Transferee liability requires transfer of the business as a whole; goodwill and trade mark rights alone are insufficient.

Transferee liability under section 26(1) of the Bombay Sales Tax Act, 1953 arises only on transfer of the business as a whole, not on transfer of goodwill alone. Goodwill and the right to use unregistered bidi labels or trade marks are assets attached to a business, but they do not by themselves amount to transfer of the entire running business. In the absence of evidence showing transfer of stock-in-trade, furniture, physical assets, or other material indicating transfer of the whole concern, the statutory condition was not met. The transfer therefore did not attract liability for the predecessor's sales tax dues.

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Issues: Whether the transfer of goodwill of a business together with the right to use unregistered bidi labels amounted to transfer of the entire business so as to attract transferee liability under section 26(1) of the Bombay Sales Tax Act, 1953.

Analysis: Liability under section 26(1) could arise only if the person sought to be fastened with the tax dues was the transferee of the entire business of the dealer. Goodwill is an advantage attached to a business and cannot be equated with the business itself. A right in trade marks, even when transferred along with goodwill, likewise does not by itself amount to transfer of the whole business. The revenue had to establish that the agreement covered the entire business and not merely goodwill and labels. In the absence of evidence of transfer of stock-in-trade, furniture, physical assets, or any other material showing transfer of the running business as a whole, the statutory requirement was not satisfied.

Conclusion: The transfer in question did not constitute transfer of the entire business, and the applicant was not liable as a transferee under section 26(1).

Ratio Decidendi: For transferee liability for prior sales tax dues to arise, the transfer must be of the business as a whole; transfer of goodwill and associated trade marks alone is insufficient.

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