Fixed-asset auction sale does not transfer old sales tax liability unless the running business is sold in entirety.

An auction purchaser of only fixed assets is not liable for the transferor's pre-existing sales tax dues. Liability for past tax arrears arises only where the transfer covers the running business or the business in its entirety, so that the transferee effectively steps into the shoes of the defaulting dealer. Where the auction is confined to land, building, plant, machinery or other fixed assets, the old tax liability does not pass to the purchaser, and demands based on such dues cannot be sustained.

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Issues: Whether an auction purchaser of only fixed assets of a defaulting unit can be fastened with liability for the transferor's old sales tax dues.

Analysis: The governing principle was that liability for past tax dues depends on the nature of the transfer. If what is transferred is merely land, building, plant and machinery or other fixed assets, the purchaser does not become liable for the seller's outstanding tax dues. Liability arises only where the transfer is of the running business, or the business in its entirety, so that the transferee effectively steps into the shoes of the defaulting dealer. The provisions considered were treated as in pari materia, and the later decisions applied that principle to the admitted facts that only assets were sold in auction.

Conclusion: The auction purchaser was not liable for the previous owner's sales tax dues, and the impugned demands could not be sustained.

Final Conclusion: The appeal succeeded, the writ petition was allowed, and the demand notices were quashed.

Ratio Decidendi: A purchaser of only fixed assets does not incur liability for the transferor's pre-existing sales tax dues; such liability can be imposed only when the transfer is of the running business or business in its entirety.

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