Judgment:
1.In these petitions, petitioner has prayed for quashing the demand notices dated 19.3.2010- annexures H & J issued by the 5th respondent -Assistant Commissioner of Commercial Taxes demanding to pay a sum of Rs. 1,00,613/ and Rs 4,64,220/- towards arrears of sales tax.
2. According to the petitioner, she is a licensee in respect of two retail liquor shops at Mandya Town. The original licenses were in the name of B Shivanna and Boregowda. During the life time of the husband of the petitioner, the said licenses were transferred by the Excise authorities by order dated 18.5.2000. At the time the said licenses were transferred in the name of the husband (deceased) of the petitioner, there was no arrears of sale tax from the original licensees. The husband of the petitioner died on 23.4.2008 and acting under R I7A of the Karnataka (Licensing & General Conditions) Rules, both the licenses were transferred in the name of the petitioner and she also obtained the registration certificate under the Karnataka Value Added Tax Act. Now the license is to be renewed for the current year. At this juncture, the respondent authority viz., Commercial Taxes Authority issued a demand notice demanding arrears of sales lax which was due from the original licensee and also the same was forwarded to the Deputy Commissioner of Excise to withhold the renewal of license. Hence, this petition.
3.Heard the counsel representing the parties.
4. It is the submission of the petitioner's counsel, S. .15 of the Karnataka Sales Tax Act is not applicable to the case on hand. What has been transferred from the transferor in the name of the husband of the petitioner/transferee originally during 2000 is only the licenses and not the business. Also according to him, no objection certificate issued makes it clear that there was no arrears of sales lax as such, being satisified, the Excise authorities acting under R 17 have transferred the license in the name of the husband of the petitioner and thereafter, in the name of the petitioner. The arrears, if any due by the original licensee remained uncollected for several years, for that no reasons have beer, assigned nor the petitioner is liable to pay the arrears of tax which was due by the erstwhile licensees in view of the clearance certificate issued.
5.Government Pleader submitted, pursuant to S. 15 of the Karnataka Sales Tax, it is for the transferee to discharge ail arrears liable to be paid by the original licensee on such transfer and. annexures H & J have been rightly issued which does not call for interference. As per the petitioner's contention, it is only a license i.e., excise license that has been transferred in favour of the husband of the petitioner at the first instance and thereafter, on the death of her husband, it is transferred in her name. What is also noticed is, as per annexures E and F, on such transfer of the licenses during 2000 in favour of the husband of the petitioner, there was no arrears i.e.. by way of sales tax. Those certificates were issued on 28.11.2005 and 29.6.2007 to the effect there was no arrears of tax due by R Mahesh, husband of the petitioner.
6. Of course, on the basis of annexures E & E. the Excise Department has transferred the licenses which were in the name of the husband of the petitioner in favour of the petitioner. Per the present, when the licenses were transferred way back in 'he year 2000 in the name of the husband of the petitioner as per the order of the Excise Authorities and also when it is noticed it is not the case of the Department that the husband of the petitioner or the petitioner is due of arrears of sales tax for the period from 2000 onwards till 2008, only at this juncture, the Department has come out with a demand against the petitioner alleging there is arrears of tax by the erstwhile licensees viz.. B Shivanna and Boregowda.
7. Why the Department has not made any attempt to recover the tax at the instance of the original licensees has not been made clear. Also, the Department has sought to initiate proceedings against the petitioner referring to S.15 of the Karnataka Sales Tax Act when the certificates issued at annexures E and F itself depict that there was no arrears by the husband of the petitioner. It appears, there is inaction on the part of the Department in not demanding the amount from the husband of the petitioner for nearly 5 to 7 years. If at all on such transfer being made, even assuming that as per S.15 of the Sales Tax Act the transferee husband of the petitioner was liable to pay the arrears of tux as ii was due by the erstwhile licensees, for nearly eight years no effort has been made to recover the dues.
8. Surprisingly, the Department has come oat with a contention that the erstwhile owners were due of the amount mentioned in the demand notice and sought to recover the same from .he petitioner after a lapse of eight years. It appears, the Department has not taken any steps against the erstwhile licensees regarding collection of arrears of tax. Without hearing the petitioner, the impugned orders are passed as at annexures H & J seeking to recover the arrears of lax, against the petitioner.
9.Whether S.15 of the Act applies to the case on hand is to be verified by the Department alter hearing the petitioner in this regard having regard to the contention taken by the petitioner that it is only the license: and not the business that has been transferred, to be hound by such a clarification U/S.15 of the Act. A unilateral order has been passed by way of issuance of notice to recover tax from the petitioner for the arrears/default committed by the erstwhile licensees which in my opinion, is not appropriate.
10.Accordingly, annexures H and J are quashed. Matter is remitted to the Assistant Commissioner of Commercial Taxes to pass appropriate orders in accordance with law after bearing the petitioner. All contentions are left open to be urged. Petitioner to appear before the Assistant Commissioner of Commercial Taxes within two months from the date of receipt of a. copy of this order. Thereafter, it is for the Assistant Commissioner to dispose of the case, in accordance with law. Petitions arc allowed.