TMI Blog1960 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... me to Rs. 16,630-83. He gave notice under section 13 of the Bombay City Land Revenue Act that the concern known as Messrs Govindram Ramsharan Mawawala situate at 532, Duncan Road, would be sold by public auction with its goodwill and sub-tenancy rights and all movables. Under clause (8) of the conditions of sale it was mentioned that the purchaser would be put into possession of the property as soon as possible after the auction is confirmed, and that the auction sale was of right, title and interest of the partnership firm with stock-in-trade and movables including goodwill and sub-tenancy rights in realisation of government dues (sales tax and income-tax). At the auction sale held on 20th May, 1957, the petitioner became purchaser. The sale was confirmed by an order dated 10th June, 1957, and a certificate of sale evidencing that the sale was in realisation of arrears of sales tax and income-tax dues and that the sale was of the goodwill and sub-tenancy rights along with movables of Govindram Ramsharan Mawawala and Nepalsingh Jawaharsingh was issued to the petitioner. By a memo dated 25th October, 1958, the 1st respondent as Sales Tax Officer, Recovery 1, Bombay, called upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: (1) If a property is sold for recovery of debt charged thereon the debt cannot continue to attach to the property in the hands of the purchaser. (2) In any event the arrears of sales tax due for the period 1st October, 1956, to 4th April, 1957, can never be payable by the petitioner as a transferee under section 26 of the Act. (3) There was no mode of recovery prescribed under the Act, in connection with amounts payable by a transferee as provided in section 26(1). (4) The proceedings intended to be taken against him are all invalid. In connection with all these contentions the petitioner has contended that the respondents are seeking illegally to attach and sell movable and immovable properties of the petitioner and are thus infringing the fundamental rights guaranteed to the petitioner under Article 19 of the Constitution. It is therefore that the petitioner is entitled to relief by way of writ in this petition. In connection with the main contention as above raised by the petitioner reference will have to be made to the provisions of section 26 of the Act. Before referring to that section, having regard to the arguments advanced before me, it is necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of goods transferred along with that part of his business, which is not so transferred,. (3) (i) When a firm liable to pay the tax is dissolved, or (ii) Where an undivided Hindu family liable to pay the tax is partitioned, such firm or family as the case may be shall be liable to pay the tax on the goods allotted to any partner or member thereof,.... (4) When a dealer to whom a part of the business has been transferred or who has obtained the whole or part of the stock relating to the business of a partnership which has been discontinued or dissolved or an undivided Hindu family which is partitioned obtains a certificate of registration he shall be liable to pay the tax on the turnover in respect of sales or purchases of goods made by him with effect from the date of such transfer of business, discontinuance or dissolution of the partnership, or the partition of the family, as the case may be." The petitioner in this case is sought to be held liable to pay arrears of sales tax dues of the partnership firm of Messrs Govindram Ramsharan Mawawala. He is sought to be held liable under the provisions of sub-section (1) of section 26, As I have already indicated the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration. It appears to me that the provisions in section 26 are intended to include and refer only to the same kinds of dealings with a business by a dealer as are mentioned in section 25. Obviously section 25 does not refer to a sale of business by Collector in recovery proceedings. In connection with the arguments advanced on behalf of the respondents that sub-section (1) of section 26 refers to a forced sale by a Collector in recovery proceedings, it is necessary to notice the language of sub-section (1) where it provides that upon a transfer 'the transferor and the transferee shall jointly and severally be liable to pay any tax including penalty, if any, payable in respect of such business". The liability for payment continues to be the obligation of the transferor in spite of transfer of business. The liability is joint as between the transferor and the transferee. In the matter of a sale by Collector having regard to this language of section 26(1) a question must arise as to who is the transferor in the matter of such sales. It is clear that Collector as transferor was not intended to be liable to pay outstanding arrears of tax. Is it correct to hold as is argued on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchaser, a dealer being referred to as transferor and the purchaser having been referred to as transferee. This construction is consistent with the scheme of the Act and particularly the scheme in section 25 as also in sub-sections (2), (3) and (4) of section 26. The construction as contended for on behalf of the respondents is entirely contrary to the scheme of the Act and the sections mentioned above. In support of the above construction as also to ascertain the true intention of the Legislature in enacting section 26(1) one may refer to the provisions in the Sales Tax Act 51 of 1959 for the same matter as contained in section 26(1) of the Act of 1953. That provision is in sub-section (4) of section 19 of the Act of 1959 and runs as follows: "Where a dealer, liable to pay tax under this Act, transfers or otherwise disposes of his business in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in the business or part thereof by any other person, the dealer and the person succeeding shall jointly and severally be liable to pay the tax (including any penalty) due from the dealer under this Act or under any earlier law, up to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st October, 1956, to 8th April, 1957, and he is accordingly not liable to pay the sum of Rs. 596-30 from out of the amount of Rs. 7,432-65 demanded as against him. Mr. Kantawala has argued that the petitioner is not entitled to any relief as the petition was filed after great delay. In that connection he pointed out that the demand was made by an order dated 3rd November, 1958, and notice for the recovery was served by the Mamlatdar on 11th March, 1959, and the petition was filed on 24th September, 1959. There is substance in this contention. It, however, appears to me that in this case the petitioner will be wrongfully and illegally without authority of law deprived of his property which may be sold in recovery proceedings unless relief is given to him. I have therefore taken the view that delay should not defeat the petitioner in this matter. Mr. Kantawala has also rightly pointed out that the scheme of the Sales Tax Act provides for a complete code for disposal of all questions arising under the Sales Tax Act. The ultimate decision of all questions of law must be procured by reference to the High Court as provided under the Act. He has therefore contended that the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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