COMMISSIONER OF SALES TAX Vs. TIRATHRAM KASHMIRILAL INDIA PVT LTD

JUDGEMENT

(1.) This is a reference under S. 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the 1959 Act") made at the instance of the Commissioner of Sales Tax.

(2.) The respondents are the transferees of the business of one M/s. Tirathram Kashmirilal, a partnership firm. The said firm was registered as a dealer under the Bombay Sales Tax Act, 1953 (hereinafter referred to as "the 1953 Act"). Thereafter, the partners of the said firm formed a private limited company with the object of taking over the business of the said firm and accordingly, on November 1, 1959 the ownership of the business of the said firm was entirely transferred to the respondents. The respondents thereafter applied for within the prescribed period and obtained a registration certificate under the 1953 Act. The assets of the business of the said firm taken over by the respondents included certain stock of goods which was purchased by the said firm both from registered dealers and unregistered dealers. In respect of the goods so purchased from registered dealers, the said firm had paid to the vendors of the said goods the amount which the said vendors would have to pay to the Govt. by way of sales tax and general sales tax, and in the case of goods purchased from unregistered dealers, the said firm had paid purchase tax to the Government. The 1953 Act, levied sales tax, general sales tax and purchase tax, the levy of sales tax being provided for by S. 8, of general sales tax by S. 9 and of purchase tax by S. 10 thereof. Under S. 8 a dealer became liable to pay sales tax on his turnover of sales of goods after deducting from such turnover certain sales of goods specified in that section. The relevant portion of S. 8 of the 1953 Act read as follows :- "8. Levy of sales tax : Subject to the provisions of S. 7, there shall be levied a sales tax on the turnover of sales of goods specified in column 1 of Schedule B at the rate, if any, specified against them in column 2 of the said Schedule, after deducting from such turnover - (a) sales of goods -

(3.) In order to ensure that a transferee of the business of a registered dealer would get the same benefits in his assessment with respect to sales tax by becoming entitled to claim the same deductions as his transferor could have done in respect of purchases made by him, R. 16(2) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954 (hereinafter referred to as "the 1954 Rules"), provided as follows :- "Where a dealer liable to pay tax transfers the ownership of the whole or part of his business, the stock of goods transferred along with such business shall not, for the purpose of S. 8, be deemed to be purchased by the transferee from the transferor and the original purchase of such good by the transferor shall for the purpose of the said section be deemed to be the purchase made by the transferee". In order to provide a dealer with relief in addition to those granted, inter alia, by Ss. 8, 9 and 10 of the 1953 Act, and also to provide a dealer with relief in cases where he had paid purchase tax to the Government or had paid to his vendors the amount of tax which his vendors would be liable to pay to the Government, S. 18B of the 1953 Act conferred upon the State Government the power to make Rules providing for a drawback, set-off or refund in respect of taxes and amounts so paid. The Rules relating to the grant of such drawback, set-off or refund are to be found in Rules 11 and 11A of the 1954 Rules. In order to ensure that these benefits would also be available to a transferee of a registered dealer just as such transferee was entitled to the benefit of deductions allowed under S. 8 of the 1953 Act by reason of the said R. 16(2) of the 1954, Rules, R. 11AA was made. This Rule provided as follows :-