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TMI Blog2017 (5) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... totally wash their hands off as though they had nothing to do with the writ petition filed by the A.P. State Financial Corporation. In any case, the sale proceeds have gone into the coffers of the petitioner as well as the A.P. State Financial Corporation. A person, who secured an interim order from a Court, should certainly honour its decision after the case is finally disposed of. Therefore, we do not think that the petitioner can escape the liability on this score. The petitioner is a Corporation, wholly owned and controlled by the State of Andhra Pradesh. The creator cannot fight with the creation. Assuming that the 2nd respondent recovers the tax due from the defaulting dealer together with interest and penalty, the same would only cause a dent in the financial status of the petitioner. Ultimately, it is the State Government, which has to go to the rescue of a Corporation created by it. Directing the petitioner to pay to the Commercial Taxes Department, a sum equivalent to ₹ 10,51,175/- together with interest at the rate of 6% p.a. from the date of the sale, viz., 29-1-2004 up to the date of payment, would meet the ends of justice - petition allowed - decided part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the borrower, which were offered as securities for the due repayment of the loan. There was a further direction in the said interim order that out of the sale proceeds realized by the State Financial Corporation, an amount equivalent to the sales tax dues should be kept in an interest yielding deposit. Depending upon the result of the writ petition, the deposited amount was directed to be disbursed or dealt with. The interim order passed on 11.11.1999 in W.P.No.21865 of 1999 filed by the A.P. State Financial Corporation reads as follows: Pending further orders, the petitioner can proceed to sell the properties offered as security for the repayment of the loan due to the petitioner. Out of the sale proceeds realized by the petitioner-corporation an amount equivalent to the sales tax dues in respect of which the sales tax Department has issued notice shall be kept in an interest yielding deposit and a separate account shall be maintained for the amounts so deposited. Depending on the result of the writ petition, the deposited amount with interest shall be disbursed or dealt with. 5. Eventually by a common judgment dated 28.04.2010, reported in Andhra Pradesh State Financial Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears to have ordered notice, but did not grant any interim order. 8. Keeping the above factual background in mind, if we come back to the case of the petitioner, it is seen that the petitioner challenges the action of the 2nd respondent-Commercial Tax Officer on the short ground that Section 29(1) of the A.P. VAT Act, 2005 invoked by the 2nd respondent for attaching the current account of the petitioner, has no application to the facts on hand. Under Section 29(1) of the A.P. VAT Act, 2005, a power is conferred upon the Commissioner or any other authority to require any person who holds any money for or on account of the defaulter, to pay such amount directly to the Commissioner or the other authority for the purpose of discharging the dues payable by the defaulting dealer to the Commercial Tax authorities. Section 29 of the A.P. VAT Act, 2005 reads as follows Section 29: Recovery of tax from third parties: (1) The Commissioner or any other authority prescribed may at any time or from time to time, by notice in writing (a copy of which shall be forwarded to the dealer at his last address known to such authority) require any person from whom money is due or may become due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the A.P. VAT Act, 2005, the 2nd respondent should satisfy one pre- requisite condition, viz., that the petitioner is holding any money for or on account of the defaulter. The petitioner is not holding any money either for or on account of the defaulter. The amount recoverable from the defaulter jointly by the petitioner and the A.P. State Financial Corporation was more than ₹ 833.72 lakhs and that by the sale of the properties they were able to recover only about ₹ 144 lakhs. The amount recovered through sale, does not belong to the defaulting dealer. Therefore, the petitioner contends that the 2nd respondent cannot invoke Section 29(1), as the money lying with the petitioner-Corporation does not belong to the defaulter. 10. In simple terms, the contention of the petitioner is that a garnishee order can be passed only in respect of the money payable to the defaulter. The proceeds of the sale of the properties of the defaulter, after having been appropriated towards the dues of the defaulter to the petitioner-Corporation, cannot be treated as the amounts intended for or on account of the defaulter. Therefore, the petitioner contends that the impugned action is comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. A person, who secured an interim order from a Court, should certainly honour its decision after the case is finally disposed of. Therefore, we do not think that the petitioner can escape the liability on this score. 14. Coming to the contention regarding Section 29(1), it is true that the same is in the nature of a garnishee order. By the plain language of Section 29(1) of the A.P. VAT Act, 2005, the amount lying in the hands of the petitioner cannot be attached, as the amount does not represent the money payable by the petitioner to the defaulting dealer. It is also not the amount that the petitioner is holding for the benefit of the defaulting dealer. As a matter of fact, Section 29(1) of the A.P. VAT Act, 2005 is similar to Section 17(1) of the A.P. GST Act, 1957. 15. But the issue cannot be looked at merely from the point of view of Section 29(1) of the A.P. VAT Act, 2005 or Section 17(1) of the A.P. GST Act, 1957. The issue has to be looked at from the point of view as to how a charge created on a property would operate. 16. There is no dispute about the fact that by virtue of Section 16C of the A.P. GST Act, 1957 a first charge was created on 06.04.1999 on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken place before 06.04.1999, the date on which Section 16C was inserted. 19. The argument of the learned counsel for the petitioner that the charge created under Section 16C, w.e.f., 06.04.1999 cannot relate back to the dues in respect of the assessment years 1995-96, 1996-97 and 1997-98, cannot be accepted. Section 16C uses the expression any amount of tax, penalty, interest and any other sum, if any, payable by a dealer or any other person under the Act. Section 16C has no connection to any assessment year. Section 16C has an express link only with the amount of tax payable. Therefore the argument that Section 16C cannot create a charge on the old dues is contrary to the express provisions of the statute. Therefore, we are of the considered view that the petitioner cannot escape the liability. 20. It is next contended by Mr. Ravindra Kumar, learned counsel for the petitioner that insofar as the petitioner is concerned they are not even aware of actual facts relating to the passing of the orders of assessment. It is his contention that certain questions such as the question whether show cause notices were issued to the assessee, whether opportunities were given and whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o recover interest and penalty, at the rates specified in the A.P. GST Act, 1957 for the simple reason that even according to the 2nd respondent there was an interim order passed by this Court on 11.11.199 permitting the State Finance Corporation to proceed with the sale, but to keep an amount equivalent to the sales tax dues, in an interest yielding deposit. Therefore, if the State Finance Corporation, joining hands with the petitioner, had sold the property pursuant to the interim order dated 11.11.1999, they would have kept only the aforesaid amount of ₹ 10,51,175/- in an interest yielding deposit in a bank. It is this amount to which the 2nd respondent can lay their hands on. Therefore, we are of the considered view that putting the petitioner to the same condition as imposed upon the State Finance Corporation, would mitigate the loss for both the sides. After all the petitioner as well as the 2nd respondent should not have fought a litigation of this nature. The petitioner is a Corporation, wholly owned and controlled by the State of Andhra Pradesh. The creator cannot fight with the creation. Assuming that the 2nd respondent recovers the tax due from the defaulting deale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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