TMI Blog1999 (9) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Mishal Paper Mills (P) Ltd., manufacturing duplex board, to which financial assistance was provided by the State Financial Corporation. In respect of default, when the payments were not made by the said company, powers under section 29 of the State Financial Corporations Act, were invoked and assessments of the assets of the unit were taken. Thereafter, steps were taken by the Financial Corporation for auctioning the said unit. The petitioner purchased the land, plant and machinery in auction as the highest bidder. In respect of the recovery of dues of sales tax, proceedings were initiated against the defaulting company and notices were issued to the petitioner treating it as the transferee-company. It is in this background that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the liability is on the transferor as well transferee, they being jointly and severally liable for the payment of tax and penalty for any other amount payable under the Act in respect of the business transferred and remaining paid at the time of transfer. It was considered that the transferee gets into the shoes of the transferor and takes over the liability of the transferor and along with the ownership of the business. Since, the provision is made with the object of payment of tax payable by the transferor it was construed that the payment shall be made from transferee. 6.. From the perusal of the provisions of section 15 of the KST Act, it is evident that the liability of the transferee is fixed when the ownership of the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tools of such business. Assets and liabilities including goodwill are the necessary ingredients to constitute a business, besides the stocks and other movable and immovable items connected with the said business. Section 29 of the KSFC Act, 1951 reads as under: "Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof, or in meeting its obligations in relation to any guarantee given by the Corporation, or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corporation shall have the right to take over the management or possession or both of the industrial conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the property transferred (as if the transfer) had been made by the owner of the property". By this provision, so far as the transferee is concerned, his rights are protected and it is considered as if the transfer is made the owner of the property. In other words State Financial Corporation has the power to confer the right over the property transferred to the transferee while exercising the power under section 29 of the Act. The property if already charged under section 13(2)(i) and sold by the State Financial Corporation, then to the extent of the charge so created by this section, the State authorities are entitled to recover the amount from the State Financial Corporation out of the proceeds of the sale and will have priority for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness. Doma Sao Mohanlal v. State of Bihar [1971] 27 STC 473 (SC) and Kanhaiya Lal v. State of Rajasthan [1992] 86 STC 30 (Raj). In Sreemati Vasant Tanna v. State of Bihar [1975] 35 STC 217 (Pat) it was observed that to make transferee liable there must be transfer of entire business. The auction purchaser was held not liable to pay the dues of old consume of electricity in Isha Marbles v. Bihar State Electricity Board (1995) 2 SCC 648 as the demand of arrears are contractual liability. In Rambali Bhuleshwar v. Sales Tax Officer [1961] 12 STC 595 (Bom) sale by Collector in the course of recovery proceedings was not considered a case of transfer of business. In Santokh Singh Karam Singh of Malout v. Punjab State [1973] 31 STC 77 (P H) trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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