STATE OF BOMBAY Vs. MORARJI PADAMSEY

JUDGEMENT

(1.) -

(2.) A rather novel and ingenious contention was put forward by the assessee in this reference. The facts briefly are that the assessee registered his business under the Sales Tax Act on the 1st October, 1946, and conducted his business till the 2nd March, 1949. On that date he transferred the whole of his business as a going concern to a third party. The Sales Tax Officer assessed the assessee in respect of two periods, 1st October, 1946, to 31st March, 1947, and 1st April, 1947, to 1st March, 1949. It will be noticed that both these periods are antecedent to the date of transfer. The assessee admitted the correctness of the amount of assessment, but he denied his liability on the ground that as the business had been transferred by him the liability to pay tax with regard to the business done before the transfer was only upon the transferee and the transferor was absolved from his liability. The Tribunal accepted this contention and the taxing authority has come before us on this reference.

(3.) IN our opinion, therefore, the transferor continues to be liable to pay the tax in respect of the periods during which he carried on the business and incurred the liability to pay sales tax. Although two questions have been submitted to us, Mr. Seervai has only argued one, viz., question (1), and we answer that question in the negative. The assessee to pay the costs. Same answer for the same reasons in Reference No. 8 of 1956. As both the references were heard together there will be one order for costs. References answered accordingly.