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TMI Blog1997 (9) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... irm M/s. Balaji Engineering Works and Balaji Oil Mills. The said Ramkumar Gogia sold an extent of 38.80 cents of land to the writ petitioner for a total sum of Rs. 22,000 on December 30, 1981. It is the case of the revenue that valid demand notices had been issued for the various assessments and served on the assessee. For the purpose of clarity, the dates of service of the notices of assessment are as below: "TNGST Act, 1959 CST Act, 1956 1976-77 19-4-1979 4-2-1981 1977-78 1-4-1979 1-4-1979 1978-79 17-5-1980 12-5-1980" 1979-80 10-1-1981 It has to be noticed that the service of notices had taken place long prior to the date of sale by Ramkumar Gogia on December 30, 1981. The first appellant had issued notices under forms 4, 5, 7 and 7A, all of them being dated March 5, 1983 issued under the Act, demanding payment of arrears of sales tax due and payable by Ramkumar Gogia. The petitioners appeared before the first respondent and requested him to withdraw the notices, pointing out that there were irregularities in the notices and in any event, the writ petitioner was not liable for the sales tax dues of Ramkumar Gogia. There being no response from the appellants, the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed to consider the points arising for our decision, because it appears to us that the questions raised by learned counsel for the respondent are very important legal issues. We will proceed to refer to the relevant provisions of the Sales Tax Act, before adverting to the points raised before us. Section 19 of the Sales Tax Act refers to the liability of the parties. It is as follows: 19. Liability of firms.-(1) where any firm is liable to pay any tax or other amount under this Act, the firm and each of the partners of the firm shall be jointly and severally liable for such payment. (2) Where a partner of a firm liable to pay any tax or any amount under this Act retires, he shall, notwithstanding any contract to the contrary, be liable to pay the tax or other amount remaining unpaid at the time of his retirement and any tax or other amount due up to the date of retirement, though unassessed. Section 24 relating to payment and recovery of tax is strongly relied upon by the revenue and at the relevant point of time, the material portion of the section was in the following terms: 24. Payment and recovery of tax.-(1) Save as otherwise provided for in sub-section (2) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adequate consideration and without notice of the charge looms large over the validity of the recovery proceedings. 7.. We will now refer to the provisions of the Revenue Recovery Act, which relates to the collection of public revenue and for the purpose of the Sales Tax Act, the arrears of sales tax are deemed to be public revenue. There is no dispute about this fact also. Section 36 of the Act explains the procedure for sale of immovable property. In this connection reference is made to section 5 of the Act, which reads as follows: 5. Arrear of revenue how recovered.-Whenever revenue may be in arrear, it shall be lawful for the Collector, or other officer empowered by the Collector in that behalf, to proceed to recover the arrear, together with (penalty) and costs of process, by the sale of the defaulter s movable and immovable property, or by execution against the person of the defaulter in manner hereinafter provided........ Much emphasis is laid on the words by sale of defaulter s movable and immovable property. For the sake of completion section 59 of the Act may also be referred to which enables any aggrieved party to apply to any civil court for redress. The various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of the application of section 100 of the Transfer of Property Act was left open. Accordingly, the learned judge held that the house property cannot be proceeded against for recovery of tax arrears. It has to be noticed that the learned Judge was considering section 10 of the Sales Tax Act, 1939, whereas the notice was issued under section 24 of the Madras General Sales Tax Act (1 of 1959). 11.. In K. Nagammal v. Joint Commercial Tax Officer [1973] 31 STC 607 (Mad.), Ramaprasada Rao, J., held that there is no provision in the Tamil Nadu Revenue Recovery Act, 1864, which enabled the Collector to attach and sell a land not registered in the defaulter s name for arrears of revenue due from the defaulter. Learned Judge, therefore, quashed the revenue recovery proceedings. 12.. In Balakrishna Goenka v. State of Tamil Nadu [1981] 2 SISTC 43, Mohan, J. (as he then was) rejected the plea of a purchaser for value without notice of the sales tax arrears and held that no such plea was acceptable because valid demand notices had been issued anterior in point of time to the sale of the property in favour of the purchaser. This judgment was rendered on August 21, 1978 in S.A. No. 278 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not recoverable by attachment and sale of the property in the hands of the purchaser. A Division Bench of the Gujarat High Court accepted the case of the purchaser and decreed the suit, holding that the charge created in favour of the municipal corporation was not enforceable against the property. The apex Court upheld the said judgment and while doing so, referred to section 100 of the Transfer of Property Act, which is as follows: Section 100: Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. Nothing in this section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai AIR 1971 SC 1201 was brought to the notice of the Division Bench, they purported to distinguish the same by the following observation: ..............Section 141(1) of the Bombay Provincial Municipal Corporation Act, 1949 merely creates a charge for the property tax. There is no provision in the Bombay Provincial Municipal Corporation Act, similar to section 24(2) of the Tamil Nadu General Sales Tax Act, 1959, providing for enforcement of the charge created under section 141(1) of the Bombay Provincial Municipal Corporation Act. Therefore, the ratio of the decision of the Supreme Court in Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai AIR 1971 SC 1201 cannot be applied to the facts of the present case. We are inclined to follow the decision of the Division Bench of this Court in Deputy Commercial Tax Officer v. Asha Kumari 1985 WLR 240 and hold that the charge created for arrears of sales tax over the properties of the defaulter under section 24(1) of the Act can be enforced in the hands of the transferee by invoking the provisions of the Revenue Recovery Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rule of section 100 of the Transfer of Property Act, a bona fide purchaser for consideration without notice of the charge is protected. This proposition of law is too very clear and so categorically emphasised by the Supreme Court that we are inclined to follow the rule decidendi of the Supreme Court in Ahmedabad Municipal Corporation case AIR 1971 SC 1201. We therefore with respect differ from the views expressed by the two Division Bench judgments referred to above and propose to follow the judgment of the Supreme Court. 16. We are not inclined to go into the other question raised by the learned counsel for the respondent relating to the institution of the suit and the technical defects in the notices issued by the appellants. No doubt, we accept the stand of the revenue that the respondent/petitioner could have filed a civil suit and challenged the revenue recovery proceedings. Inasmuch as the writ petition had already been entertained and the writ appeal has also been entertained at this belated stage, we do not want to reject the plea of the respondent that they are the bona fide purchasers for value without notice of the sales tax arrears. Since the appellants have now ..... X X X X Extracts X X X X X X X X Extracts X X X X
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