Forced auction purchaser liability under sales tax transfer rules does not extend to Collector-driven recovery sales.

Section 26(1) of the Bombay Sales Tax Act, 1953 was construed as applying only to voluntary transfers of a dealer's business within the statutory scheme, where the transferor remains liable jointly and severally with the transferee. A forced auction sale by the Collector in recovery proceedings was outside that scheme, because it was not a transfer by the dealer and the Collector could not be treated as the transferor contemplated by the provision. The later insertion of section 19(4) in the Bombay Sales Tax Act, 1959 supported the same interpretation. On that basis, an auction purchaser in such a forced sale was not liable for the dealer's pre-existing sales tax arrears under section 26(1).

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Issues: Whether an auction purchaser in a forced sale by the Collector can be treated as a transferee under section 26(1) of the Bombay Sales Tax Act, 1953 so as to become liable for the transferor dealer's unpaid sales tax arrears.

Analysis: The charging provision levied sales tax on the dealer, and the statutory scheme in sections 25 and 26 contemplated voluntary dealings by a dealer in the ownership of his business, including sale, disposal, discontinuance, partnership changes and partition. Section 26(1), read in that context, presupposed a transferor who remained liable jointly and severally with the transferee and against whom the transferee could in principle seek reimbursement. A sale by the Collector in recovery proceedings was not a transfer by the dealer within that scheme, and the Collector could not realistically be treated as the transferor contemplated by the section. The later enactment of section 19(4) of the Bombay Sales Tax Act, 1959 supported the same construction.

Conclusion: The forced auction purchaser was not a transferee within section 26(1) of the Bombay Sales Tax Act, 1953, and was not liable for the dealer's pre-existing sales tax arrears on that basis.

Final Conclusion: The demand and recovery proceedings against the petitioner were quashed, and relief was granted in writ jurisdiction.

Ratio Decidendi: Section 26(1) of the Bombay Sales Tax Act, 1953 applies only to transfers of a dealer's business contemplated by the statutory scheme, and does not extend to a forced sale by the Collector in recovery proceedings.

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