COMMISSIONER OF SALES TAX Vs. TAJKHANJI AND CO

JUDGEMENT

(1.) These are references under section 34(1) of the Bombay Sales Tax Act, 1953 (hereinafter referred to as "the said Act") made at the instance of the Commissioner of Sales Tax.

(2.) The facts giving rise to the question raised in these references are as follows : Prior to 23rd February, 1956, one Sugrabai and others were carrying on the business as dealers in paints, varnishes and other painting materials in partnership under the firm name and style of K. Tajkhanji & Co. One Asmabai Chandabhai (hereinafter referred to as the "assignee") lent and advanced to the said Sugrabai and others (hereinafter referred to as the "assignors") several sums of money from time to time which they were unable to repay. The assignors then executed a mortgage in favour of the assignee for repayment of the sum of Rs. 8,000 by a deed of mortgage dated 2nd August, 1955. The assignors were unable to repay the amount of the mortgage debt and interest thereon. By a deed of assignment dated 23rd February, 1956, the assignors transferred the said business of K. Tajkhanji & Co. to the assignee on the terms and conditions set out in the said deed of assignment. The said deed of assignment contains the recitals setting out the aforesaid facts. The relevant clauses of the said deed of assignment being clauses 1 and 4 are as follows :

(3.) After the deed of assignment was executed, the assignee carried on the business in the name and style of K. Tajkhanji & Co., the respondents herein. During the assessment periods from 24th February, 1956, to 7th October, 1957, and from 8th October, 1957, to 31st March, 1958, the respondents were not registered as dealers, the contention of the respondents being that their turnover did not exceed the minimum limit of Rs. 25,000. This contention of the respondents was negatived and they were assessed under section 14(6) of the said Act by the relevant Sales Tax Officer on the ground that the respondents were the transferees in respect of the said business within the purview of section 26(1) of the said Act. The said Sales Tax Officer also levied penalty under section 14(7) of the said Act. Against these decisions the respondents preferred appeals to the Assistant Commissioner of Sales Tax, who dismissed the said appeals. The respondents then preferred revision applications against the orders of the Assistant Commissioner of Sales Tax, but the same were dismissed by the Deputy Commissioner of Sales Tax. The respondents then went in further revision by way of two revision applications to the Sales Tax Tribunal at Bombay. These revision applications were allowed by the Tribunal. The Tribunal took the view that the ownership of the said business was not entirely transferred by the said assignors to the respondents and hence the respondents could not be treated as transferees under the provisions of section 26(1) of the said Act. These references have been made at the instance of the Commissioner of Sales Tax and arise out of the said decisions of the Tribunal.