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TMI Blog2014 (12) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2010 from the respondent No.3 - Jayshreeben Deepakbhai Magiya. The property was originally owned by Dr. Bhanu T. Parekh, which was purchased by one Shri Dhanjibhai Hirjibhai Tuvar on 7th March, 1989 and thereafter, by Smt. Jayshree Deepak Magiya on 29.06.1995 by a registered sale deed. It is the case of the petitioner that before the purchase of the impugned property, title investigation was carried out in the name of the previous owner by the learned advocate who issued a certificate dated 23.12.1996 certifying to the State Bank of Saurashtra that the title of the previous owner was clear, marketable and free from any encumbrances. Such property was purchased by the petitioner on 20.05.2010 which was duly registered with the respondent No.2 vide document No.2603 and the petitioner continued to enjoy the same peacefully. 2.1 It is the case of the petitioner that he entered into an agreement to sell with one Shri Kamlesh P. Shah on 26.03.2013 for the sale of such property. Such agreement to sell has been registered with the respondent No.2 on 26.03.2013. After the said process of entering into the agreement to sell with the proposed purchaser, when the petitioner approached the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No.2 to quantify the stamp duty to be paid by the petitioner, allow the transfer of the impugned property and register the sale deed transferring the title in the impugned property; [c]any other and further relief deemed just and proper be granted in the interest of justice' [d] to provide for the cost of this petition." 3. On issuance of the notice, the respondent No.1 appeared and filed an affidavit-in-reply contending, inter alia, that the impugned property is transferred by Shri Deepak Shantilal Magiya through his wife Jayshreeben Deepakkumar Magiya to the petitioner with an intention to defraud the Government revenue and that the said transaction is void under section 47 of the Gujarat Value Added Tax Act, 2003. It is contended that Shri Deepak Magiya opened the bank account in the name of Apna Enterprise citing its sale tax registration number. He was, in fact, not the real owner and the real owner was one Shri S. A. Saiyed. Shri Deepak Magiya was considered to be the king of billing business in Bhavnagar, who never got registered himself under the Gujarat Sales Tax Act or the Gujarat Value Added Tax Act. Shri Deepak Magiya used t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of any tax or any other sum payable by the dealer." "Section - 48 : Tax to be first charge on property. Notwithstanding anything to the contrary in any law for the time being in force, any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer, or as the case may be, such person." Thus, section 47 of the Act is concerned with a dealer who creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer, after any tax becomes due from him, and when he so does in favour of any other person with the intention of defrauding the government revenue, this provision states that such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer. Section 48 of the Act creates first charge on the property of the dealer or any other person from whom tax is due. 6. It is to be noted at this juncture that section 47 of the GVAT Act is similarly worded to section 281 of the Income Tax Act, 1961 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchaser merely the right, title and interest of the defaulter at the time of the sale, even though the property itself be specified. (2) Where immovable property is sold in execution of a certificate, and such sale has become absolute, the purchasers right, title and interest shall be deemed to have vested in him from the time when the property is sold, and not from the time when the sale becomes absolute. 11. Investigation by Tax Recovery Officer. (1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection : Provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed. (2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for anything in good faith done or intended to be done under the Act. However, an exception is carved out under sub-rule (6) of rule 11 which permits institution of the suit in a civil court to establish the right by the party against whom an order is made in respect of the property in dispute and subject to the result of such suit, the order made by the Tax Recovery Officer shall be conclusive. There is of course no corresponding provision under the Gujarat Value Added Tax Act. 10. Submissions of Learned Advocate Mr. Hemani inter alia that because of explicit provisions made under Schedule II and in particular, sub-rule (6) of rule 11 of the Income Tax Act, the civil suit would be permissible and not otherwise, cannot be accepted. 10.1 It is true that there is no explicit provision made under the GVAT Act as is provided under the IInd Schedule of the Income Tax Act, however, it is a well settled law that in the event of any dispute in relation to the title of any property, it is the civil court which shall have a jurisdiction. This has also been emphatically held and observed by the Apex Court in Tax Recovery Officer v. Gangadhar Viswanath Ranade (supra) and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the said proceedings or otherwise. Proviso to sub-section (1), however, provides that such charge or transfer shall not be void if made for adequate consideration and without notice of pendency of such proceedings or without notice of such tax or other sum payable by the assessee or with the permission of the Assessing Officer. It can thus be seen that even if the transactions creating a charge or parting of possession has been entered into by the assessee during the pendency of any proceedings under the Act or after completion thereof, the eventuality of such charge or transfer being declared void can be avoided provided one of the two conditions contained in the proviso is satisfied. Under such circumstances, the transferee can demonstrate that the transaction had taken place with the previous permission of the Assessing Officer or that the same was entered into for adequate consideration and without notice of pendency of such proceedings or without notice of such tax or other sum payable by the assessee. This element of the transaction being with adequate consideration and without notice would equally apply to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of TRA v. Gangadhar Vishwanath Ranade (supra) and held that the action of the TRO in declaring the transfer of property to be void was without jurisdiction. The Court also held that the impugned order attaches civil consequences. The authority therefore before passing such order ought to have given an opportunity to the petitioners of being heard. This was not done. This was an additional ground on which the order was struck down. In the case of Sancheti Leasing Company Ltd v. Income Tax Officer, (2000) 158 CTR (Mad) 190, learned Single Judge of the Madras High Court following the decision of the Supreme Court in the case of Gangadhar Vishwanath Ranade (supra) held that ITO had no jurisdiction to declare the transaction of sale to the petitioners as void. The decisions cited by the counsel for the Revenue arose in different factual background. In the case of Abdul Jamil (supra), the issue arose out of civil proceedings in which the Court found that the vendor had sold the property to the first plaintiff after the issuance of certificate under the Act for recovery of the tax arrears from him. The Court therefore, held that the transaction was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue's interest, require some consideration at this stage. 11. The Benami Transactions (Prohibition) Act, 1988 prohibits all benami transactions and also provides for the right to recover property held benami. Section 3 thereof provides that no person shall enter into any benami transaction. However, it further provides that nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter. This provision thus avails protection in the event of any purchase of property in the name of the wife or the unmarried daughter, where presumption has also been provided by the law in favour of the person and unless contrary is established, it is to be presumed that such property has been purchased for the benefit of wife and unmarried daughter. 11.1 Some of the references of judicial pronouncements on the very issue would be desirable at this juncture. [a] The Supreme Court in the case of Canbank Financial Services Ltd. v. Custodian and others, AIR 2004 SC 5123, held thus : &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transaction is benami and the Supreme Court laid down the following principle at page 734: "The principle governing the determination of the question whether a transfer is a benami transaction or not may be summed up thus: (1) The burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; (2) if it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) the true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct etc." [17] The burden is on the plaintiff to prove that the transaction is benami. In the present case, even though the consideration m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 SC 727), has dealt with the subject to observe and hold thus : "18. The principle governing the determination of the question whether a transfer is a benami transaction or not may be summed up thus: (1) The burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; (2) if it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) the true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct etc." The expression "benami" denotes the transaction for the benefit not of the person taking part in the transaction, but of the person / persons not mentioned in the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove otherwise when such property is purchased in the name of the wife as legal presumption favours the wife and unmarried daughter. 13(b) However, such presumption can be rebutted by the person who alleges by production of evidence or other material before the court, that the property was purchased for the benefit and interest of the person other than the wife and the unmarried daughter. In other words, unless the presumption gets rebutted by successfully producing cogent evidence that the suit property was purchased benami by the husband / father for his own benefit, such presumption would continue. 13(c) Moreover, the property had been transferred in the name of the present petitioner by way of a registered sale deed on payment of due consideration and, this was done in absence of any charge, registered with the office of the Sub Registrar in respect of the said property. Therefore also, prima facie, it shall have to be termed as the bona fide purchase of the immovable property for value without notice. 14. (a) The learned Assistant Government Pleader has made an earnest request not to conclude this issue as the respondent State is desirous to move the civil court to get the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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