2021 (3) TMI 1238 - HC - VAT and Sales Tax

Cancellation of auction conducted - auction was conducted to recover the arrears of tax for the period between 1989-1990 - auction was sought to be cancelled for not having followed the procedure - HELD THAT - The land in question which was auctioned by the Commercial Tax Department. However, the said land did not belong to the 3 rd respondent/Spinning Mill which is under liquidation and therefore for the arrears of Commercial Taxes, The Commercial Tax Department could not have auctioned the immovable property of the Government of Tamil Nadu. The 3 rd respondent/Spinning Mill was merely a permissive user of the land - Therefore, the entire exercise carried out by the Commercial Tax Department in respect of property belonging to the Government represented by the District Revenue Officer, Vellore District itself was without any basis. In any event, the auction that was conducted on 06.12.2006 has been cancelled by the territorial Assistant Commissioner of Commercial Tax Department. The amount that was paid by the petitioner was also sought to be refunded back. The petitioner however declined to receive the amounts hoping that the petitioner would succeed in the writ proceedings which have been initiated since 2007. Since the amount of ₹ 1,35,00,000/- at the time of bid from the petitioner has not been refunded back to the petitioner, the Commercial Tax Department is directed to refund the said amount together with interest accrued thereon at the prevailing bank rates from time to time. The petitioner shall forward the account details to which the amounts has to be refunded back within a period of 30 days from the date of receipt of a copy of this order. Petition dismissed.

Summary

Issues:
Challenge to confirm auction held on 06.12.2006 and cancellation of said auction.

Analysis:
1. The petitioner participated in an auction of land leased to a cooperative society by the Government of Tamil Nadu to recover tax arrears. The auction was initiated by the Commercial Tax Department to recover a total sum of ?7.58 Crores.

2. The land was given to the cooperative society under a registered agreement with specific terms and conditions, including provisions for resumption by the government in certain circumstances.

3. The auction conducted on 06.12.2006 was later set aside by the Deputy Commissioner for not following proper procedures, leading to the suspension of the Assistant Commissioner who conducted the auction.

4. Despite the auction cancellation, the petitioner's initial bid amount was refunded, but the liquidator of the spinning mill later requested the return of the amount paid during the auction proceedings.

5. The petitioner challenged the cancellation of the auction, arguing that the basis for cancellation was unsustainable and not in line with the agreement signed in 1965. The petitioner sought relief based on legal grounds.

6. The court noted that the land auctioned did not belong to the spinning mill under liquidation but was government property. The auction by the Commercial Tax Department was deemed baseless, and the auction cancellation was justified.

7. The court directed the Commercial Tax Department to refund the bid amount to the petitioner with accrued interest, emphasizing the need for prompt submission of account details for the refund process.

8. Ultimately, the court dismissed the writ petitions, ruling in favor of refunding the bid amount to the petitioner and closing the case without costs.

This detailed analysis covers the key issues raised in the legal judgment, providing a comprehensive overview of the case and the court's decision.