Company liable for sales tax arrears due to business transfer.

The Tribunal held that the petitioner-company was liable for the sales tax arrears of the defaulter company due to the transfer of the entire business and the first charge on the property under sections 9(1) and 11-AAAA of the Rajasthan Sales Tax Act, 1954. The writ petitions were dismissed with no order as to costs.

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Issues Involved:
1. Liability of the petitioner-company for the sales tax arrears of the defaulter company.
2. Validity of the notice issued by the Commercial Taxes Officer for the recovery of sales tax arrears.
3. Transfer of ownership of the business and its implications under section 9 of the Rajasthan Sales Tax Act, 1954.
4. First charge on the property under section 11-AAAA of the Rajasthan Sales Tax Act, 1954.

Issue-wise Detailed Analysis:

1. Liability of the petitioner-company for the sales tax arrears of the defaulter company:
The petitioner-company argued that it was not liable for the sales tax arrears of the defaulter company as there was no transfer of the entire business. The Tribunal, however, found that the petitioner-company had purchased the entire business, including land, building, plant, and machinery, through an auction conducted by the Rajasthan Financial Corporation (Corporation). The Tribunal emphasized that the transfer of the entire business, even if it was not operational at the time, made the petitioner-company liable for the sales tax arrears under section 9(1) of the Rajasthan Sales Tax Act, 1954 (RST Act).

2. Validity of the notice issued by the Commercial Taxes Officer for the recovery of sales tax arrears:
The petitioner-company challenged the validity of the notice issued by the Commercial Taxes Officer, arguing that it was not liable for the defaulter company's arrears. The Tribunal upheld the validity of the notice, stating that the petitioner-company, having purchased the entire business, was liable for the sales tax arrears under section 9(1) of the RST Act. The Tribunal also noted that the Corporation had informed the petitioner-company about the conditions of the auction, which included the liability to clear dues of government departments.

3. Transfer of ownership of the business and its implications under section 9 of the Rajasthan Sales Tax Act, 1954:
The Tribunal examined section 9(1) of the RST Act, which states that when the ownership of the business of a dealer liable to pay tax is entirely transferred, the transferee is liable to pay the tax arrears. The Tribunal found that the petitioner-company had purchased the entire business of the defaulter company, including land, building, plant, and machinery, which constituted a transfer of the entire business. Consequently, the petitioner-company was liable for the sales tax arrears of the defaulter company.

4. First charge on the property under section 11-AAAA of the Rajasthan Sales Tax Act, 1954:
The Tribunal also considered the provisions of section 11-AAAA of the RST Act, which states that any amount of tax, penalty, interest, and other sums payable by a dealer shall be the first charge on the property of the dealer. The Tribunal held that the sales tax arrears constituted the first charge on the property of the defaulter company, which had been transferred to the petitioner-company. Therefore, the petitioner-company was liable to clear the sales tax dues as the charge attached to the property irrespective of the transfer.

Conclusion:
The Tribunal concluded that the petitioner-company was liable for the sales tax arrears of the defaulter company due to the transfer of the entire business and the first charge on the property under sections 9(1) and 11-AAAA of the RST Act. The writ petitions were dismissed with no order as to costs.

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