2006 (8) TMI 568 - HC - VAT and Sales Tax

Issues Involved:
1. Authority of the third respondent to cancel the auction.
2. Exercise of power in accordance with the law.
3. Validity of exercising power after receipt of the entire sale consideration.
4. Authority of the Commissioner of Commercial Taxes to grant installments once the property is brought to sale.

Issue-wise Detailed Analysis:

1. Authority of the Third Respondent to Cancel the Auction:
The core question is whether the third respondent had the authority to cancel the auction already conducted. The respondents relied on Section 38 of the A.P. Revenue Recovery Act, 1864, which allows the Collector to set aside a sale on grounds of material irregularity, mistake, or fraud. However, this power must be exercised based on an application or suo motu with reasons recorded in writing. The judgment noted that there was no material on record to show that the fourth respondent made any application to set aside the sale. The third respondent's decision, therefore, falls under the suo motu category, which requires reasons to be recorded in writing. The court found the reasons provided by the third respondent to be vague and insufficient, lacking any reference to the Commissioner of Commercial Taxes' alleged instructions or any substantial evidence of irregularity or fraud.

2. Exercise of Power in Accordance with the Law:
The court examined whether the power to cancel the auction was exercised following the established legal procedures. The third respondent's order dated January 6, 2006, cited telephonic instructions from higher authorities and adverse news items as reasons for cancellation. However, the court found these reasons to be inadequately substantiated. The judgment highlighted that the third respondent did not provide any concrete evidence of the Commissioner of Commercial Taxes' instructions or any specific complaints about the auction's conduct. The court concluded that the cancellation order lacked a proper legal basis and did not comply with the procedural requirements under Section 38 of the Revenue Recovery Act.

3. Validity of Exercising Power After Receipt of the Entire Sale Consideration:
The court addressed whether the auction could be canceled after the petitioner had paid the entire sale consideration. The judgment referenced the Supreme Court's decision in Janak Raj v. Gurdial Singh, which held that an auction purchaser is entitled to confirmation of the sale even if the decree is later reversed. The court reasoned that similar principles should apply to sales under the Revenue Recovery Act to protect the interests of auction purchasers and ensure the attractiveness of such sales. The court found that the cancellation of the auction after the petitioner had paid the full amount was not permissible, as it would undermine the integrity of the auction process and deter potential buyers.

4. Authority of the Commissioner of Commercial Taxes to Grant Installments Once the Property is Brought to Sale:
The court considered whether the Commissioner of Commercial Taxes had the authority to grant installments to the fourth respondent after the property was brought to sale. The respondents cited Section 16(2) of the APGST Act, which allows the Deputy Commissioner to grant extensions or installments for tax payments. However, the court noted that there was no specific authorization for the Commissioner to exercise this power. Moreover, the court found no evidence that the Commissioner had indeed granted such installments. The judgment emphasized that the power to grant installments should not interfere with the auction process once the property is brought to sale under the Revenue Recovery Act.

Conclusion:
The court concluded that the third respondent lacked the authority to cancel the auction without proper legal grounds and procedural compliance. The cancellation order was found to be arbitrary and unsupported by substantial evidence. The court directed the respondents to convey the auctioned property to the petitioner and recommended an examination of the third respondent's actions by the Chief Secretary, Government of Andhra Pradesh. The writ petition was allowed, and the cancellation of the auction was set aside.

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