Transferee liability for unpaid sales tax and assessment of an unregistered buyer's turnover under the statutory tax scheme.

A transferee of a registered business was held liable under section 19(1) of the Orissa Sales Tax Act, 1947 for unpaid sales tax relating to periods before transfer, because the liability attached to tax already payable on completed sales and the transferee stepped into the transferor's position. For liability arising from the date of transfer, section 19(2) required assessment under the charging and machinery provisions applicable to an unregistered dealer, with turnover deemed accordingly. The reference was answered for the Revenue, confirming transferee liability for unpaid tax and the correct assessment route for an unregistered transferee.

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Issues: (i) Whether a transferee of a business from a registered dealer is liable under section 19(1) of the Orissa Sales Tax Act, 1947 for sales tax remaining unpaid for periods prior to the transfer. (ii) Whether the transferee's liability from the date of transfer could be enforced without determining liability under section 4, as contemplated by section 19(2) of the Orissa Sales Tax Act, 1947.

Issue (i): Whether a transferee of a business from a registered dealer is liable under section 19(1) of the Orissa Sales Tax Act, 1947 for sales tax remaining unpaid for periods prior to the transfer.

Analysis: The statutory scheme treated section 4 as the charging provision, with section 11 requiring returns from registered dealers, section 12 providing for assessment, and section 13 dealing with payment and recovery of tax. Section 19(1) made the transferee liable for tax payable in respect of the business that remained unpaid at the time of transfer, and such liability attached to the transferee as if he were the registered dealer. The liability related to tax already attracted by completed sales, and the transferee stepped into the position of the registered dealer for the unpaid amount.

Conclusion: Yes. The transferee was liable under section 19(1) for the unpaid tax of the transferred registered business.

Issue (ii): Whether the transferee's liability from the date of transfer could be enforced without determining liability under section 4, as contemplated by section 19(2) of the Orissa Sales Tax Act, 1947.

Analysis: Section 19(2) was held to govern a transferee who was not a registered dealer, in which case the gross turnover of the transferor's business was deemed to be the transferee's turnover for fixing liability under the charging section. The assessment of such transferee had to proceed under the provision applicable to unregistered dealers, namely section 12(5), and not under section 12(4), which applied to registered dealers. The Tribunal's view that the liability had to be worked out under the charging machinery for an unregistered transferee was accepted, subject to the correct assessment route.

Conclusion: Yes. The transferee's liability from the date of transfer had to be determined under section 4 read with section 19(2), and assessment was to be made under section 12(5) rather than section 12(4).

Final Conclusion: The reference was answered in favour of the Revenue on both questions, affirming transferee liability for unpaid sales tax of the transferred business and clarifying that an unregistered transferee's liability must be assessed under the provision applicable to unregistered dealers.

Ratio Decidendi: Under the sales tax scheme, tax becomes payable when the taxable sale occurs, and a transferee of a business may be made liable for unpaid tax of the transferor while a transferee's own liability, if unregistered, must be assessed under the machinery provision applicable to unregistered dealers.

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