9911796707
TMI Blog2000 (7) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... , for short). The learned Magistrate issued fine levy warrant for recovery of the said amount under section 421(1)(a), Code of Criminal Procedure, 1973 by attachment and sale of the movable property of the assessee. The said movable property sought to be attached and sold was the plant and machinery. But the said plant and machinery, by then, had already been mortgaged and hypothecated in favour of the Karnataka State Industrial Investment and Development Corporation Limited, Bangalore ("KSIIDC", for short). The said KSIIDC is a financial corporation established under section 3 of the State Financial Corporations Act, 1951 ("SFC Act", for short). The assessee is stated to be owing to the KSIIDC in respect of the loan for which it had mortga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act. There is therefore no doubt at all that in respect of the arrears of sales tax to the tune of Rs. 2,16,756 due from the assessee, there shall be a charge on the properties of the assessee including the plant and machinery. To recover the said sum, if a proceeding under section 13(3)(b) of the K.S.T. Act is initiated, then the learned Magistrate would be justified in issuing warrant for recovery of the said amount by attachment and sale of any movable property of the assessee including the machinery hypothecated to the KSIIDC. This would be the position if we look to only the K.S.T. Act and Criminal Procedure Code. If we look to the S.F.C. Act, however, the position would be different. The first part of section 46-B provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing action under section 29(1) of the S.F.C. Act, and secondly in discharging of debt due to the financial corporation, i.e., in adjusting a sum of Rs. 1,38,31,361 due from the assessee to the KSIIDC and the residue of the money so received shall have to be paid to the person entitled thereto, i.e., assessee. Though, under section 13(2)(i) of the K.S.T. Act, in respect of the arrears of tax and other amount due under the K.S.T. Act, charge is created on the property of the assessee, it is not the first charge as was the case with section 11-AAAA of the Rajasthan Sales Tax Act, 1954, a case in relation to which the learned Magistrate was referring to in the impugned order. Since, unlike in the Rajasthan Sales Tax Act, the charge under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee or both, the KSIIDC does not become the transferee of that property, nor does it become the owner of the property. No doubt, sub-section (5) of section 29 of the S.F.C. Act creates a fiction wherein, for a limited purpose, KSIIDC is deemed to be the owner of the concern, the assessee herein. But, as I said, that is only for a limited purpose, viz., of filing of suits by or against the concern and not for any other purpose. Since sub-section (1) of section 29 of the S.F.C. Act even empowers the KSIIDC to sell the property of the assessee, it could be seen from sub-section (2) of the said section 29 that, any transfer of property so made in exercise of its power under sub-section (1) of section 29, shall vest in the transferee, all ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary for the KSIIDC to make it clear, when it advertises the property for sale, that after the said sale, there would be charge on the property created under section 13(2)(i) of the K.S.T. Act in respect of the sales tax arrears due from the assessee, and further that after the said sale, the purchaser also, as much as the assessee, would be, by virtue of section 15 of the K.S.T. Act, jointly and severally liable to pay the said arrears. Any purchaser of the property should go ahead with the transaction with his eyes wide open to this factual and legal position. 4.. I, therefore, direct that the property of the assessee, now in the hands of the KSIIDC under section 29 of the S.F.C. Act, shall be sold with the intending purchaser being ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of section 13 of the K.S.T. Act makes it clear at the outset, the recovery under the said subsection (3) would be without prejudice to any other mode of collection. In addition to serving a notice under section 14 of the K.S.T. Act therefore, the respondent-authority would be at liberty to proceed with Civil Miscellaneous No. 1507 of 1996 under section 13(3)(b) of the K.S.T. Act, wherein the learned Magistrate could still proceed to recover the sales tax arrears due under section 421 of Code of Criminal Procedure if any property of the assessee is available other than what is taken possession of by KSIIDC. Impugned order modified accordingly, and petition disposed of accordingly. Petition disposed of accordingly. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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