Entire transfer of business required for transferee liability; reservation of debts and outstanding engagements defeats liability.

Transferee liability under section 26(1) of the Bombay Sales Tax Act, 1953 arose only if the dealer's business was entirely transferred as a going concern. Although the assignment deed passed the business name, goodwill, tenancy rights and certain advantages, it reserved credits, outstandings, debts, and the obligation to perform all outstanding engagements up to the date of assignment. Those reserved incidents were treated as essential parts of the running business, so the revenue failed to show a complete transfer. The respondents were therefore not liable as transferees, and the transferee liability assessment could not be sustained.

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Issues: Whether, on a proper construction of the assignment deed, the ownership of the business was entirely transferred so as to attract transferee liability under section 26(1) of the Bombay Sales Tax Act, 1953.

Analysis: Liability under section 26(1) arises only when the ownership of the dealer's business is entirely transferred. The deed transferred the business name, goodwill, tenancy rights and certain advantages, but clause 4 reserved to the transferors the credits and outstandings, the liability for debts, and, most importantly, the right and obligation to perform all outstanding engagements up to the date of assignment. Those reserved rights and liabilities formed an essential part of the running business. In a fiscal provision imposing liability on a transferee, the revenue had to establish that the business as a running concern had passed wholly to the transferee, and that was not shown here.

Conclusion: The conditions of an entire transfer of business were not satisfied, and the respondents were not liable as transferees under section 26(1) of the Bombay Sales Tax Act, 1953.

Final Conclusion: The reference was answered in favour of the assessee's contention before the Tribunal, and the transferee liability assessment could not be sustained.

Ratio Decidendi: For transferee liability under a provision requiring an entire transfer of business, the transfer must include the business as a going concern; reservation of essential business incidents such as outstanding engagements and related rights and liabilities prevents the transfer from being entire.

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