2014 (11) TMI 965 - HC - VAT and Sales Tax

Recovery of sales tax - illegal attachment and auction of property - plot belong to partner of the firm - suit is pending between the partners of the partnership firm - Held that - it is apparent that an illegal procedure has been adopted by the officer of the State in attaching the property in question for recovery of sales tax and forcing its auction. Therefore the proceeding of attachment and auction were not according to the law and such proceeding cannot be sustained. By such proceeding no effect was caused on the ownership of the plaintiff on the suit property and therefore a declaration may be given in favour of the plaintiff relating to the suit property. Similarly the officers of the State has created the third party interest (interest of respondent No. 5) on the property and the officers of the State as well as respondent Nos. 5 and 6 were interested to dispossess the plaintiff from the property by adopting illegal method and therefore it is a case in which a perpetual injunction may also be issued in favour of the plaintiff. However as discussed above the plaintiff cannot get any relief against the officer concerned because no sanction was received by the plaintiff under section 48(1) of the Act and therefore no compensation can be granted to the plaintiff for illegality caused by respondent No. 3. Consequently the appeal filed by the appellant is hereby partly allowed. It is declared that the suit property i.e. plot No. 39 Punjab Bank Colony Idgah Hills Bhopal having area 38 X 68 square feet is of the plaintiff and its attachment and auction as done by respondent No. 3 was void and illegal which makes no effect upon the title of the appellant. - Decided in favor of appellant.

Issues Involved:
1. Maintainability of the suit without obtaining permission from the State Government.
2. Limitation period for filing the suit.
3. Entitlement to a declaratory decree without seeking consequential relief.
4. Validity of the attachment and auction procedure.
5. Service of notice and adherence to legal procedures.
6. Possession of the property and consequential relief.

Detailed Analysis:

1. Maintainability of the Suit:
The court examined whether the suit was maintainable without obtaining permission from the State Government under Section 48(1) of the M.P. General Sales Tax Act, 1958. It was concluded that no sanction was required for filing a suit against the State for the actions of its officers. Section 48(1) requires sanction only for prosecuting officers personally, not for actions against the State. Therefore, the suit was maintainable against the State, but no personal relief could be granted against the officers without such sanction.

2. Limitation Period:
The court considered whether the suit was filed within the limitation period as prescribed under Section 48(2) of the Act. The plaintiff argued that the limitation should be counted from the date of the registration of the sale certificate on March 1, 1988, making the suit filed on March 28, 1988, within the three-month limitation period. The court accepted this argument, noting that the sale was completed upon the registration of the sale certificate. Thus, the suit was within the limitation period.

3. Declaratory Decree Without Consequential Relief:
The court addressed whether a declaratory decree could be granted without seeking consequential relief, such as possession. It was argued that the plaintiff was in possession of the property and no evidence was provided by the defendants to prove otherwise. Therefore, the plaintiff was not required to seek possession, and the suit for declaration and perpetual injunction was maintainable.

4. Validity of Attachment and Auction Procedure:
The court found that the attachment and auction procedures were not conducted according to the law. The service of notice was improperly executed, and the auction process lacked transparency and adherence to the principles of natural justice. The auction was conducted without proper public notice, and the property was sold at a significantly undervalued price, suggesting possible connivance among the respondents.

5. Service of Notice:
The court scrutinized the service of notice and found that the notices were not served at the plaintiff's correct address. The notices were affixed on an open plot rather than the plaintiff's residence, which was known to the respondents. This improper service rendered the attachment and subsequent auction invalid.

6. Possession of the Property:
The court examined the issue of possession and found no evidence that the purchaser (respondent No. 5) had taken possession of the property after the auction. The burden of proof was on the defendants to show that possession was transferred, which they failed to do. Therefore, it was presumed that the plaintiff remained in possession of the property.

Conclusion:
The appeal was partly allowed. The court declared that the attachment and auction of the suit property were void and illegal, having no effect on the plaintiff's title. The respondents were prohibited from interfering with the plaintiff's possession. The plaintiff was entitled to costs from the State of Madhya Pradesh, while the respondents were to bear their own costs. The application under Order XLI, rule 27 of the CPC filed by respondent No. 5 was dismissed as it was irrelevant to the case.

← Previous Next →