2015 (12) TMI 1137 - HC - VAT and Sales Tax

Recovery from wife for husband s dues - Attachment of property - Held that - We do not see any authority in law permitting respondent No.1 to attach the property of the petitioner for the dues of her husband. Nothing has been brought on record to suggest that the property in question was purchased from the sources other than that of the petitioner herself. It is not the case of the Department that the sale transaction of 31.12.1994 was benami transaction and that the husband of the petitioner had funded for purchase of the property. In any case, as noted, the sale took place on 31.12.1994 and the husband of the petitioner started his current business in the year 1998. The sales tax dues pertain to the Assessment Year 1999-00. Nothing has been stated in the affidavit in reply to justify the action of the Department in attaching the property of the petitioner for the dues of her husband. By merely stating that only qua share of the husband, the said property was attached, would nor further the case of the Department. This is in fact curious statement. It does not clarify whether the share referred to is that of the sales tax dues or of the interest in the property. If later is the case, there is nothing on the record to suggest that the husband had any right, title or interest in such property - Mere reference to the powers under Section 48A of the Gujarat Sales Tax Act would not save the situation for the Department. Such powers can be exercised only where the facts so permit. - Decided in favour of appellant.

Summary

Issues:
Challenge to Sales Tax Department's attachment of private property for husband's dues.

Analysis:
The petitioner contested the Sales Tax Department's action of attaching her private property, asserting sole ownership acquired through personal earnings and 'stri dhan'. The property was purchased via leasehold rights from Kandla Port Trust in 1994. The petitioner's husband, who started a timber business in 1998, had sales tax dues for the Assessment Year 1999-00. The Department attached the property without serving a formal order, hindering the petitioner's attempt to sell it. The petitioner sought to quash this attachment.

Respondent No.1 justified the attachment, citing the husband's outstanding State and Central sales tax dues. However, the Court found no legal basis for attaching the petitioner's property for her husband's debts. The Department failed to prove the property was acquired using the husband's funds or that it was a 'benami' transaction. Notably, the property was purchased before the husband's business began, and the dues were for a subsequent year. The Department's vague claim of attaching only the husband's share lacked clarity on whether it referred to tax dues or property interest.

The Court referenced two previous judgments where similar actions by the Department were quashed, highlighting the inconsistency in the Department's approach. Merely citing Section 48A of the Gujarat Sales Tax Act was deemed insufficient to justify the attachment without proper grounds. Ultimately, the Court allowed the petition, ruling to quash the Sales Tax authorities' attachment of the petitioner's property. This decision was based on the lack of legal authority to attach the property for the husband's dues and the absence of evidence linking the property to the husband's liabilities.