Transferee liability for predecessor tax dues fails absent complete business transfer or fraudulent intent under sales tax law.

A transferee was not made liable for a seller's outstanding tax dues because the record showed purchase of land, building, machinery and raw materials, but not transfer of the entire business; section 9(1) applied only on a complete transfer of business ownership. The attempt to sustain the notice under section 11AAA also failed because the transfer was for valuable consideration, there was no notice of departmental dues, no material showed intent to defraud the Revenue, and the notice did not plead the essential statutory ingredients. The notice was therefore quashed and recovery of the seller's dues from the transferee was restrained.

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Issues: (i) Whether the petitioner was liable for the outstanding tax dues of the seller under section 9(1) of the Rajasthan Sales Tax Act, 1954 on the footing that the entire business had been transferred. (ii) Whether the impugned notice and demand were sustainable under section 11AAA of the Rajasthan Sales Tax Act, 1954 on the ground that the transfer was made to defraud the Revenue.

Issue (i): Whether the petitioner was liable for the outstanding tax dues of the seller under section 9(1) of the Rajasthan Sales Tax Act, 1954 on the footing that the entire business had been transferred.

Analysis: The material on record showed purchase of land, building, machinery and raw materials, but not a transfer of the entire business. The agreement and notice did not establish that the whole ownership of the business of the dealer had been taken over by the petitioner. The statutory liability under section 9(1) arises only where the ownership of the business is entirely transferred.

Conclusion: The petitioner was not liable under section 9(1); the provision was inapplicable.

Issue (ii): Whether the impugned notice and demand were sustainable under section 11AAA of the Rajasthan Sales Tax Act, 1954 on the ground that the transfer was made to defraud the Revenue.

Analysis: Section 11AAA applies only where, during pendency of proceedings, a transfer of immovable property is made with intent to defraud the Revenue, and the proviso protects transfers for valuable consideration made without notice of such proceedings. The record showed purchase for valuable consideration, absence of notice of departmental dues, and no material showing an intention to defraud the Revenue. The notice also did not state the essential ingredients required to invoke the section.

Conclusion: The notice was not sustainable under section 11AAA and could not fasten the seller's tax liability on the petitioner.

Final Conclusion: The impugned notice was quashed and the respondents were restrained from recovering the seller's tax dues from the petitioner. The petition was allowed.

Concurring Opinion: The Technical Member agreed that the petition should be allowed and that section 11AAA was not attracted, but did not concur with the majority's determination on section 9(1), treating that question as unnecessary on the facts.

Ratio Decidendi: Liability for a predecessor's tax dues cannot be fastened on a transferee unless the statutory conditions for transfer of business or fraudulent transfer are strictly established, including transfer of the entire business under section 9(1) or intent to defraud the Revenue under section 11AAA, and a transfer for valuable consideration without notice is protected.

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