st April, 1954, as the said Champaklal's father's business was of more than Rs. 25,000 and as Champaklal was his legal heir and had continued the business of the said Shivratan after his death. THE said Champaklal in his reply to the said notice stated that he had no connection with his father's business. THEreafter the respondent issued another notice, dated 23rd March, 1965, at annexure B, again to Champaklal as partner of the petitioner-firm on the very same ground that he continued the business of his father after his father's death, which fact was admitted by him in his statement dated 18th June, 1963. THE notice asked Champaklal to show cause why the firm should not be assessed, taking the sales for the year 1953-54 as exceeding Rs. 25,000 with effect from 1st April, 1954. Again, the petitioner reiterated the original contention in the reply dated 31st August, 1965, denying all connections with the said Shivratan. Another reply was submitted on 6th October, 1965. THEreafter the respondent-Sales Tax Officer assessed the petitioner's firm from 1st April, 1954, on the total sales up to 31st December, 1959. By his order, dated 30th October, 1959. In pursuance of the said assessment order at annexure C, a demand notice was issued to the petitioner-firm for the recovery of the tax along with the penalty as assessed, which came to about Rs. 12,723. 52 P. THE petitioner challenges the said assessment order along with the notice of demand on the ground that there is no provision in the Act which would enable the respondent to assess an heir of a deceased dealer and also on the ground that no opportunity had been given to the petitioner to controvert all the materials which had been collected at his back. At the hearing Mr. Kaji confined his attack only to the first ground. THE respondent-Sales Tax Officer has filed his affidavit-in-reply, to which the petitioner has given a rejoinder.

(3.) THEN comes section 26, which is material for our purpose. It runs as under : " (1) When the ownership of the business of a dealer liable to pay the tax is entirely transferred, the transferor and the transferee shall jointly and severally be liable to pay any tax including penalty, if any, payable in respect of such business whether under the Bombay Sales Tax Act, 1946, the Bombay Sales Tax (No. 2) Ordinance, 1952, or this Act, and remaining unpaid at the time of the transfer and the transferee shall also be liable to pay tax on the sales or purchases of goods effected by him with effect from the date of such transfer and shall within thirty days of the transfer apply for registration unless he already holds a certificate of registration. (2) When a dealer liable to pay the tax transfers the ownership of a part of his business the transferor shall be liable to pay the tax in respect of the stock of goods transferred along with that part of his business, which is not so transferred, as if the goods have been sold by him, unless the transferee holds a certificate of registration or obtains it within the prescribed period. "