2019 (8) TMI 1096 - HC - VAT and Sales Tax

Auction or property - proceedings pursuant to tax liability penalty for the assessment years 2007-08 2008-09 and 2014-15 under TNVAT Act - It is the case of the writ petitioner that writ petitioner came to know about the impugned auction notice on 26.07.2019 when an official attached to the office of the first respondent went over to the residence of the writ petitioner and pasted the impugned auction notice - HELD THAT - A perusal of Section 42 of TNVAT Act reveals that when tax is not paid by a dealer the penalty shall immediately became a charge on the properties or persons who are liable to pay the tax or penalty under this Act. There is also no disputation that with regard to said AYs for assessment years 2007-08 and 2008-09 deemed assessment happened on 30.06.2012 and with regard to assessment year 2014-15 deemed assessment happened on 31.10.2015. Therefore on 30.06.2012 qua assessment year 2007-08 and 2008-09 and on 31.10.2015 qua the assessment year 2013-14 there was a charge on the said property - From a perusal of Section 26 of TNVAT Act it becomes clear that writ petitioner who is a legal heir of the dealer under TNVAT Act is now holding immovable property i.e. said property of the dealer. The transfer is from father to son by way of a settlement. In the instant case as it is the stated position of writ petitioner that he does not know anything about the business transactions of his late father writ petitioner obviously is not in a position to dispute that said property was offered as a security to the respondent - the argument predicated on Sections 39(4) and 39(5) pales into insignificance. Petition dismissed.

Summary

Issues:
Challenge to auction notice for tax liability and penalty under TNVAT Act for assessment years 2007-08, 2008-09, and 2014-15. Validity of auction notice and property charge. Interpretation of Sections 42, 43, and 26 of TNVAT Act. Allegation of intention to defraud revenue through property transfer. Timeliness of filing writ petition and representation to prevent auction.

Analysis:
The judgment concerns an auction notice issued by the first respondent for tax liability and penalty under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) for specific assessment years. The petitioner, a legal heir, challenges the notice, citing lack of awareness and the property's transfer from his late father. The auction notice indicated a substantial tax liability and penalty, leading to the auction scheduled for the following day. The petitioner's claim of inheriting the property through a settlement deed is central to the dispute.

The court delves into the relevant provisions of the TNVAT Act, particularly Sections 42, 43, and 26. Section 42 establishes the immediate charge on properties for unpaid tax and penalties, while Section 43 voids transfers made to defraud revenue. Section 26 addresses the assessment of legal representatives, deeming them liable for the deceased dealer's tax obligations to the extent of the assets inherited. The court emphasizes the legal implications of the property transfer and the petitioner's status as a legal heir under the TNVAT Act.

The judgment highlights the petitioner's lack of knowledge regarding the business activities of his late father, who was the original dealer under the Tamil Nadu General Sales Tax Act. The court considers the petitioner's claim of ignorance in business matters but emphasizes the legal consequences of the property transfer. The court also scrutinizes the petitioner's timing in filing the writ petition and the representation to prevent the auction, concluding that the petitioner's actions seem to be a last-minute attempt to halt the auction.

Ultimately, the court dismisses the writ petition, citing the petitioner's late intervention, lack of substantial representation, and the perceived intention to thwart the auction. The judgment underscores the legal principles governing tax liabilities, property transfers, and the responsibilities of legal heirs under the TNVAT Act. The decision is based on a comprehensive analysis of the facts, legal provisions, and the petitioner's conduct in the matter.