TaxTMI 
TaxTMI 
1990 (1) TMI 276
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....e Financial Corporation ("KSFC " for short). For default in repaying the loan, the assets of Brindavan Industries, both movables and immovables, were brought to sale by the KSFC and in the auction-sale held on 17th February, 1984, the assets of the defaulter were sold in public auction and the petitioner in this writ petition was the highest bidder. Thus, both the movable and immovable assets of the defaulter were handed over by the KSFC to the petitioner. 3.. After the assets were thus tranferred in favour of the petitioner, the recovery officer attached to the commercial tax department, Gulbarga, issued a notice to the petitioner on 20th August, 1985, as per annexure-B, calling upon the petitioner to pay the arrears of tax and penalty ....
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....under section 31 of the State Financial Corporations Act, 1951 ("the SFC Act" for short). Thus, by the transfer of property made by the KSFC in exercise of its powers under section 29(1) of the SFC Act, all rights in or to the property trans. ferred vested in the transferee (petitioner), and for all purposes, the Financial Corporation is deemed to be the owner of the assets of the debtor. 7.. It is argued for the respondents by Sri Dattu, the learned High Court Government Pleader, that the dealer Sri Srinivasa Shetty was an assessee in default under the KST Act at the time of transfer and the petitioner who is a transferee of the business of the dealer which included its assets, both movable and immovable, becomes liable to pay the tax a....
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.... a creditor in this case and it took over the industrial concern, along with its assets both movable and immovable, in exercise of the rights conferred on it under section 29(1) of the SFC Act. On assuming the control of the industrial concern, and its assets, the KSFC exercised its right to transfer the industrial concern by way of lease or sale and realise the loan, the repayment of which was secured by pledge, mortgage, hypothecation or assignment in favour of the KSFC. Any transfer of the property made by the KSFC in exercise of its powers under sub-Section (1) of section 29 of the SFC Act, whether by way of lease or sale, vests in the transferee all rights in or to the property transferred as if the transfer had been made by the owner ....
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....n the position of a creditor of the dealer who, as in the present case, is also a defaulter under the KST Act. 13.. Under section 15 the transferee of the ownership of the business of a dealer is made liable to pay any tax or penalty remaining unpaid at the time of transfer. The Full Bench of this Court in Sarvotham Shenoy's case (S.T.R.P. Nos. 5 and 6 of 1977, decided on 15th September, 1978), referred to above has held that the transferee is liable to pay the tax or penalty which remained unpaid at the time of transfer. The question that arose for consideration by the Full Bench was: whether under section 15 of the Mysore Sales Tax Act, a transferee is liable to pay tax or penalty even though not demanded from the transferor pri....
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....dealer against the transferee of the business, all the provisions of the Act and the rules of recovery are made applicable to the transferee as well. Under section 15(1) of the Act, the transferee becomes a dealer for the purpose of the Act and hence is treated as a "defaulter" liable to pay the tax under the Act. The petitioner, therefore, cannot avoid the liability to pay the tax that was due from the owner of the business, the dealer. This liability is transmitted to him by virtue of the provisions of section 15, which is enacted to extend the liability to the transferee of the business. Along with the ownership of the business, which is transferred, the liability of the transferor under the Act in respect of the transactions prior to th....
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....gainst him. The other provisions of the Act under which coercive process can be taken for recovery of the arrears of tax, are still open for the department to be enforced against him, such as the recovery of the tax assessed as an arrear of land revenue, the attachment and sale of any property of the dealer by the prescribed officer or by a Magistrate, as if it were a fine imposed by him. But section 15 of the Karnataka Sales Tax Act creates a statutory liability on the transferor and the transferee, who are jointly and severally liable to pay any tax or penalty or any other amount payable in respect of the business transferred and remaining unpaid at the time of transfer. Under these provisions a statutory liability is imposed on the tr....