1973 (8) TMI 149 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the revised assessment order.
2. Liability of the petitioner for sales tax dues under Section 17 of the Bihar Sales Tax Act, 1944.
3. Transfer of ownership and its implications on tax liability.
4. Applicability of res judicata in tax assessment periods.
5. Validity of the certificate proceeding against the petitioner.

Detailed Analysis:

Legality of the Revised Assessment Order:
The revised assessment order dated 29th June, 1962, assessed a tax of rupees forty thousand and odd against the firm Doma Sao Kishun Lal for the period when it was a Hindu undivided family. This revised assessment was challenged but upheld by the Board of Revenue on 5th February, 1964. The petitioner did not annex a copy of this revised assessment order in the writ application nor prayed for its quashing, making it too late to challenge its legality during the arguments.

Liability of the Petitioner for Sales Tax Dues under Section 17 of the Bihar Sales Tax Act, 1944:
Section 17 of the Bihar Sales Tax Act, 1944, stipulates that when the ownership of the business of a registered dealer is entirely transferred, any unpaid tax at the time of the transfer shall be payable by the transferee. The Supreme Court emphasized that without determining whether the business was entirely transferred to the appellant, the liability to pay tax assessed against Doma Sao Kishun Lal could not be enforced against the appellant. The High Court found that the ownership of the Patna business was entirely transferred to the petitioner-firm, making it liable for the sales tax dues.

Transfer of Ownership and Its Implications on Tax Liability:
The business of the Hindu undivided family, Doma Sao Kishun Lal, was partitioned in August 1946 and continued under the same name as a partnership. The Patna business was transferred to the petitioner-firm, Doma Sao Mohan Lal, in April 1955. The court concluded that the petitioner-firm is the transferee of the Patna business, thus liable for the sales tax dues under Section 17 of the Bihar Sales Tax Act, 1944. The court rejected the argument that the liability could not be fastened on the transferee because the tax was assessed after the transfer.

Applicability of Res Judicata in Tax Assessment Periods:
The Supreme Court noted that each assessment period is distinct, and decisions declaring liability to tax cannot operate as res judicata in respect of another period. The High Court acknowledged this principle but inferred from the materials that the petitioner-firm was the transferee of the Patna business, making it liable for the tax dues.

Validity of the Certificate Proceeding Against the Petitioner:
The certificate proceeding was initiated for the realization of tax dues based on the revised assessment. The petitioner's objection under Section 9 of the Bihar and Orissa Public Demands Recovery Act was dismissed by the Certificate Officer, the Collector, the Commissioner, and the Board of Revenue. The High Court found that the sales tax dues related to the Patna business, which was entirely transferred to the petitioner-firm, thus validating the certificate proceeding.

Conclusion:
The writ application was dismissed with costs, as the petitioner-firm was found liable for the sales tax dues of the Patna business under Section 17 of the Bihar Sales Tax Act, 1944. The revised assessment order and the certificate proceeding were upheld, and the petitioner's arguments against them were rejected.