TaxTMI 
TaxTMI 
2015 (9) TMI 576
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....f Rs. 5 lakhs and fine of Rs. 4,01,189/-). The said unit was taken over by the appellant in April 2006. The background of the case is that the demand was officially confirmed against M/s. Sumit Rerolling Mills Pvt. Ltd. and the said unit was taken over by the bank against their dues. The bank has auctioned the unit and in such auction one Zia Iron Stores has purchased the property of the unit. Thereafter the present appellant has purchased the unit from Zia Iron Stores. The department vide their letter dated 25/7/2008 and 23/10/2008, 6/2/2008 asked the appellant to pay the Central Excise dues which was outstanding against the M/s. Sumit Rerolling Mills Pvt. Ltd. in terms of Section 11 of the Central Excise Act, 1944. Aggrieved by the said demand appellant filed appeal before the Commissioner (Appeals), who vide the impugned order directed the appellant to pay the remaining of government dues and rejected the appeal. 3. Shri Sanjay Agarwal, Ld. Counsel for the appellant submits that they have only purchased the immovable assets that too not from M/s Sumit Rerolling Mills Pvt. Ltd but from Zia Iron Stores. He further submits that they have not succeeded the business of M/s. Sumit ....
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....buyer Zia Iron Stores, the liability which liable to be undertaken by the purchaser is only in respect of those dues, tax revenue charges and legal charges which is related to transfer of property and not in respect of Central Excise dues. Therefore the liability of Central excise arrears has not been transferred to the present appellant, for this reason also they are not liable to discharge, the arrears of Central Excise. He further submits that as per the deed of assignment between Zia Iron Stores and the appellant in condition No. 6 it is stated that assignor having paid, up to this date all dues among other dues, Central Excise dues also and if there remain arrear to be paid assignor undertake to pay the same. Therefore even in view of this assignment deed the appellant has not under taken under deed of assignment to clear arrears of Central Excise therefore under any circumstances the appellant is not liable for payment of arrears which is against M/s. Sumit Rerolling Mills Pvt. Ltd. He further submits that it has been held by the Hon'ble Supreme Court in the case of UOI vs. Sicom Ltd. [2010 18 STR 673 (SC)] wherein Hon'ble Apex Court held that Government dues have no ....
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....lant has undertaken to discharge the arrears and that conditional registration was granted to the appellant, therefore the appellant was liable to pay arrears. In this regard, it is his submission that the appellant blindly following instruction of the departmental officer given such undertaking the appellant has reserved their legal rights. Therefore merely by giving under taking the appellant cannot be deprived from contesting the recovery of arrears on the basis of legal provisions. He also submits that mere undertaking cannot be brushed aside statutory provisions for recovery of arrears. In this support he placed reliance on the judgment of this Tribunal in the case of Shri Kesav Cements & Infra Ltd. vs. Commissioner of C. Ex, Belgaum [2010 (256) ELT 585 (Tri.Bang)], wherein it was held that recovery cannot be made from auction purchaser of the assets even though the appellant was force to pay dues of defaulter by withholding registration. 4. On the other hand, Shri. Asuthosh Nath, Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that since the assets which was purchased by the appellant was origi....
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....ecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change. (2) (i) The Central Excise Officer may, by a notice in writing, require any other person from whom money is due to such person, or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held, or at or within the ....
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.... M/s. Sumit Rerolling Mills Pvt. Ltd whereas it was first acquired by the bank, who under auction sold the asset not to the appellant but to the Zia Iron Stores and subsequently the appellant has purchased the assets from M/s. Zia Iron Stores. In this transaction, neither M/s. Sumit Rerolling Mills Pvt. Ltd is the predecessor nor the appellant is successor. With regard to the proviso to Section 11 recovery under Section 11 and proviso thereto cannot be made from appellant. I also observe that in the proviso to Section 11 it is clearly provided that the recovery of arrears pending against predecessor can be made from the successor only in case when there is transfer of business or trade either in whole or in part, the proviso to Section 11 does not stipulates applicability in case of sale of assets of the predecessor to successor. In the present case, it is undisputed fact that firstly appellant has not taken over the business or trade which was being run by M/s. Sumit Rerolling Mills Pvt. Ltd. For this reason also proviso Section to 11 is not applicable. I am in agreement with the submission of the Ld. Counsel that in view of the Krishna Lifestyle Technologies Ltd (supra) case the ....
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....screte or individual assets. In fact, "ownership of business" is wider than the sum of the ownership of a business constituent asset. Above all, transfer of "ownership of business" requires that the business be sold as a going concern". 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 Edition, Volume I at page 459 considering Section 2(13) of the Income Tax Act, the learned authors have in the context of the expression "business" noted that the definition is wide, but underlying each of them is the fundamental idea of the continuous exercise of an activity. It connotes some real, substantive and with a set purpose. There is something organic about the whole which does not exist in its separate parts. Business may include activity of taking a market place or godowns. The proviso to Section 11 of the Central Excise Act not only speaks of transfer of business or trade, but uses the expression "in whole or in part". In other words, there need not be transfer of the whole of the ownership of business.It is sufficient if there is transfer or disposal of part of the....
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....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 to enable the transferor to run a part of the business transferred but to enable the transferee to run the business unhampered by the load of debts or for any other appropriate collateral purpose cannot detract from the totality of succession". It would thus appear that whether there is whole or part transfer of business and succession thereto what has to be established is that identity and continuity of the business so transferred is preserved. The High Court of Rangoon in Commissioner of Income Tax v. N. N. Firm((1934) 2 ITR 85(Rangoon) was again considering the expression "Business". It held there where a business is split up and thereafter another person carries on part of the business he does not succeed his predecessor in ca....
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.... 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 require the facts to be investigated as to whether there has been transfer of the whole of the business or part of the business and succession to the original business by the transferee. 17. Our attention was also invited to the Judgment in Municipal Corporation of Delhi v. Gurnam Kaur (1989) 1 SCC 101) as to what can be said to be a binding precedent. The Court noted that Quotability as to law applies to the case, its ratio the only thing binding on an authority is the principle upon which the case was decided. Statements which are not part of the ratio decidendi are distinguished as obiter dicta and are not authoritative. The Court also quoted with approval, P. J. Fitzgerald, 12th edition as to the concept of sub sil....
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....d that the immovable assets were first sold in auction by the bank to Zia Iron Stores and thereafter the appellant has purchased the property from Zia Iron Stores. It has been held in the numerous judgment that if any property is sold under auction buyer cannot be held liable for payment of the arrears of the previous owner of the property. This issue has been dealt in various following judgments, wherein Hon'ble Courts have held as under: Rana Girders Ltd. Vs. Union of Inda [2013 (295) ELT 12 (S.C.)] 23. We may notice that in the first instance it was mentioned not only in the public notice but there is a specific clause inserted in the Sale Deed/ Agreement as well, to the effect that the properties in question are being sold free from all encumbrances. At the same time, there is also a stipulation that "all these statutory liabilities arising out of the land shall be borne by purchaser in the sale deed" and "all these statutory liabilities arising out of the said properties shall be borne by the vendee and vendor shall not be held responsible in the Agreement of Sale." As per the High Court, these statutory liabilities would include excise dues. We find that....
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....al Excise Rules, liability to pay excise duty can be recovered from plant, machinery and building, cannot be accepted in view of the binding opinion recorded by the Hon'ble Supreme Court, in the aforesaid judgment. (c) Himgiri Ispat Pvt. Ltd. Vs. Custom, Excise & Service Tax [2014 (305) ELT 36] 4. While right to prefer Appeal is statutory, the same can be exercised to the extent Statute has granted. While a time limit has been fixed for preferring the Appeal, upon expiry of that period, the right to prefer Appeal stands extinguished. If the Appellate Authority has been authorized to condone delay of a limited period as prescribed, the same itself prescribes that he has no authority to condone delay beyond the limit so prescribed. However, the right exercised by a citizen under Article 226 of the Constitution of India is not a statutory right, but is a constitutional right. If the Constitution has limited that right, of course, then the right has to be exercised within that limit. The fact remains that the Constitution, while conferring the right under Article 226 of the Constitution, did not fetter such right by any limitation whatsoever. In those circumstance....
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....r any other sums of any kind as specified in the section is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise for the purposes of recovering such duties or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change. In the facts of the present case, admittedly, it is not the person from whom the amounts were recoverable or due, who has transferred the property in question to the petitioner. The property had been sold to the petitioners under the provisions of the Securitisation Act, by the respondent Bank who is a secured creditor. Moreover, what has been sold to the petitioners is the immovable property of the defa....
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....fide auction-purchaser under a statutory sale was not liable to clear electricity dues of the previous owner by holding as follows :- "What we have discussed above appears to be the law gatherable from the various provisions which we have detailed out above. It is impossible to impose on the purchasers a liability which was not incurred by them." 5. Thereafter, in State of Karnatka and another v. Shreyas Papers Pvt. Ltd. & others reported as JT 2006 (1) SC 180, the Hon'ble Supreme Court stated the following questions :- "1.1 Firstly, whether the purchaser of assets of a concerns old by a State Financial Corporation, in exercise of its powers under Section 29 of the State Financial Corporations Act, 1951 (hereinafter "the SFC Act) would be liable under the Karnataka Sales Tax, 1957 (hereinafter "the KST Act"), for the arrears of sales tax of the concern whose assets have been transferred? 1.2 Secondly, under what circumstances does a charge created on a property become unenforceable against a transfree of such a property?" The Hon'ble Court held as follows :- "In these circumstances, we are of the view that the first resp....
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....statute claiming "first charge" over the property, the Crown's debt is entitled to have priority over the claim of others. (iii) Since there is no specific provision claiming "first charge" in the Central Excise Department cannot have precedence over the claim of secured creditor viz., the petitioner Bank. (iv) In the absence of such specific provision in the Central Excise Act as well as in Customs Act. we hold that the claim of secured creditor will prevail over Crown's debits." In view of our above conclusion, the petitioner UTI Bank being secured creditor is entitled to have preference over the claim of the Deputy Commissioner of Central Excise, first respondent therein." 7. It may be specifically noted here that no such "first charge" has been pleaded by the Excise Authorities in the present case also. Lastly, reference may be made to the decision of this Court in Union of India v Punjab Financial Corporation reported as 2007(1) ISJ (Banking) 258. In this case, the Court held as follows : "The result of the above discussion is that the plea raised by the petitioners in regard to its priority of recovering excise dues or the ....