JUDGMENT
Dr. B.P. Saraf, J.
1. By this reference under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the assessee, the Maharashtra Sales Tax Tribunal has referred the following question of law to this Court for opinion :
“Whether, on the facts and circumstances of the case, and upon a true and proper construction of the provisions contained in section 15A-I, the Tribunal was justified in law in holding that the applicant-assessee was liable to pay additional tax under section 15A-I of the Act ?”
2. M/s. Ramesh Electricals & Trading Agencies is a reseller-cum-importer of electrical goods and bakelite. It was a partnership firm and was registered as such as a dealer under the Bombay Sales Tax Act, 1959 (“Act”). The partnership was, however, dissolved with effect from January 1, 1980 and the business, hitherto run by the partnership was taken over by one of its partners who carried on the same thereafter as his proprietary concern. After taking over the said business, the said partner (referred to as “the assessee”) applied for new registration certificate as required by section 19(6) of the Act within the prescribed time. On such application being made, a fresh registration certificate was granted to him as a transferee of the earlier registered dealer, viz., the partnership firm. The assessee was thereafter assessed under the Act for the period April 1, 1980 to March 31, 1981, by the Sales Tax Officer by his order dated August 20, 1983. While assessing the assessee for the above period, the Sales Tax Officer also levied additional tax under section 15A-I of the Act at the rate of 6 per cent as his turnover of sales had exceeded the limit of Rs. 10 lakhs which was the qualifying turnover for levy of additional tax. The assessee appealed to the Assistant Commissioner of Sales Tax against the levy of additional tax by the Sales Tax Officer under section 15A-I of the Act. The levy was challenged on the ground that the assessee was not a dealer within the meaning of the Act, inasmuch as he was registered as a dealer not by virtue of the provisions of section 3 of the Act but by virtue of section 19(6) of the Act which makes every person who succeeds in the business of a dealer liable to pay tax under the Act, liable to pay tax on the sales or purchase of the goods made by him on or after such succession notwithstanding anything contained in section 3 and requires such person within 30 days thereof to apply for registration, if he did not already hold a certificate of registration. The above contention of the assessee did not find favour with the Assistant Commissioner who held that the liability of the dealer was under section 3 of the Act which is to be read with section 19(6) of the Act. He, therefore, confirmed the order of the Sales Tax Officer and dismissed the appeal. Aggrieved by the order of the Assistant Commissioner, the assessee went in further appeal to the Maharashtra Sales Tax Tribunal (“the Tribunal”). The Tribunal, after detailed discussion, held that even a transferee under section 19(6) of the Act is primarily liable under section 3 of the Act and hence liable to additional tax under section 15A-I of the Act. The Tribunal, therefore, held that a transferee was liable under section 3 of the Act like any other dealer and hence also liable to additional tax under section 15A-I of the Act if his turnover exceeds the specified limit. In that view of the matter, the Tribunal confirmed the order of the Sales Tax Officer and the Assistant Commissioner and dismissed the appeal of the assessee. Hence this reference at the instance of the assessee.
3. Mr. P. C. Joshi, the learned counsel for the assessee, submits that section 15A-I provides for levy of additional tax only to dealers liable to pay tax under section 3 of the Act. According to him, a transferee of a business of a dealer is liable to pay tax not under section 3 of the Act but under section 19(6) of the Act and hence section 15A-I would not apply to such a dealer.
4. We have given our careful consideration to the above submission of the counsel for the assessee. We, however, do not find any merit in the same. In our opinion, the above submission is misconceived and based on an erroneous understanding of the scheme of the Act and the provisions of sections 3 and 19(6) thereof. Obviously, the submission of the counsel that the assessee being a transferee of the business of a dealer is not liable to pay tax under section 3 of the Act is patently erroneous. Section 3 of the Act deals with the incidence and levy of tax. It makes every dealer whose turnover of purchases or sales during a particular financial year exceeds the limits specified therein, liable to pay tax under the Act on his turnover of sales or purchases. Section 6 of the Act provides that subject to the provisions of this Act and the Rules, taxes leviable under the Act shall be paid by every dealer who is liable to pay such tax. Some special provisions have been made in section 19 of the Act regarding liability to pay tax in certain cases including cases where a person succeeds in the business of a dealer liable to pay tax under this Act. Section 19 of the Act, which is relevant for the present purpose, reads as follows :
“19. Special provision regarding liability to pay tax in certain cases. – (1) Where a dealer, liable to pay tax under this Act, dies then, –
(a) if the business carried on by the dealer is continued after his death by his legal representative or any other person, such legal representative or other person shall be liable to pay the tax due from such dealer under this Act or under any earlier law, in the like manner and to the same extent as the deceased dealer, and
(b) if the business carried on by the dealer is discontinued whether before or after his death, his legal representative shall be liable to pay out of the estate of the deceased, in the like manner and to the same extent as the deceased dealer would have been liable to pay if he had not died, the tax including any penalty due from such dealer under this Act, or under any earlier law,
whether such tax including any penalty has been assessed before his death but has remained unpaid, or is assessed after his death.
Explanation. – In this sub-section, the expression ‘legal representative’ has the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure, 1908.
(2) Where a dealer, liable to pay tax under this Act, is a Hindu undivided family and the joint family property is partitioned amongst the various members or group of members, then each member of group of members shall be jointly and severally liable to pay the tax (including any penalty) due from the dealer under this Act or under any earlier law, up to the time of the partition, whether such tax (including any penalty) has been assessed before partition but has remained unpaid, or is assessed after partition.
(3) Where a dealer, liable to pay tax under this Act, is a firm, and the firm is dissolved, then every person who was a partner shall be jointly and severally liable to pay to the extent to which he is liable under section 18, the tax (including any penalty) due from the firm under this Act or under any earlier law, up to the time of dissolution, whether such tax (including any penalty) has been assessed before such dissolution but has remained unpaid, or is assessed after dissolution.
(4) Where a dealer, liable to pay tax under this Act, transfers or otherwise disposes of his business in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in the business or part thereof by any other person, the dealer and the person succeeding shall jointly and severally be liable to pay the tax (including any penalty) due from the dealer under this Act or under any earlier law, up to the time of such transfer, disposal or change, whether such tax (including any penalty) has been assessed before such transfer, disposal or change but has remained unpaid, or is assessed thereafter.
(5) Where the dealer, liable to pay tax under this Act, –
(a) is the guardian of a ward on whose behalf the business is carried on by the guardian, or
(b) are trustees who carry on the business under a trust for a beneficiary,
then, if the guardianship or trust is terminated, the ward or, as the case may be, the beneficiary shall be liable to pay the tax (including any penalty) due from the dealer up to the time of the termination of the guardianship or trust, whether such tax (including any penalty) has been assessed before the termination of the guardianship or trust, but has remained unpaid, or is assessed thereafter.
(6) Where a dealer, liable to pay tax under this Act, is succeeded in the business by any person in the manner described in clause (a) of sub-section (1) or in sub-section (4), then such person shall, notwithstanding anything contained in section 3, be liable to pay tax on the sales or purchases of goods made by him on and after the date of such succession, and shall (unless he already holds a certificate of registration) within thirty days thereof apply for registration :
Provided that, where such person resells any goods purchased by the dealer while carrying on business before such succession, he shall be entitled to such deductions in respect thereof as are permissible under section 7, 8, 9 or 10, as the case may be, had the resale been effected by the dealer himself.”
On a careful reading of section 19 of the Act in the light of the scheme of the Act and the provisions of sections 3 and 6 thereof, it is abundantly clear that section 19 of the Act, though put as a separate section, in truth and reality is a part and parcel of section 3 of the Act. Section 3 of the Act has to be read with this section. In cases dealt with in this section, the liability to pay tax under section 3 is on the persons specified in section 19 notwithstanding the non-fulfilment of any of the requirements thereof. For instance, in case of transfer of a business or succession of the business, the transferee or the successor has been made liable to pay tax under section 3 of the Act immediately from the date of transfer or succession. Dealers dealt with in section 19(6) are also liable to pay tax under section 3 of the Act. Section 19(6) is not an independent charging section. The charge is created by section 3 itself. It cannot be, therefore, said that a successor in the business of a dealer is not a dealer liable to pay tax under section 3 of the Act.
5. Section 15A-I of the Act provides for a levy of additional tax in case of a dealer whose turnover exceeds Rs. 10 lakhs a year. This section, so far as relevant, as it stood at the material time reads as under :
“15A-I. Levy of additional tax in the case of dealers whose turnover exceeds Rs. 10,00,000 a year. – (1) Where the turnover of either of all sales or of all purchases by any dealer liable to pay tax under section 3 has exceeded ten lakhs of rupees in any year, the tax payable by him shall be increased by the levy of an additional tax at the rate of 6 per cent of the tax payable by him for that year under the other provisions of this Act. Such additional tax shall be paid by the dealer in addition to the tax levied and payable by him under the other provisions of this Act :
……….”
6. The language of section 15A-I is clear. The additional tax under this section is payable by all dealers, who are liable to pay tax under section 3 of the Act, in addition to the tax payable by them where their turnover of sales or purchases exceed Rs. 10 lakhs in any year. All dealers who are liable to pay tax under this Act having turnover of sales or purchases exceeding ten lakh rupees in any year are thus made liable to pay the additional tax under this section. Reference to section 3 occurs therein merely because that is the real charging section. The expression “dealer liable to pay tax under section 3” appearing in section 15A-I, cannot be construed to exclude a dealer who is liable to pay tax under section 3 of the Act by virtue of any special provision contained in any other section of the Act, viz., section 19. To appreciate the true purpose of the above expression, the Act has to be read as a whole and the various provisions thereof construed and understood in their context and setting.
7. For the reasons set out above, we are of the clear opinion that the liability of the assessee to pay tax on the turnover of the business transferred to him, in his capacity as a transferee of such business by virtue of section 19(6) of the Act, is liability under section 3 of the Act. He is, therefore, a dealer liable to pay tax under section 3 of the Act and has to be regarded as such. He would, therefore, be liable to pay additional tax under section 15A-I on his turnover exceeding the specified limit. The Tribunal was right in saying so.
8. Hence, the question referred to us is answered in the affirmative and in favour of the Revenue. Under the facts and circumstances of the case there shall be no order as to costs.
9. Reference answered in the affirmative.