HAJIPUR PLYWOOD FACTORY Vs. STATE OF BIHAR

JUDGEMENT

(1.) In this sales tax reference case is involved the interpretation of Section 20 of the Bihar Sales Tax Act, 1947 (hereinafter called the Act). The Commercial Taxes Tribunal has stated a case and made this reference under Section 25(1) on the following question of law : Whether, in the facts and circumstances of the case, the applicant is legally liable to pay the sales tax dues of M/s. Indian Forest Industries Ltd. for the years 1949-48 to 1949-50 under Section 20 of the Bihar Sales Tax Act, 1947?

(2.) At Konhara Ghat, Hajipur, there is a plywood factory which was at one time owned and run by Indian Forest Industries Ltd. It was a registered dealer under the Act holding Registration Certificate No. MZ. 2298. The said company entered into an agreement with another firm known as Mehta Brothers on 9th February, 1951, by which, according to the case of the department, the entire business run by the company was transferred by it to Mehta Brothers. A formal sale deed dated 5th August, 1955, followed the agreement. After running the factory and business for some time, Mehta Brothers transferred it to Babu and Company in pursuance of an agreement dated 2nd April, 1956, entered into between them. This agreement was also followed by a sale deed dated 11th March, 1959. The name and style of Babu and Company running the factory and business was changed to Hajipur Plywood Factory, the petitioner, at whose instance this reference has been made.

(3.) Sales tax under the Act was assessed against Indian Forest Industries Ltd. for the years 1947-48, 1948-49 and 1949-50. The managing director of this company was one Shri D.N. Sahay. Certificate proceedings were started against the company and the managing director for realisation of the sales tax dues. A part could be realised and a part remained unpaid. Treating the petitioner to be liable to pay the unpaid sales tax dues due from Indian Forest Industries Ltd. under Section 20 of the Act, a notice was served upon it directing it to show cause why the said dues should not be realised from it. A show cause petition was filed on behalf of the petitioner. The Assistant Superintendent of Commercial Taxes made an order on 7th March, 1962, a copy of which is annexure A to the statement of the case, holding that the petitioner was the transferee of the business within the meaning of Section 20 of the Act and, hence, was liable to pay the dues on account of unpaid balance of the sales tax due from Indian Forest Industries Ltd. The petitioner filed a revision under Section 24(4) of the Act read with the Rules framed thereunder, which was dismissed by the Appellate Assistant Commissioner of Commercial Taxes by his order dated 17th April, 1965, a copy of which order is annexure C. Annexure B is a copy of the revision application filed by the petitioner before him. The petitioner filed a second revision application (annexure D) before the next higher revisional authority. This second revision was dismissed by the Additional Deputy Commissioner of Sales Tax by his order dated 29th October, 1965 (annexure E). Thereafter the petitioner filed a third revision application (annexure F) before the Commissioner of Commercial Taxes. It met the same fate by the Commissioner's order dated 25th July, 1966, contained in annexure G. A copy of the fourth revision application filed by the petitioner before the Commercial Taxes Tribunal is annexure H. The Tribunal has also dismissed the revision by its order dated 15th March, 1967 (annexure I). All the authorities have held that the entire business in relation to which the sales tax dues are sought to be realised Was transferred by Indian Forest Industries Ltd. to Mehta Brothers, which, in its turn, transferred the entire business to the petitioner. Hence all the authorities below have held that the petitioner is liable to pay the dues which remained due from the first transferor. On being asked to state a case to this Court, the Tribunal has done it and referred the question of law, as already stated.