By TIOL News Service

MUMBAI, FEB 25, 2013: THIS is a Revenue appeal.

M/s Anway Industries was a registered unit at MIDC, Waluj. As M/s Anway Industries was defaulter of various confirmed demands, the financial Institution namely Maharashtra State Financial Corporation (MSFC) took over the factory premises. Later on, a public auction was held for land and building and M/s Namoh Developers was the successful bidder who took over the possession of the premises on payment of auction money.

The respondent assessee purchased the leasehold rights of plot of land from the successful bidder in public auction. Thereafter, a tripartite agreement was made between MSFC, M/s Namoh Developers and the respondent.

Subsequently, the respondent applied for a registration with the Central Excise department and the same was granted on submission of an undertaking to pay all the Government dues accrued by M/s Anway Industries and which included an amount of Rs.6,15,515/- along with interest and equivalent penalty.

The respondent assessee went back on his promise and withdrew the undertaking given. Resultantly, the registration certificate was revoked on the premise that M/s Anway Industries is a defaulter of Central Excise duties, therefore, until and unless the respondent assessee cleared the dues, registration cannot be granted.

In appeal, the Commissioner(A) took a view that as the appellant is not a successor in business of M/s Anway Industries, therefore, they are not liable to pay the dues of M/s Anway Industries and the registration has to be granted to them.

Against this order, the Revenue is in appeal before the CESTAT.

The Revenue representative submitted that the respondent assessee could not renege their promise as they are bound by the tripartite agreement wherein they had agreed to pay all the dues of M/s Anway Industries on the plot of land.

The appellant submitted that as the appellant is not the successor of the business of the defaulter, therefore they are not liable to pay the dues pending against the defaulter i.e. M/s Anway Industries. In support, reliance is placed on the decision in Krishna Lifestyle Technologies Pvt. Ltd. vs. Union of India - (2008-TIOL-86-HC-MUM-CX).

The Bench observed -

"7. In the case of Krishna Lifestyle Technologies Pvt. Ltd.(supra) the Hon'ble High Court Bombay has held that "purchase of immovable/movable assets of a tax defaulter, though assets were sold, sale of assets by itself would not be transfer of business in whole or in part, there must be material on record to show that business has been transferred to Petitioner and consequent thereto petitioner has succeeded in business. In absence of petitioner succeeding in business or part of business, issue of petitioner being liable for arrears of Central Excise dues will not arise."

6. In view of the above cited judgment and the facts on record that the appellant is not a successor of business of M/s Anway Industries therefore, the appellant is not liable to pay the arrears of Central Excise dues pending against M/s Anway Industries. Therefore, I do not find any infirmity in the impugned order the same is upheld and the appeal filed by the Revenue is dismissed."

(See 2013-TIOL-362-CESTAT-MUM)