KANHAIYA LAL Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THIS writ petition has been filed for quashing the notices dated June 27, 1978 (annexure 6), dated March 20, 1979 (annexure 7) and dated April 18, 1979 (annexure 8), attachment-memo dated June 13, 1979 (annexure 9) and proclamation of sale (annexure 10), issued by the Commercial Tax Officer, B Circle, Jodhpur (non-petitioner No. 3 ). The facts of the case giving rise to this writ petition may be summarised thus :

(2.) SRIKRISHNA Ladha was carrying on business of manufacturing and sale of lime in village Hariyadana (Bilara) under the name and style of M/s. Marudhara Lime Works in a kiln. He had immovable properties near it. He was a registered dealer under the Rajasthan Sales Tax Act, 1954 (hereinafter to be called "the Act') and Central Sales Tax Act, 1956. For the period from April 1, 1974 to March 31, 1975, he was assessed by the Assistant Commercial Taxes Officer, Circle B, Jodhpur (non-petitioner No. 4) and a demand of Rs. 15,685. 26 was raised as tax vide assessment order dated June 22, 1976. Certain amount was recovered from him and Rs. 17,945. 26 remained outstanding against him. The assessing authority (non-petitioner No. 4) moved the Commercial Taxes Officer, B Circle, Jodhpur (non-petitioner No. 3), exercising powers of the Collector under the Rajasthan Land Revenue Act, for the recovery of the said amount. During the recovery proceedings, the non-petitioner No. 3 was informed by the non-petitioner No. 4 that SRIKRISHNA had sold away the lime kiln and the building appurtenant thereto to the petitioner for Rs. 15,000 through a registered document of sale dated March 25, 1977. Thereon, the non-petitioner No. 3 sent notices annexures 6, 7 and 8 to the petitioner to show cause as to why the lime kiln and the building purchased by him be not attached and sold to recover the said amount outstanding against his vendor SRIKRISHNA. The petitioner filed his reply, annexure 3, raising several objections including that he was bona fide purchaser for consideration and without notice of the pendency of the recovery proceedings. The objections were not decided either by the non-petitioner No. 3 or by the non-petitioner No. 4. The non-petitioner No. 3 intimated the petitioner that under the provisions of section 9 of the Act the said amount could be recovered from the said properties purchased by him and also from his personal properties vide his notice dated April 19, 1979 (annexure 8 ). Thereafter, the non-petitioner No. 3 issued warrant of attachment for attaching his personal properties. In compliance thereof, his ancestral house situated in ward No. 4, Bilara, has been attached along with Usha fan and steel almirah vide attachment memo (annexure g ). Proclamation of sale (annexure 10) has also been issued.

(3.) THE question for consideration is whether the petitioner is liable to pay the amount outstanding against the transferor, Srikrishna, as tax and interest. THE case of the non-petitioners is that they are entitled. To recover the same from the petitioner under section 9 (1) of the Act. It runs as under : " 9. Liability on transfer of business or on discontinuance or dissolution of business of a firm, etc.- (1) When the ownership of the business of a dealer liable to pay the tax is entirely transferred, any tax payable in respect of such business and remaining unpaid at the time of the transfer, shall be payable by the transferee, as if he were the dealer liable to pay such tax; and the transferee shall also be liable to pay tax on the sale or purchase 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. " THE non-petitioners have clearly stated at page 9, para 16 (viii), of their reply dated July 30, 1990, that the entire landed property of the dealer, i. e. , M/s. Marudhara Lime Works, Hariyadana, was sold to the petitioner and, therefore, he was liable to pay the said amount. It is not their case that the ownership of the business of the dealer, M/s. Marudhara Lime Works, Hariyadana, was entirely transferred. THE transfer-deed, annexure 12, also does not show that running business of the lime kiln, i. e. , stock-in-trade, business assets, goodwill and its credits and debits were transferred. It is clear from the above quoted provisions of section 9 (1) of the Act that the transferee is liable to pay the tax payable in respect of the business of the transferor and remaining unpaid by him if the ownership of the business is entirely transferor and not otherwise. It is further clear from the provisions of sub-section (2) of section 9 that the transferee is not liable if the ownership of a part of the business is transferred by the assessee.