Excise dues payable by old Company cannot be recovered from assessee when assessee purchased only assets of old Company

CA Bimal Jain

Liability of past Excise dues payable by old Company could neither be fastened nor be recovered from assessee when the assessee had only purchased assets of old Company, which was ordered to be wound up and had not taken over their running business

Facts:

Jaiprakash Associates Ltd. (the Petitioner), had only purchased the assets of the U.P. State Cement Corporation Limited (the Corporation) in pursuance of the winding up order passed by the High Court, and had not taken over a running business of the Corporation. However, the Department alleged and demanded duty mainly on ground that, since the Petitioner had purchased a running business of the Corporation, the liability towards Excise dues payable by the Corporation accrued to the Petitioner under Section 11 of the Excise Act.

Held:

The Hon’ble High Court of Allahabad has held that in terms of the proviso to Section 11 of the Excise Act, where a person transfers or disposes of his business, which results in change of ownership, in that scenario, the successor, would be liable. However, in the instant case, the Corporation has not transferred or disposed of its business or trade. The Corporation has been wound up by an order of the High Court and its assets have been sold off. A running business of the Corporation has not been sold. Hence, the liability of past Central Excise dues payable by the Corporation cannot be fastened nor recovered from the Petitioner.

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