2021 (8) TMI 483 - HC - VAT and Sales Tax

Recovery of Sales Tax Dues - Cancellation of Auction - Intended purchaser - The appellant is before us contending that the auction should not have been cancelled on the ground that the property was never owned by the Co-operative Spinning Mills and without prejudice to such contention, it is submitted that the refund of the amount collected from the appellant should have been directed to be refunded with commercial penal interest - HELD THAT - It may be true that the Commercial Taxes Department accepted the said property as one of the securities at the time of granting registration under the provisions of the Tamil Nadu General Sales Tax Act, but that may not be a ground which will inure in favour of the appellant who voluntarily participated in the auction sale and therefore, as an intending purchaser, the appellant was required to exercise due diligence and make thorough verification and cannot turn around and say that it is for the Department to verify all the facts. The Doctrine of Caveat Emptor stares at the appellant. The learned Single Bench was right in refusing to grant the relief sought for and it is equally right in directing the amount paid by the appellant to be refunded and also with regard to the rate of interest. The appellant is a Charitable Trust and has a huge establishment in Vellore and it is also represented that it is doing several charitable activities. If that is so, the appellant can be gracious enough to give up the claim for interest payable by the Government, because, the Government Exchequer is greatly strained due to Covid-19 Pandemic and it is common knowledge that several philanthropists, industrialists, Charitable Trusts, individuals, Government servants have come forward to voluntarily contribute to the Government to enable them to tackle the pandemic situation. Appeal dismissed.

Summary

Issues:
1. Validity of auction cancellation and refund of deposited amount.
2. Contention regarding the rate of interest on the refunded amount.

Issue 1: Validity of auction cancellation and refund of deposited amount:
The appellant, a Charitable Trust, filed writ appeals against the order related to an auction conducted by the 3rd respondent for a property due to a default by a Dealer. The appellant sought a writ of mandamus to confirm their bid and challenged the cancellation of the auction. The Court directed the refund of the deposited amount of ?1,35,00,000 with interest. The appellant argued that the auction cancellation was unjust as the property was not owned by the Dealer. However, the Court held that the appellant, as a bidder, should have conducted due diligence and the doctrine of Caveat Emptor applied. The Court upheld the decision of the Single Bench, leading to the dismissal of the writ appeals. The appellant was entitled to the refund of the amount with interest at Bank rates.

Issue 2: Contention regarding the rate of interest on the refunded amount:
The appellant's counsel contended that the main issue in the appeals was the rate of interest on the refunded amount. The Court considered the submissions of both parties and found no grounds to interfere with the Single Bench's order. The Court noted that the appellant, being a Charitable Trust, was urged to consider waiving the claim for interest due to the financial strain on the Government caused by the Covid-19 pandemic. The Court gave the appellant the option to give up the interest claim voluntarily. If the appellant agreed, they were instructed to provide a written letter signed by the authorized representative, and the refund would be processed within three weeks. If the appellant did not agree, the refund would be made within twelve weeks from the date of the judgment.

In conclusion, the Writ Appeals were dismissed with no costs, and connected miscellaneous petitions were closed.