Successor liability for tax arrears survives takeover where acquisition law transfers liabilities and relief protection has expired.

A Government company that took over an undertaking remained liable for pre-existing income-tax arrears and statutory interest because the acquisition scheme transferred the undertaking together with its liabilities. The relief notification under the Kerala Relief Undertakings Act operated only for the statutory period and did not suspend the Income-tax Act; it could not extinguish the liability after expiry. Section 5 of the acquisition law exempted only liabilities arising from contravention of law, while section 6 vested the undertaking's rights and liabilities in the transferee. Section 7(4) did not exclude tax dues merely because they were not listed in the schedule or balance-sheet, so the recovery notice was upheld.

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Issues: Whether the petitioner, as the Government company to which the undertaking and liabilities of the predecessor company had vested, was liable to discharge the income-tax arrears and interest, and whether the recovery notice and proposed coercive steps were liable to be quashed in view of the Relief Undertakings Act and the Acquisition Act.

Analysis: The relief notification under the Kerala Relief Undertakings (Special Provisions) Act, 1961 operated only for the statutory period and, in any event, could not protect the petitioner after the expiry of the maximum permissible period. The Income-tax Act was not among the enactments suspended under the relief legislation. Under the acquisition scheme, section 5 exempted the Government only from liabilities incurred by reason of contravention of law, while section 6 expressly provided that the right, title, interest and liabilities of the undertaking vested in the Government company. Section 7(4) could not be read to exclude pre-existing tax liabilities merely because they were not shown as specified liabilities in the schedule or balance-sheet. The income-tax dues and interest under section 220(2) constituted part of the vested liabilities of the taken-over company, and the petitioner could not avoid payment by shifting responsibility to the State Government or the Commissioner of Payments.

Conclusion: The petitioner remained liable as successor-in-interest for the income-tax arrears and statutory interest, and the challenge to the recovery notice failed.

Ratio Decidendi: Where the acquisition statute expressly transfers the undertaking together with its liabilities to the Government company, pre-existing tax arrears not excluded by the statute remain enforceable against the transferee, and a temporary relief notification cannot extinguish the statutory liability or interest after its expiry.

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