BAJRANGLAL BAJAJ Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) BY this application under Article 226 of the Constitution, the petitioner seeks a writ of certiorari for quashing an order of assessment made on 29th November, 1960, by the Sales Tax Officer, Jabalpur, under Section 18 (4) of the Madhya Pradesh General Sales Tax Act, 1958, holding the petitioner liable for the payment of sales tax for the period from 23rd October, 1958, to 9th April, 1960, as transferee of the business of the dealer M/s. Rajasthan Paper Mart (hereinafter called the Mart ). The Sales Tax Officer held the petitioner liable for the payment of Rs. 6,970-78 np. , being the amount of tax and penalty levied on the Mart. An application preferred by the petitioner to the Additional Commissioner of Sales Tax for revising the order of the Sales Tax Officer was dismissed on 30th October, 1963. The petitioner has sought a writ of certiorari also for quashing the aforesaid order of the Additional Commissioner of Sales Tax.

(2.) THE material facts are that one Mohanlal, Sodhani and his son Harprasad Sodhani, used to carry on business as paper merchants under the name and style of "m/s. Rajasthan Paper Mart, Jabalpur". The Mart used to purchase from time to time stationery goods, paper etc. from the petitioner who also carries on business of selling stationery and allied materials under the name and style of "m/s. Bharat Paper Mart, Jabalpur". On 9th April, 1960, there was a settlement of accounts between the petitioner and the Mart as a result of which it was found that an amount of Rs. 3,101-71 np. was due to the petitioner from the Mart. The petitioner also claimed interest on this sum amounting to Rs. 1,348-29 np. On 9th April, 1960, the Mart had also to pay Rs. 90 as rent for the premises in which it had stocked its goods, as also a sum of Rs. 768 to M/s. Jupiter Traders for the paper purchased from them. In order to discharge these liabilities Mohanlal Sodhani and Harprasad Sodhani decided to sell the goods in stock they had for Rs. 6,100 to the petitioner. This consideration of Rs. 6,100 was made up of Rs. 3,101-71 np. , and Rs. 1,348-29 np. as interest thereon, due to the petitioner, Rs. 90 which had to be paid to the landlord of the premises and Rs. 768 which had to be paid to M/s. Jupiter Traders, and a sum of Rs. 792 paid in cash by the petitioner to the two Sodhanis. On 9th April, 1960, Mohanlal and Harprasad passed a receipt in favour of the petitioner about the sale of their goods for Rs. 6,100 to him. That receipt inter alia contained a recital that Rs. 90 had been obtained from the petitioner and paid to the landlord of the premises and similarly Rs. 768 had been received from the petitioner and paid to M/s. Jupiter Traders, and that receipts for these payments had been obtained from the landlord and the Jupiter Traders.

(3.) THE Rajasthan Paper Mart was registered as a dealer under the M. P. General Sales Tax Act, 1958. When in response to the notices issued to it for assessment for the period from 2nd October, 1958, to 9th April, 1960, none appeared on behalf of the Mart before the Sales Tax Officer, an enquiry was initiated by him about the turnover of the business done by the Mart. During the course of that enquiry, the Sales Tax Officer gathered the information that Mohanlal Sodhani and Harprasad Sodhani had transferred their stock-in-trade consisting of stationery paper, ink, pencils, fountain-pens, furniture etc. , for Rs. 6,100 to the petitioner. On the information which he had collected, the Sales Tax Officer took the view that the petitioner was the transferee of the business of the Mart and as such liable to pay tax under Section 33 of the Act for the period in question. A notice was, therefore, issued to the petitioner by the Sales Tax Officer to show cause why he should not be made liable to pay tax under Section 33 of the Act. Before the Sales Tax Officer, the petitioner contended that he was not the transferee of the business of the Mart; that he had merely purchased the goods in stock, furniture etc. of the Mart; and that merely because of this purchase no liability could be fastened on him under Section 33 of the Act. This contention was rejected by the Sales Tax Officer on grounds which are none too intelligible. He first observed that the petitioner had not only purchased the stock-in-trade of the Mart but had also taken over some of its liabilities. Then he said that the petitioner's answer to his query whether the Mart had also transferred its liability for the payment of sales tax to him showed that at the time of the transfer effected on 9th April, 1960, he "had full knowledge" of the fact that sales tax amount was outstanding against the Mart. The Sales Tax Officer proceeded to say that the question whether the Mart did or did not transfer its goodwill was immaterial and that the intention of the transferor, the Sodhanis, to defraud their creditors was evident from the fact that they had absconded and that a warrant for their arrest had been issued by a civil court. He then referred to the facts of a prosecution launched by one Narmada Bai against the petitioner which had no bearing whatsoever in the assessment proceedings before him. Ultimately the Sales Tax Officer reached the conclusion that the petitioner Was a transferee of the business of the Mart and liable to pay tax amount and penalty imposed on it in respect of the assessment period from 23rd October, 1958, to 9th April, 1960.