Excess profits tax recovery from purchaser denied where the sale agreement did not cover the earlier assessment period.

Under the Excess Profits Tax Act, the Calcutta HC held that Section 14(2) did not permit recovery of a vendor's assessed excess profits tax from the purchaser for an earlier accounting period. The sale agreement was construed as covering only tax and liabilities arising from the later period beginning 1 May 1945, so it did not extend to the earlier assessment ending 30 April 1945. The Court further noted that any private contractual undertaking could not, by itself, fasten statutory tax liability on the purchaser for a period not covered by the agreement.

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Issues: Whether Section 14(2) of the Excess Profits Tax Act barred recovery of excess profits tax from the purchaser, and whether the sale agreement imposed liability on the purchaser for the tax demand relating to the earlier accounting period.

Analysis: The demand was for excess profits tax assessed on the vendor firm for the accounting period ending 30 April 1945. The purchaser was not liable under Section 14(2) for that demand. Clause 7 of the sale agreement, properly construed, related only to tax and liabilities for the later period beginning 1 May 1945 and did not cover the earlier assessment. Even if the agreement could create a private obligation, the revenue authorities could not rely on it to fasten statutory tax liability on the purchaser for a period not covered by the undertaking.

Conclusion: Section 14(2) barred recovery of the assessed excess profits tax from the purchaser, and the purchaser was not liable for the impugned demand.

Ratio Decidendi: A purchaser cannot be made liable for a vendor's tax demand for an earlier accounting period unless the statutory provision specifically permits such recovery or the contractual undertaking expressly covers that liability.

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