Somnath Iyer, J.
1. A certain Kabadi who was carrying on business as a radio and cloth dealer at Gadag was a dealer under the Mysore Sales Tax Act, 1957. On 28th February, 1963, the whole of his business was purchased by Bhandage who is the petitioner in these four revision petitions. When he made the purchase, Kabadi's turnover for the period between 1st April, 1962, and 30th June, 1962, had been assessed to sales tax by an order of assessment made on 6th December, 1962. The turnover relating to the years 1959-60, 1960-61 and 1961-62 formed the subject-matter of subsequent assessment proceedings in which assessments were respectively made in the years 1963, 1964 and 1965. When the tax and penalty payable by Kabadi were not paid by the petitioner, an application was presented to the Judicial Magistrate, Gadag, under section 13(3) of the Act for their recovery. The petitioner's objection to that recovery which rested on more than one ground was negatived, and these revision petitions are directed against the orders made by the Magistrate in that way.
2. Mr. Srinivasan advanced three arguments on behalf of the petitioner. The brat was that since the orders of assessment in respect of the years 1959-60, 1960-61 and 1961-62 were made after the transfer of the business to the petitioner, the tax and the penalty payable under those orders of assessment were not payable by the petitioner who is a transferee, and that the liability in respect of such tax and penalty does not flow out of section 15(1) of the Act. The second submission was that no tax or penalty to which section 15(1) refers, could be recovered from the transferee of the business through a Magistrate under section 15(3). The third 'submission was that the provisions of section 15(1) which resulted in an infraction of the fundamental right to acquire and hold property created by Article 19 of the Constitution was void.
3. On the question whether section 15(1) is an unconstitutional piece of legislation, we abstain from expressing any opinion in these revision petitions which could be disposed of on other grounds. And, before we state those grounds, it will be necessary to set out that sub-section which reads :
'15. Tax payable on transfer of business - (1) When the ownership of the business of a dealer liable to pay the tax or penalty is entirely transferred, the transferor and the transferee shall jointly and severally be liable to pay any tax or penalty payable in respect of such business and remaining unpaid at the time of transfer.'
4. Now the assessment in respect of the four periods with which we are concerned was made only in proceedings to which Kabadi who was the dealer was a party, and in none of these proceedings was the petitioner a party. Similarly the imposition of penalty was only on Kabadi and not on the petitioner. The question is whether merely for the reason that the petitioner became the transferee of the whole of the business of Kabadi on 28th February, 1963, the tax and the penalty payable by the dealer under the relevant orders of assessment made in that regard became payable and could be recovered in a proceeding under section 13(3).
5. Now, section 19(1) transmits in some measure the liability of a dealer to pay tax or penalty to a person who is the transferee of the entire business of the dealer, although the dealer also continues to be liable to pay the amount the from him. The liability comes into being only when there is a transfer of the whole of the business, and, in the cases before us, Mr. Srinivasan no longer disputes that there was such transfer to the petitioner. But it is important to observe that the tax or penalty which the transferee referred to in section 15(1) is liable to pay is the tax or penalty remaining unpaid at the time of the transfer. It should therefore follow that the tax or penalty which the transferee could be called upon to pay is the tax or penalty which was payable by the transferor when there was a transfer of the business. If it had not become payable at that point of time, the liability to pay that amount does not stand transmitted to the transferee.
6. But no tax or penalty had become payable in respect of the assessment years 1959-60, 1960-61 and 1961-62 when the petitioner purchased the business from Kabadi. The tax and penalty with respect to those assessment years became payable only when the orders of assessment were made, and those orders of assessment were made only after the purchase. So no tax or penalty payable by the dealer remained unpaid when he transferred his business to the petitioner, in respect of these years.
7. The condition precedent to the fastening of liability on the transferee is that there should be a liability of the dealer to pay the tax or penalty at the time of the transfer, and that condition did not exist in respect of these three assessment years. So the tax and penalty payable by the dealer in respect of those years did not become payable by the petitioner, and no application could we been made under section 13(3) to the Magistrate for its recovery.
8. But with respect to the period between 1st April, 1962, and 30th June, 1962, the order of assessment had already been made when the petitioner purchased the business of Kabadi. So unless it could be said that the provisions of section 15(1) are unconstitutional, the petitioner became liable to pay the tax so determined by the order of assessment which the dealer had become liable to pay when he made a transfer of his unless to the petitioner. Similarly if any penalty had been imposed by then, that penalty also became payable. But the question is whether that liability could be enforced through an application presented to the Magistrate under section 13(3) which reads :
'Any tax assessed, or any other amount due under this Act from a dealer, may, without prejudice to any other mode of collection, be recovered -
(a) * * * *
(b) on application to any Magistrate, by such Magistrate as if it were a fine imposed by him.'
9. This sub-section speaks of two kinds of liability which could be enforced by a Magistrate in the exercise of the power created in him by clause (b). One of them is the liability to pay 'any tax assessed' and the other is the liability to pay 'any other amount due under the Act from a dealer'. The question is whether the liability to pay the tax or penalty to which section 15(1) refers falls within any one of these two categories. If it does, then the Magistrate would have the power to make the recovery; otherwise not.
10. It seems to us that the tax or penalty, the liability to pay which transferred under section 15(1) to the petitioner, does not fall within either of these classifications. The words 'tax assessed' which occur in section 13(3) refer, it is clear, to a tax which is determined in an order of assessment made in the proceedings to which the person from whom it is sought to be recovered was a party. It is a tax due from a person under an order of assessment concerning his turnover. But with respect to each of the four periods with which we are concerned in these far revision petitions, no order of assessment was made in any proceedings to which the petitioner was a party. The tax or penalty which the petitioner was called upon to pay became payable not because it was a tax in respect of which there was an assessment made in the case of the petitioner, but because although it was a tax assessed on the dealer the liability of the dealer to pay such tax or penalty devolved on the petitioner by reason of his purchase. It is not the assessment which created the petitioner's liability. The source of that liability was the purchase. So what the petitioner was demanded to pay was not any tax or penalty which was 'assessed' within the meaning of that expression occurring in section 13(3).
11. The other category to which section 13(3) refers speaks of 'any other amount due under the Act from a dealer': The language of this sub-section makes it clear that the recovery which is authorised by it is the recovery of on amount due under the Act from a dealer, and that that recovery could be made only from him. If it was the intendment that an amount due under the Act from a dealer could be recovered not only from him but also from any one else who became liable under any other provision of the Act to pay it, section 13(3) would have said so, but it does not. On the contrary what it empowers is the recovery of the tax or penalty due from a dealer, although it does not say so in so many words, and also any other amount which is due from him. Whether the amount sought to be recovered is of the one kind or the other, it is plain that such recovery could be made only from the dealer and from no one else.
12. The decision of this Court in Diwakar v. State of Mysore ( 14 S.T.C. 625.) reinforces the view that we have taken in this case. The elucidation made in that decision precludes any appeal to section 32 of the Act, and Mr. Shantaraju vary rightly made no such appeal.
13. So we allow these revision petitions and set aside the orders made by the Magistrate and dismiss the applications presented to him by the concerned sales tax authority.
14. The petitioner will be entitled to his costs. Advocate's fee Rs. 100 (one hundred), one set.
15. Petitions allowed.