ORDER
S.P. Khare, J.
1. This is a petition under Articles 226 and 227 of the Constitution of India challenging the order dated 26-8-1998 (Annexure P-9) of the respondent No. 1 Commercial Tax Officer and the revisional order dated 16-9-1998 of the respondent No. 2 Deputy Commissioner of Commercial Tax, Jabalpur.
2. The petitioner No. 1 'Perfect Industrial Agencies Private Limited' is a company having its Head Office at Bombay and a branch office at Jabalpur. It has been appointed as an agent of Ashok Leyland Limited, Madras for sale of its vehicles in Jabalpur. Petitioner No. 2 Smt. Sangeeta Khera is one of its directors. The respondent No. 1 is seeking to recover the sales-tax dues of Rs. 3,93,984/- of 'Perfect Agencies Private Limited' from the petitioner Company. He has sent a letter to the respondent No. 3, the bank in which the petitioner No. 1 has its account to pay this amount. The petitioners challenged it by filing Writ Petition No. 2306 of 1998 in which by order dated 24-6-1998 the respondent No. 1 was directed to decide the question whether the petitioner No. 1-Company is a transferee of the business of the old company after hearing the objections of the petitioners. Accordingly the respondent No. 1 heard the petitioners and on the basis of the material which was available answered this question in the affirmative by the impugned order dated 26-8-1998. The petitioner No. 1 has been held liable to pay the sales tax dues in view of Section 33 of the M. P. General Sales Tax Act, 1958 corresponding to Section 49 of the M. P. Commercial Tax Act, 1994. The respondent No. 1 proceeded to encash the bank guarantee given by the respondent No. 3 as per direction in the earlier writ petition.
3. The petitioners challenged the order dated 26-8-1998 of the respondent No. 1 by filing a revision before the respondent No. 2 but that has also been rejected by order dated 16-9-1998 (Annexure P-7). The respondents Nos. 1 and 2 have concurrently held that the ownership of the business of the old company has been 'entirely transferred' to the petitioner No. 1 within the meaning of Section 33 of the M. P. General Sales Tax Act, 1958. The broad circumstances which have been relied upon for this finding are (a) Shri Navdeep Singh Khera was the director of the old company and he is also the director of the new company and the other two directors are closely related to him (b) the old company was the dealer of the vehicles of Ashok Leyland Limited, Madras and the new company has also obtained this dealership (c) the business premises of both the companies is 102, Parijat Building, Cherital, Jabalpur (d) the telephone number of both is the same (e) the sales-tax registration in the name of the new company has been obtained from a different circle by giving the address 15, Napier Town, Jabalpur where this company is not having any office and that is the address of a Chartered Accountant (f) the petitioners have suppressed the documents and the material which could throw more light on this question and therefore an adverse inference is to be drawn against them (g) there has been no liquidation or winding of the old company as required by law (h) there is so much of resemblance in the names of the two companies that the new company is enjoying the goodwill of the old company and for that reason it has automatically got the agency of the Ashok Leyland Company (i) the account books of the old company have not been produced (j) the employees and officers of the old company are also working in the new company (k) no proper account has been given of the assets of the old company.
4. The case of the petitioner No. 1 is that it is a 'separate legal entity' and is not liable to pay the sales-tax dues of the old company. It is also stated that Shri S. S. Saluja was the Managing Director of the old company having its branch office at Indore and he has taken over the entire business of the old company. He should be held liable to pay the tax dues of the old company. He was having the agency of 'Hero-honda' in the name of the branch office of the old company and the sales-tax dues are in respect of that business.
5. The case of the respondents is that the new company with a slight change in the name has been formed to evade the payment of taxes and that is not legally permissible. Both the companies belong to the members of one family. The petitioner No. 1 has taken over the entire business of the old company and it is liable to pay the tax dues.
6. The learned counsel for both the sides were heard. The point for determination is whether the petitioner No. 1 is transferee of the business of the old company.
7. The concurrent finding of fact of the respondents Nos. 1 and 2, as stated above, is based on the material on record and they have considered the relevant circumstances. This finding is neither perverse nor irrational and, therefore, this Court in exercise of its power of judicial review under Article 226 of the Constitution cannot disturb that finding. A writ of certiorari will not be issued as a cloak of an appeal in disguise. It does not lie to bring up an order or decision for rehearing. There can be no reappreciation of the evidentiary material.
8. It has been argued on behalf of the petitioners that the transfer of business implies transfer of a running business together with all its rights, liabilities, stock in trade and goodwill. Reliance is placed on the Division Bench decision of this Court in Bajranglal v. State of M. P. XVI S.T.C. 350. In that case the goods of a proprietorship concern were given to a creditor in discharge of its dues and therefore, it was held that it was not transfer of a business. In the present case on consideration of cumulative circumstances it has been held that the entire business has been transferred to the new company. Even if the Managing Director of the old company, as contended on behalf of the petitioners, has kept certain assets of the old company, that does not extinguish the liability of the new company which is in reality the transferee of the old company. There is no evidence that the Managing Director has kept all the assets.
9. It is true that a company is a juristic entity and it is distinct from its directors and shareholders. It is an abstraction of the law. Its corporate personality receives legal recognition. After its incorporation under Section 34 of the Companies Act, 1956 it has a separate legal existence and the law recognises it as a legal person separate and distinct from its members. This new legal personality emerges from the moment of incorporation. But in course of time certain exceptions have grown in which there can be piercing of the 'corporate veil' or cracking open the 'Corporate shell'. One of such situations in which it is permissible to lift the mask of the corporate entity is, if it is being used for tax evasion or an attempt to do so. The arms of the law and especially of the taxing authorities clothed with that law are long enough to reach the factum behind the facade. If it were not so the business morality would be a casualty.
10. In Life Insurance Corporation of India v. Escorts Limited, AIR 1986 SC 1370 the Supreme Court has held that generally and broadly speaking, it may be said that the corporate veil may be lifted where a statute itself contemplates lifting of the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or beneficient statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. Earlier in Juggilal Kamlapat v. Commissioner of Income-Tax, AIR 1969 SC 932 it was held that the Court is entitled to lift the mask of corporate entity if the conception is used for tax evasion or to circumvent tax obligation or to perpetrate fraud. The Court in such cases can go behind the legal form to find out what is the substance.
11. In the present case the petitioner No. 1-Company cannot get rid of the tax dues by changing its name, label or board. The members of a family formed a company and when the taxes were in arrears they thought of an ingenious device to form a new company with slight change in its name. It has been found as a fact by taking into consideration the relevant circumstances that this company is a transferee of the old company and therefore it is liable to pay the tax-dues of the old company.
12. The petition is dismissed. The stay order passed earlier is vacated.