(1) When the ownership of the business of a dealer liable to pay tax under this Act is entirely transferred, the transferor and the transferee shall jointly and severally be liable to pay the tax together with penalty, if any, or interest or penalty payable in respect of such business for any year or relatable to a part of any year and remaining unpaid at the time of the transfer, and the transferee shall also be liable to pay the tax on the sales or purchases of goods effected by him with effect from the date of such transfer and shall within thirty days of the transfer apply for registration unless he already holds a registration certificate.

(2) When a dealer is a firm or association of persons or a joint Hindu Family and such firm, association or family has discontinued business-

(a) the tax payable under this Act by such firm, association or family for the period up to the date of such discontinuance may be assessed and determined as if no such discontinuance had taken place; and

(b) every person who was at the time of such discontinuance a partner of such firm or a member of such association or family shall notwithstanding such discontinuance, be liable severally and jointly for the payment of the tax payable by such firm, association or family, whether such assessment is made prior to or after such discontinuance and, subject as aforesaid the provisions of this Act shall apply as if every such person or partner were himself a dealer.

Provided that when it is found that a change has occurred in the constitution of the firm or association or that such firm or association has transferred its business and the tax payable by a partner or member as aforesaid cannot be recovered from him, it may be recovered from the firm or association as reconstituted or from the transferee.

Explanation - The dissolution or reconstitution of a firm or association of persons or partition of Joint Hindu family shall be deemed to be discontinuance of business within the meaning of this sub-section.

(3) The provisions of this Section shall mutatis mutandis apply to any arrears of tax payable under the Act repealed by Section 81 of Act No. 5 of 1995 or the Act repealed by this Act and due for any year or relatable to a part of any year prior to such transfer of business, discontinuance or dissolution of the partnership or the partition of undivided Hindu family, as the case may be.

(4) When two or more companies are amalgamated by the order of a Court or of the Central Government and the order is to take effect from a date earlier to the date of the order and any of such companies have sold or purchased any goods to or from each other during the period commencing on the date from which the order to take effect and ending on the date of the order, then such transactions of sale and purchase will be included in the turnover of the sales or purchases of the respective companies and will be assessed to tax accordingly.

(5) Notwithstanding anything contained in the order specified in sub-section (4), for all of the purposes of this Act, the said two or more companies will be treated as distinct companies and will be treated as such for the periods up to the date of the said order and the registration certificates of the said companies will be cancelled, where necessary, with effect from the date of the said order.

(5A)(a) When any company is de-merged by the order of a Court or of the Central Government and the order is to take effect from a date earlier to the date of the order, then for all of the purposes of this Act, it shall be presumed that the two or more companies brought into existence by the operation of the said order have not sold or purchased any goods to or from each other during the period commencing on the date from which the order is to take effect and ending on the date of the order and will be assessed to tax accordingly.

(b) Notwithstanding anything contained in the order specified in clause (a), for all of the purposes of this Act, the said two or more companies will be treated as single company for the periods up to the date of the said order and the registration certificate of the de-merged company will be cancelled where necessary, with effect from the date of the said order and the said two or more companies shall be granted registration certificates, where necessary, from the date of the said order.

(5B) Notwithstanding anything contained in Section 14, when the ownership of the business of a registered dealer is entirely transferred or when two or more companies are amalgamated or a company is de-merged by the order of a Court or of the Central Government, then the transferee, the amalgamated company or the de-merged companies shall be entitled to take credit of input tax rebate, which remains unadjusted on the date of said transfer or the order of amalgamation or de-merger, as the case may be.

(5C) Notwithstanding anything to the contrary contained anywhere else in this Act, when the business of a unit of a dealer is amalgamated into another unit of the same dealer and he holds separate registration certificate for each of such units, the goods including plant and machinery, held by the amalgamating unit on the date of such amalgamation shall be deemed to have been transferred to the amalgamated unit and the amalgamated unit shall be entitled to take credit of input tax rebate, which remains unadjusted on the date of such amalgamation.

(6) Words and expressions used in sub-sections (4), (5), (5A) and (5B) but not defined, shall have the same meanings as assigned to them in the Companies Act, 1956 (No. 1 of 1956).