TaxTMI 
TaxTMI 
2013 (8) TMI 206
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....ecame final nor any amount was paid by Vaishnavi and turned into a defaulter company. Property of Vaishnavi was taken over by Gujarat Industrial Investment Corporation Ltd. (GIICL) and on an occasion transferred to M/s. Sachin Dyeing & Printing Mills Pvt. Ltd. on as is whereas basis as per the agreement of sale. The central excise duty initiated an action of recovery of central excise duty against M/s. Sachin Dyeing & Printing Mills Pvt. Ltd. as dupe of defaulter company from transferring company. Adjudicating authority confirmed the same vide order in original dated 30.11.06 which was appealed and the order in appeal was remanded back to the first appellate authority as per the Tribunals order dated 10.05.07. The first appellate authority in the current proceedings has again upheld the said confirmation of the demand against the appellant. Aggrieved by such an order, the appellant is before the Tribunal. 3. Ld. counsel appearing on behalf of the appellant would submit that un-recovered dues against Vaishnavi were proposed to be recovered from the appellant by taking action under the provisions of Section 11 of the Central Excise Act read with Section 142 of the Customs Act, 19....
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.... liability, as the appellant in accordance with law is not a successor, he is not liable for any duty to the Revenue. It is the submission that the liability cannot be fastened on the basis of the said terms, when in accordance with law, appellant is not liable to pay any amount as proposed under show cause notice dated 16.02.06. It is the submission that judgment of the Hon'ble High Court of Bombay in the case of Krishna Lifestyle Technologies Ltd. 2008 (229) ELT 173 (Bom.) is directly on the issue wherein the Hon'ble High Court has interpreted the provisions of Section 11 and more specifically word 'successor'. It is his submission that this decision was carried in appeal by the Revenue by filing a special leave petition before the Apex Court which was dismissed by the Apex Court after condoning the delay as reported at 2009 (242) ELT A 118. It is also the submission that the judgment of the Hon'ble High Court of Gujarat in the case of Sweta Gupta Vs. UOI 2006 (205) ELT 155 will be applicable on the issue. 4. Ld. D.R. on the other hand would emphasise upon the findings recorded by the first appellate authority. It is his submission that the factory in question was auctioned on....
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....able in accordance with law, shall be paid by the purchaser in accordance with law. Likewise, dues of the claims of Gujarat Electricity Board, GIDC/Body Corporate, Local Authorities, if any, found payable in accordance with law shall also be paid by the purchaser in accordance with law. However, in no case, the vendor shall be liable or responsible for payment of any such dues/claims as assets are sold on "AS IS WHEREAS BASIS". The tax liabilities and other dues/claims pertaining to the land & building, if any of the Government, Local Bodies, etc. and/or the liabilities of Gujarat Industrial Development Corporation shall be borne by the purchaser in accordance with law, however, in no circumstances the vendor shall be liable or responsible for any such claims/dues, as the assets are sold on "AS IS WHEREAS BASIS" by the vendor to the purchaser. 10. It can be seen that departmental authorities are relying upon the first two sentences of this clause and a show cause notice has been issued in order to observe the recovery of the demand which is in accordance with the law. 11. The entire issue in this case can be seen from a specific angle in as to whether the appellant herein ....
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....ion 11 to hold that the appellant herein has succeeded in a business or trade of defaulting company i.e. Vaishnavi. First of all, it has to be seen whether the appellant herein has purchased the property from Vaishnavi or whether Vaishnavi has transferred the business or trade in whole or in parts or has affected any change in ownership. I find from the perusal of the records that none of this has been alleged and there are no findings recorded in the impugned order on this point. It is undisputed that the appellant herein had purchased the said plant & machinery from M/s. GIICL who had, by enforcing the provisions of a specific Act, taken over the possession of defunct unit of Vaishnavi. On such factual matrix, I find that Honble High Court of Bombay in the case of Krishna Lifestyle Technologies Ltd. has specifically dealt with this issue i.e. as to what is a succession and the effect of such succession or the business. I find that the ratio which has been laid down by their lordships, with respect needs to be reproduced. 15.We may also consider some other judgments and commentaries as to the expression business. In Kanga and Palkhivala's Law and Practice of Income Tax, Eighth....
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....ng over of the whole of the business concerned; But if a business is taken over as a whole, the fact that minor assets of the business are omitted from the transfer will not prevent there being a succession. The fact that the purchaser already has a similar business in not a material fact in establishing succession. The purchase of a business with a view to closing down would not appear to constitute succession. The following observations are also material : This is an authority for the position that if a business was taken over as a going concern the mere fact that some assets, which were not required by the successor for carrying on of the business, were not transferred to him would not make it any less a succession in law. It is not necessary to multiply decisions. Succession involves change of ownership; that is, the transferor goes out and the transferee comes in. It connotes that the whole business is transferred. It also implies that substantially the identity and the continuity of the business are preserved. If there is a transfer of a business, any arrangement between the transferor and the transferee in respect of some of the assets and liabilities not with a view t....
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.... was only a sale of the machinery and not the sale of the whole business. We have already referred to the judgment in Shreyas Papers Pvt. Ltd. (supra). The High Court there had found hat mere transfer of land, building, plant and machinery by the State Financial Corporation would not make the purchaser a transferee. In Oriental Fire & General Insurance Co. Ltd. v. Commissioner of Income Tax (2000) 244 ITR 631 (Delhi) was pleased to hold that carrying on the business and its place has been taken by an entirely new entity to run in continuity and as a going concern of the same business. Substantial identity and continuity of the business must be preserved. 16. Succession therefore has a recognized connotation. The tests of change of ownership, integrity, identity and continuity of a business have to be satisfied before it can be said that a person succeeded to the business. The business carried on by the transferee must be the same business and further it must be continuation of the original business either wholly or in part. It would thus be clear from the above, that these tests will have to be met, before it can be said that a person has succeeded to a business. This would requ....