Successor tax exemption with transferor liability means the purchaser remains jointly liable for pre-transfer trade tax dues.

Continuation of exemption under Section 4-A(2-B) of the U.P. Trade Tax Act for a successor industrial unit remains subject to the statutory condition in Section 3-C that, on transfer of business, transferor and transferee are jointly and severally liable for tax due up to the date of transfer. A purchaser who accepts the exemption with that condition cannot later resist recovery of the predecessor's outstanding trade tax dues by asserting that the sale was free from encumbrances or by challenging the condition as illegal or contrary to public policy. The operative effect is that the successor remains liable for the earlier tax dues along with the transferor.

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Issues: Whether the purchaser of an industrial unit, who obtained continuation of exemption under Section 4-A(2-B) of the U.P. Trade Tax Act, could deny liability for the predecessor's outstanding trade tax dues and resist recovery on the ground that the sale was free from encumbrances.

Analysis: The exemption under Section 4-A was continued in favour of the successor unit subject to the condition contemplated by the second proviso to Section 4-A(2-B), namely that the successor manufacturer would be treated as the transferor and transferee for tax liability under Section 3-C. Under Section 3-C(2), on transfer of the business, the transferor and transferee are jointly and severally liable for tax payable in respect of the business up to the time of transfer. The purchaser accepted the exemption benefit with this condition and, after availing it, could not later challenge the condition as illegal, arbitrary, or contrary to public policy.

Conclusion: The recovery of the predecessor's trade tax dues from the petitioner was valid, and the petitioner was liable along with the transferor.

Final Conclusion: The writ petition was held to be without merit because the successor purchaser, having accepted the exemption subject to statutory liability, could not avoid joint and several responsibility for the earlier tax dues.

Ratio Decidendi: A successor who accepts continuation of tax exemption subject to statutory transferor-transferee liability cannot subsequently repudiate the accompanying condition and remains jointly and severally liable for the predecessor's tax dues.

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