M.K.Kar Gupta, Member (T) -
(1.) THE two cases in RN -244 of 1996 and RN -245 of 1996 are taken up together as the facts of the two cases and the points of law involved in the two cases are identical. These are applications made under Section 8 of the West Bengal Taxation Tribunal Act, 1987, challenging the finding of the authorities below to the effect that the transfer of sales and marketing units of the applicant -company (in RN -244 of 1996) viz., Lakme Ltd., to Lakme Lever Ltd. (applicant in RN -245 of 1996) did not amount to an absolute transfer within the meaning of Section 99 of the West Bengal Sales Tax Act, 1994.
(2.) THE case of the applicant in RN -244 of 1996 is that Lakme Ltd., is a company incorporated under the Indian Companies Act, 1913, having its branches all over India. One such branch in West Bengal was at 8B, Middleton street, Calcutta -700 001. Hindustan Lever Ltd., a company incorporated under the Indian Companies Act, 1913, is engaged in the development, manufacture, sale and distribution of various consumer products in India. Lakme Ltd. (in short, "Lakme") and Hindusthan Lever Ltd. (in short, "HLL") signed a memorandum of understanding to start jointly a company called Lakme Lever Ltd., (in short, "the company") to take over the sales and marketing unit of Lakme. The 31st December, 1995 was fixed as the date of taking over at the close of that day's business hours. An Extraordinary General Meeting of the shareholders of Lakme and HLL was held on January 5, 1996 wherein permission was accorded to the Board of Directors' of Lakme to transfer by sale Lakme's sales and marketing unit relating to the cosmetic division as a going concern to the company. By an assignment made on the 29th March, 1996, Lakme agreed to sell and the company agreed to take over as a going concern Lakme's existing sales and marketing units throughout India together with the net movable tangible assets and net current assets as on December 31, 1995 for a consideration and on the terms and conditions set out therein with effect from the first day of January, 1996 or such other date which may be mutually agreed upon. Pending finalisation of all legal formalities of the assignment, parties to the assignment mutually agreed that during the interim period to keep the sale going, Lakme will act as trustee on behalf of the company, import the specified goods in its own name from its manufacturing unit at Mumbai and sell the same and deposit due taxes up to July 6, 1996 in terms of the said assignment. After the assignment, Lakme's branch in West Bengal which is exclusively a selling unit, was transferred absolutely to the company which took over the goodwill plus net movable tangible assets and net current assets and became full and beneficial owner of the sales and marketing unit of Lakme on the 1st day of January, 1996. Thereafter, Lakme acted as a trustee of the company up to June 6, 1996 according to the terms of the said assignment. The company, Lakme Lever Ltd., started to operate in its own name from June 7, 1996.
(3.) BY a letter No. CB/444 dated June 25, 1996 to the respondent No. 2, the Deputy Commissioner, Commercial Taxes, Corporate Division, Lakme applied for amendment of its registration certificate No. AW/1342 under the State Act in favour of Lakme Lever Ltd., with effect from January 1, 1996 in terms of Section 99 of the West Bengal Sales Tax Act, 1994. A similar prayer was made by Lakme Lever Ltd., by its letter No. CB/467 dated June 25, 1996 for amendment of the existing registration certificate of Lakme in West Bengal by substituting the name of Lakme Lever Ltd., in place of Lakme as transferee under Section 99 of the West Bengal Sales Tax Act, 1994. By a letter dated July 10, 1996 under reference No. CB/768 Lakme Lever Ltd., informed the respondents that in so far as West Bengal was concerned, Lakme Lever Ltd., had taken over the entire branch of Lakme in West Bengal as a going concern with goodwill, net movable tangible assets and net current assets. The respondents were informed that the West Bengal branch of Lakme having been absolutely transferred, Lakme Lever Ltd., should be treated as a transferee of Lakme in terms of Section 99 in so far as West Bengal was concerned.;