Section 16: Liability to pay tax in case of transfer of business

(1)When the ownership of the business of a proprietor, is entirely transferred, both the transferor and the transferee shall jointly and severally be liable to pay any tax, interest and penalty, if any, payable in respect of such business and remaining unpaid at the time of the transfer and the transferee shall also be liable to pay tax on and from the date of such transfer and shall forthwith apply for grant of registration certificate unless such certificate is already possessed by him.

(2) Where a proprietor liable to pay tax under the Act , transfers the ownership of a part of his business, the transferor shall be liable to pay tax in respect of that part of transferred business only.