Transferee liability under sales tax law depends on proof of entire business transfer, not mere continuation of trade.

Transferee liability under section 19 of the Orissa Sales Tax Act, 1947, arises only when the entire business is transferred as a going concern and unpaid tax remains outstanding at the time of transfer. The statutory presumption of an entire transfer from continuation of business at the same premises in substantially the same goods is rebuttable. On the facts, the record showed only sale of stock-in-trade, with no proof that the purchaser acquired the business, goodwill, assets, or liabilities as a running concern. Liability could not therefore be fastened on the successor dealer merely because the same type of business continued from the same premises.

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Issues: Whether liability under section 19 of the Orissa Sales Tax Act, 1947, could be fastened on the successor dealer on the facts found, and whether the statutory presumption of an entire transfer of business was rebutted.

Analysis: Section 19 makes a transferee liable only where the ownership of the business is entirely transferred and unpaid tax remains outstanding at the time of transfer. The explanation raises a presumption of entire transfer when a dealer carries on business in the same premises in substantially the same goods in succession to a liable dealer, but the presumption is rebuttable. On the facts, the Tribunal found no evidence that the purchaser had taken over the business as a running concern, including its goodwill, assets and liabilities, and the record showed only sale of stock-in-trade. Liability could not therefore be imposed merely because the new dealer carried on similar business from the same premises.

Conclusion: The question was answered in the affirmative in favour of the assessee and against the Revenue. The successor dealer was not liable under section 19 on the materials found.

Final Conclusion: The reference was disposed of by holding that the statutory conditions for treating the successor as transferee of the entire business were not established on the facts.

Ratio Decidendi: Transferee liability for unpaid sales tax arises only on proof of an entire transfer of the business as a going concern, and the rebuttable statutory presumption under the explanation to section 19 does not survive where the department fails to establish transfer of the business assets and goodwill beyond a mere sale of stock-in-trade.

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