Transfer of business under sales tax law requires more than common partners or same trading style; new firm not liable.

Section 27 of the Madras General Sales Tax Act applies only when there is a transfer of the business of a dealer, and it fastens liability on the transferee for tax due up to the date of transfer. A dissolved partnership ends in law, and a newly constituted firm formed by fresh agreement is a separate legal entity. Mere continuance of business in the same style, at the same place, with some common or related partners does not amount to a transfer of the old firm's business. Section 27 was therefore inapplicable, and the demand against the new firm for the dissolved firm's sales tax arrears was set aside.

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Issues: Whether the new partnership firm, constituted after dissolution of the old firm, could be treated as a transferee or as the same legal entity so as to make it liable for sales tax arrears due from the dissolved firm under section 27 of the Madras General Sales Tax Act.

Analysis: Section 27 applies where there is a transfer of the business of a dealer, real or benami, and fastens liability on the transferee for tax due up to the date of transfer. A dissolved partnership comes to an end in law, and the mere fact that the new firm carries on business in the same style, at the same place, and with some common or related partners does not amount to a transfer of the old firm's business. The new partnership is constituted by a fresh agreement and is a separate legal entity. Those factual similarities do not justify treating the new firm as liable for arrears owed by the dissolved firm.

Conclusion: Section 27 was held inapplicable, and the notice of demand against the new firm for recovery of the old firm's tax arrears was set aside; the assessee succeeded.

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