JUDGMENT 1. (Oral) - On 15.7.1993, the Commercial Taxation Officer, Anti-Evasion-I, Jaipur issued a notice to the petitioner demanding a sum of Rs. 41,17,828/- towards Sales Tax dues outstanding against M/s. Universal Computers Limited, Bhiwadi. In the notice it was stated that in the years 1987-88 and 1988-89, the demand of Rs. 41,17,828/- was outstanding against M/s. Universal Computers 5 Limited, Bhiwadi under the Rajasthan Sales Tax Act and the Central Sales Tax Act; the petitioner having purchased the property of M/s. Universal Computers Limited from the Rajasthan Financial Corporation, was liable to make payment of the said sales tax due under Section 9(1) of the Rajasthan Sales Tax Act, 1954. The petitioner was called upon to appear before the to concerned Commercial Taxation Officer on 7.8.1993 vide that notice after depositing the said amount. 2. The petitioner sent its reply to the notice dated 15.7.1993 on 2.8.1993 and informed the concerned Commercial Taxation Officer that they have purchased the fixed assets of M/s. Universal Computers Limited from the Rajasthan Financial Corporation (for short, 'RFC') after the RFC has taken over the fixed assets of M/s. Universal Computers Limited under Section 29 of the State Financial Corporation Act, 1951. Since the ownership of the business has not been transferred to the petitioner, they contended in the reply, that Section 9(1) of the Rajasthan Sales Tax Act, 1954 cannot be invoked and that the sales tax dues in the sum of Rs. 41,17,828/- outstanding against M/s. Universal Computers Limited are not payable by the petitioner. 3. Thereafter, the petitioner challenged the notice dated 15.7.2003 by filing a writ petition before this court. Upon constitution of the Rajasthan Taxation Tribunal Act, 1995, the writ petition was transferred to the Rajasthan Taxation Tribunal (for short, 'the Tribunal') under Section 15 of the said Act. 4. The Tribunal heard the petition along with couple of other matters together and vide its order dated 30.12.1998 dismissed the petitioner's case. 5. Hence, the writ petition by the petitioner. 6. The following facts are not in dispute; (I) That RFC issued a public notice inviting offers for the sale of fixed assets of M/s. Universal Computers Limited situate at Bhiwadi. The said notice set out the board details of the fixed assets and that the highest offer of Rs. 54 lacs has already been received. The last date of receipt of the offer was fixed on 24.7.1991. The said notice set out the board details of the fixed assets and that the highest offer of Rs. 54 lacs has already been received. The last date of receipt of the offer was fixed on 24.7.1991. (ii) That pursuant to the said notice, the present petitioner sent a letter to RFC on 28.6.1991 requesting them to furnish the conditions of sale of fixed assets of M/s. Universal Computers Limited, Bhiwadi. (iii) That RFC then vide their letter dated 02.07.1991 informed the petitioner inter-alia that they were selling the fixed assets on as is where is' basis and provided information regarding the conditions of sale. (iv) That the petitioner made its offer for purchase of the fixed assets vide letter dated 26.07.1991 for Rs. 78.97 lacs. (v) That by communication dated 21/23.08.1991, RFC informed the petitioner that their offer for purchase of fixed assets has been approved on the terms and conditions stated therein. (vi) That the petitioner then accepted the terms and conditions of sale and also submitted its undertaking before the RFC. (vii) That on 11.10.1991, the possession of fixed assets i.e. land, building, plant and machinery of Ws. Universal Computers Limited was handed over to the petitioner. 7. That before the Tribunal, while admitting the afore-stated facts, the stand of the Sales Tax Department was that the purchase of the fixed assets of M/s. Universal Computers Limited by the petitioner did not adversely effect the right of the Sales Tax Department to realise the outstanding dues of M/s. Universal Computers Limited from the petitioner-company. The Sales Tax Department reiterated that its notice dated 15.07.1993 was valid and that its dues constituted the first charge upon the property of the defaulter company. It was submitted that the purchase was made by the petitioner to carry on business which was being carried on by the defaulter company. 8. As noticed above, the Tribunal was persuaded by the stand of the Sales Tax Department and consequently dismissed the petitioner's matter challenging the notice dated 15.07.1993. 9. A perusal of the notice dated 15.7.1993 shows that it came to be issued by the Commercial Taxation Officer under Section 9(1) of the Rajasthan Sales Tax Act, 1954 (for short, 'Act of 1954'). 10. Section 9 of the Act of 1954 makes provision for liability on transfer of business or on discontinuance or dissolution of business of a firm etc. 10. Section 9 of the Act of 1954 makes provision for liability on transfer of business or on discontinuance or dissolution of business of a firm etc. We extract Section 9(1) which is relevant for our consideration hereunder : "9. Liability on transfer of business or on discontinuance or dissolution of business of a firm, etc. (1) When the ownership of the business of a dealer liable to pay the tax is entirely transferred, any tax payable in respect of such business and remaining unpaid at the time of the transfer, shall be payable by the transferee, as if he were the dealer liable to pay such tax; and the transferee, shall also be liable to pay tax on the sale or purchase of goods effected by him with effect from the date of such transfer and shall within thirty days of the transfer apply for registration unless he already holds a certificate of registration." 11. The keywords in Section 9(1) are, "the ownership of the business' and "entirely transferred". It is only when the ownership of business of a dealer is liable to pay the tax is entirely transferred, the liability of unpaid tax is fastened on the transferee. It is with the entire transfer of the ownership of the business that results in the liability of the transferee. 12. The Tribunal while dealing with this aspect relied upon the judgment of the Karnataka High Court in the case of Alpha Silicones v. Assistant Commercial Tax Officer (Recovery) Gulbarga and another, 1990 (Vol. 77) STC 68 . That was a case where the deafer registered under the Karnataka Sales Tax Act, 1957 fell into arrears of tax payable under that Act. The defaulter had obtained a loan on the security of building and machinery etc. from the Karnataka State Financial Corporation (KSFC). For default in repaying the loan, the assets of the defaulter, both movable and immovable i were brought to sale by the KSFC and in the auction sale held on 17.2.1984, the petitioner therein being the highest bidder, acquired the movable and immovable assets of the defaulter. After the assets were transferred in favour of the petitioner therein, the recovery officer attached to the Commercial Taxes Department, Gulbarga issued a notice calling upon the petitioner therein to pay the arrears of tax and penalty in the sum of Rs. 47,847 due from the defaulter. After the assets were transferred in favour of the petitioner therein, the recovery officer attached to the Commercial Taxes Department, Gulbarga issued a notice calling upon the petitioner therein to pay the arrears of tax and penalty in the sum of Rs. 47,847 due from the defaulter. This demand was made by the Commercial Taxes Department under Section 15 of the Karnataka Sales Tax Act, 1957. The notice was challenged by the petitioner before the Karnataka High Court. The Karnataka High Court held that the demand of the Commercial Taxes Department to recover the tax of the defaulter from the petitioner who was the transferee of the business assets of the defaulter was valid and enforceable. 13. The view of the Karnataka High Court in Alpha Silicones has been expressly over ruled by the Supreme Court in a recent decision in the case of State of Karnataka and another v. Shreyas Papers (P) Ltd. and Others, (2006) 1 SCC 615 . 14. The Supreme Court in Shreyas Papers (P) Ltd., considered the expression, "ownership of business" with reference to Section 15(1) of the Karnataka Sales Tax Act. For the sake of better appreciation of the judgment of the Supreme Court in the case of Shreyas Papers (P) Ltd., we may reproduce Section 15(1) of the Karnataka Sales Tax Act, 1957 which reads thus: "15(1). When the ownership of the business of a dealer liable to pay the tax or penalty, or any other amount under the provisions of this Act, is transferred, the transferor and the transferee shall jointly and severally be liable to pay any tax or penalty or any other amount payable in respect of such business and remaining unpaid at the time of transfer, and for the purpose of recovery from the transferee such transferee shall be deemed to be the dealer liable to pay the tax or penalty or other amount under this Act." 15. The Supreme Court held that foisting of the liabilities of the defaulting transferor onto the transferee, would come into effect only if the "ownership of the business" is transferred. In paragraph 15 of the report, the 35 Supreme Court considered the matter thus : "15. The Supreme Court held that foisting of the liabilities of the defaulting transferor onto the transferee, would come into effect only if the "ownership of the business" is transferred. In paragraph 15 of the report, the 35 Supreme Court considered the matter thus : "15. A careful reading of Section 15(1) of the KST Act shows that the consequences contemplated therein, namely, foisting of the liabilities of the defaulting transferor onto the transferee, would come into effect only if the "ownership of the business" is transferred. Although, Mr. Hegde strenuously urged that "business" could not be separated from the assets of the business, we are unable to accept this contention. Business is an activity, directed with a certain purpose, more often towards producing income or profit. Ownership of assess is merely an incident rather as than a characteristic of business. Hence, the mere transfer of one or more species of assets does not necessarily brings about the transfer of the "ownership of the business" for "ownership of a business" is much wider than mere ownership of discrete or individual assets. In fact "ownership of business" is wider than the so sum of the ownership of a business' constituent assets. Above all, transfer of 'ownership of business' requires that the business be sold as a going concern. In our view, therefore, Section 15(1) is intended to operate only when there is complete transfer of "ownership of business" so as to render the transferor as a successor-in-interest of the transferor. Only in such an eventuality does Section 15(1) make the transferee liable for the transferor's sales tax liabilities." 16. In paragraph 16 of the report, the Supreme Court considered the judgment of Alpha Sillicones and expressly over-ruled the decision of Karnataka High Court thus : "16. Mr. Hegde referred to two judgments of the Karnataka High Court both of which, unfortunately, take an erroneous view of the matter. In Karnataka State Industrial Investment and Development Corporation Ltd. v. CCT, (2001) 121 STC 520 (Kant) , the High Court held that when Section 29 of the SFC Act was read with Section 15 of the KST Act, the transferee would be jointly liable with the State Financial Corporation concerned. As we have already held, Section 15 operates only in a situation where the ownership of the business is transferred. The learned Single Judge, however, did not notice this point. As we have already held, Section 15 operates only in a situation where the ownership of the business is transferred. The learned Single Judge, however, did not notice this point. Similarly, we are unable to accept the correctness of the judgment in Alpha Silicones v. CTO, (1990) 77 SIC 68 (Kant) as it held that even the mere transfer of assets would amount to transfer of ownership of the business. We overrule these two judgments to the extent that they conflict with the views expressed herein." 17. That the petitioner is purchaser of the fixed assets of the defaulting company has not been challenged by the counsel for the Commercial Taxes Department. In the light of the decision of the Supreme Court in the case of Shreyas Papers (P) Ltd., the view of the Tribunal that the petitioner company stepped into the shoes of the defaulter unit and liable to make payment of the outstanding as well as tax against the defaulter unit cannot be sustained. As a matter of fact, the Tribunal followed the view of the Karnataka High Court in the case of Alpha Silicones which has already been over ruled by the Supreme Court in Shreyas Papers (P) Ltd. Having said so, the notice dated 15.07.1993 must be held to be bad in law. 18. However, Mr. R.B. Mathur, the counsel for the Commercial Taxes Department submitted that though the invocation of Section 9(1) of the Rajasthan Sales Tax Act, 1954 in demanding the sales tax of the defaulter to be deposited by the transferee might not be proper and legal yet by virtue of Section 11-AMA, the recovery of sales tax dues outstanding against M/s. Universal Computers from the petitioner cannot be defeated since statutory charge in favour of the Sales Tax Act has been created under that Section. He would submit that this aspect has also found favour of the Tribunal and, therefore, the order of the Tribunal does not call for any interference and its view is proper. 19. He would submit that this aspect has also found favour of the Tribunal and, therefore, the order of the Tribunal does not call for any interference and its view is proper. 19. Section 11-AAAA of the Rajasthan Sales Tax Act, 1954 reads thus : "11-AAAA.-Liability under this Act to be the first charge Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax, penalty, interest and any other sum, if any, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer, or such person." 20. It is important to notice here Section 11-MA as well that reads thus : 11-AAATransfer to de fraud revenue void.-Where during the pendency of any proceeding under this Act, any dealer creates a charge on or parts with the possession by way of sale, mortgage, exchange, or any other mode of transfer whatsoever, of his immovable property, in favour of any other person with the intention to defraud the revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable under this Act by the dealer as a result of the completion of the said proceedings : Provided that such charge or transfer shall not be void if made for valuable consideration and without notice of the pendency of proceeding under this Act." 21. The Supreme Court in the case of Shreyas Papers (P) Ltd., also considered this aspect. Section 13(2)(i) of the Karnataka Sales Tax Act provided that if a default was made in payment of sales tax, then the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or any other amount due under the Act. The Supreme Court considered Section 100 of the Transfer of Property Act which reads thus : "100. The Supreme Court considered Section 100 of the Transfer of Property Act which reads thus : "100. Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property, and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. Nothing in this section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge." 22. In the light of the provision contained in Section 100 of the Transfer of Property Act, the Supreme Court considered the aspect of enforceability of the charge in paragraph 20, 21, 22 and 23 of the report in the following manner : "20. As the section itself unambiguously indicates, a charge may not be enforced against a transferee if she/he has had no notice of the same, unless by law, the requirement of such notice has been waived. This position has long been accepted by this Court in Dattatreya Shanker Mote v. Anand Chintaman Datar, (1974) 2 SCC 799 and in Ahmedabad Municipal Corpn. of the City of Ahmedabad v. Haji Abdulgafur Haji Hussenbhai, (1971) 1 SCC 757 (hereinafter "Ahmedabad Municipal Corp."). In this connection, we may refer to the latter judgment, which is particularly relevant for the present case. 21. Ahmedabad Municipal Corpn. was a case where a person was in arrears of property tax, due under the Bombay Provincial Municipal Corporation Act, 1949. Consequently, the Municipal Corporation created a charge over the property of the defaulter. However, the property was sold in execution of a mortgage decree. When the Municipal Corporation purported to exercise their charge over the property, the purchaser in court-auction filed a suit for a declaration that he was the owner of the property and that the arrears of municipal taxes due by the transferor were not recoverable from him by proceeding against the property purchased in the auction. When the Municipal Corporation purported to exercise their charge over the property, the purchaser in court-auction filed a suit for a declaration that he was the owner of the property and that the arrears of municipal taxes due by the transferor were not recoverable from him by proceeding against the property purchased in the auction. In the appeal before this Court, the Municipal Corporation's main argument was that where the local law provided for the creation of a charge against a property for which municipal taxes were due, transferees of such properties were imputed with constructive knowledge of any charge created against the properties that they had purchased. This argument was, however, rejected. This Court held that while constructive notice was sufficient to satisfy the requirement of notice in the proviso to Section 100 of the TP Act, whether the transferee had constructive notice of the charge had to be determined on the facts and circumstances of the case-Ibid at SCC pp. 765. In other words, this Court held that there could be no fixed presumption as to the transferee having constructive notice of the charge against the property. In fact, the principle laid down in Ahmedabad Municipal Corpn. has been correctly applied in a sales tax case similar to the present case. 22. In the present case, firstly no provision of law has been cited before us that exempts the requirement of notice of the charge for its enforcement against a transferee who had no notice of the same. It remains to be seen, therefore, if in the facts of the present case, the first respondent had notice actual or constructiveof the charge. At the outset, in advertisement/notice dated 17.3.1992 issued by the Corporation, mention is only made of the sale of the defaulting company's assets and there is no indication, whatsoever, of any sales tax arrears. Further, the bid offer made on behalf of the first respondent on 5.6.1992 specifically excludes any statutory liabilities, including sales tax. This offer was accepted by the Corporation on 15.7.1992. Even at that stage, there was no mention of any sales tax arrears. The sale of the assets took place pursuant to the agreement dated 12.8.1992 in which a specific clause was inserted that the first respondent would be liable to pay all property taxes, other taxes, electricity bills, water taxes and rents from the date of the agreement (i.e. 12.8.1992). The sale of the assets took place pursuant to the agreement dated 12.8.1992 in which a specific clause was inserted that the first respondent would be liable to pay all property taxes, other taxes, electricity bills, water taxes and rents from the date of the agreement (i.e. 12.8.1992). For the first time, by letter dated 8.1.1993 of the second appellant to the Mandel Panchayat, Aloor taluk, the issue of sales tax dues of the defaulting company was brought to the surface. This is further borne out by the correspondence between the first respondent and the Corporation. Thus, it is evident that the first respondent had no actual notice of the charge prior to the transfer. As to whether the first respondent had constructive notice of the charge, no substantive argument on this issue was made, either before the High Court or at any rate before us. Hence, we cannot hold that the first respondent had constructive notice of the charge. 23. In these circumstances, we are of the view that the first respondent was a purchaser for value without notice of the sales tax arrears of the defaulting company or the consequent charge on the property. This would, therefore, attract the principle laid down by this court in Ahmedabad Municipal Corporation which is also embodied in the proviso to Section 100 of the TP Act. Thus, the property in the hands of the first respondent was free of the charge and it is not open to the appellants to enforce the liabilities of the defaulting company in this manner against the first respondent." 23. The Supreme Court observed in Shreyas Papers (P) Ltd. that no law was shown that exempted requirement of notice of charge for its enforcement against a transferee who had no notice of the same. The counsel for the Commercial Taxes Department also could not show us any law that exempted the requirement of notice of charge for its enforcement against a transferee. Section 100 of the Transfer of Property Act in unequivocal terms provides that save as otherwise provided by any other law for the time being in force, no charge shall be enforced against any property in the hands of any person to whom such property has been transferred for consideration and without notice of charge. Section 100 of the Transfer of Property Act in unequivocal terms provides that save as otherwise provided by any other law for the time being in force, no charge shall be enforced against any property in the hands of any person to whom such property has been transferred for consideration and without notice of charge. As a matter of fact, this scheme of law itself finds place in proviso to Section 11AAA which provides that the transfer in favour of the transferee during the 213 pendency of the sales tax proceedings shall not be void if made for the valuable consideration and without notice of the pendency of the proceedings under the Act. 24. The Tribunal manifestly erred in holding that the charge created under Section 10 AAAA of the Rajasthan Sales Tax Act cannot be defeated even where purchase has been made by a bonafide purchaser. This is misreading of Section 100 of the Transfer of Property Act and non-consideration of Section 11 AAA. The view of the Tribunal also does not held good in view of the authoritative pronouncement of the Supreme Court in the case of Shreyas Papers (P) Ltd. 25. As the facts demonstrate, the petitioner's case that it was bonafide purchaser of the fixed assets of the defaulter company for a valuable consideration cannot be said to be unjustified. RFC in exercise of its powers conferred under Section 29 of the State Financial Corporation Act took over the assets of the defaulter company and then proceeded to sell them. It was in this process that the petitioner purchased the property for a valuable consideration on the terms and conditions set out by the RFC. Nothing has been shown that either the Rajasthan Financial Corporation or the present petitioner had any notice of the sales tax dues outstanding against the defaulter dealer. 26. In what we have said above, the judgment of the Rajasthan Taxation Tribunal dated 30.12.1998 deserves to be set aside and we order accordingly. The notice dated 15.7.1993 issued by the Commercial Taxes Officer, Anti Evasion-II, Jaipur is consequently set aside. The parties shall bear their own costs.Appeal Allowed-Decision of Tribunal set aside. *******