Transferee liability for tax arrears applies to auction purchases of business assets, despite transfer through a secured creditor.

Liability under section 15 of the Karnataka Sales Tax Act, 1957 follows the transfer of business ownership, so unpaid tax and penalty arrears remain recoverable from the transferee. An auction purchaser of business assets acquired through a secured creditor under the State Financial Corporations Act, 1951 was treated as having taken over the business for sales tax recovery purposes, and the mode of transfer did not exclude section 15. The recovery notice was therefore valid and enforceable against the purchaser.

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Issues: Whether a purchaser of business assets in an auction conducted by a secured creditor is liable under section 15 of the Karnataka Sales Tax Act, 1957 for the transferor-dealer's unpaid tax and penalty arrears.

Analysis: Section 15 creates a statutory liability on the transferee of the ownership of a dealer's business for tax, penalty, or other amounts remaining unpaid at the time of transfer, and the transferee is treated as a dealer for recovery purposes. The fact that the transfer was effected through the Karnataka State Financial Corporation under section 29 of the State Financial Corporations Act, 1951 did not alter the character of the transfer so as to exclude the operation of section 15. The Court treated the auction purchaser as having acquired the business assets and the business ownership for purposes of the sales tax liability attached to the business, and held that the mode of transfer through the secured creditor did not extinguish the statutory liability.

Conclusion: The transferee was liable for the tax arrears of the dealer, and the recovery notice was valid and enforceable against the petitioner.

Ratio Decidendi: Liability under section 15 of the Karnataka Sales Tax Act, 1957 follows the transfer of business ownership and can be enforced against the transferee notwithstanding that the transfer is effected through a secured creditor under the State Financial Corporations Act, 1951.

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