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TMI Blog2019 (11) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the third respondent in an auction sale held by the second respondent bank on as is where is and whatever is basis . On the date when the sale notice was issued, the assessment orders in the case of the third respondent, on the basis of which recovery is sought to be made from the petitioner, were not even passed. Therefore, the petitioner had purchased such property without any encumbrance. The petitioner being a bona fide purchaser who has purchased the subject property in sale proceedings under the Securitisation Act prior to any charge having been created in favour of the first respondent has no liability to discharge the debts of the third respondent. Therefore, it cannot be said that the petitioner was holding any amount on behalf of the third respondent on account of having purchased the subject property in the auction sale held by the second respondent under the provisions of the Securitisation Act - Since the petitioner herein does not owe any amount to the third respondent and does not hold any monies on account of the third respondent, the provisions of section 44 of the GVAT could not have been invoked against the petitioner. Under the circumstances, the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond respondent therefore, initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as 'the Securitisation Act') by issuing a demand notice under section 13(2) of the said Act for an amount of ₹ 78,02,01,920.47 to the third respondent and other guarantors. Thereafter, on 29.7.2015 the second respondent took over the possession of the property being factory land and building, plant and machineries situated at Plot No.6, GIDC Industrial Area, Valia, Ankleshwar, District Bharuch admeasuring 1,02,803 square metres (hereinafter referred to as 'the subject property') under the provisions of sub-section (4) of section 13 of the Securitisation Act and issued sale notice dated 17.11.2015 with a reserve price of ₹ 52.76 crores. It appears that the first sale failed for want of bidders and hence, a second auction was fixed on 17.2.2016. However, the second sale also failed for want of bidders. Thereafter, on 21.11.2016 the second respondent bank issued an E-auction sale notice and put the subject property on public auction whereby the auction was fixed on 23.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . S. N. Soparkar, Senior Advocate, learned counsel with Mr. Shakti Jadeja, learned advocate for the petitioner, submitted that the whole proceeding for recovering the tax dues of the third respondent from the petitioner is bad in law inasmuch as no amount was due and payable by the petitioner to the third respondent. It was submitted that the petitioner was as a bona fide purchaser of the subject property for consideration in an auction held under the provisions of the Securitisation Act. At the time when the subject property was purchased, there was no charge of the first respondent over the property in question and that the property in question had been purchased by the petitioner without there being any encumbrance thereon. It was submitted that insofar as the notice issued to the banker of the petitioner under section 44 of the GVAT Act is concerned, the same is in the nature of a garnishee notice. It was submitted that section 44 of the GVAT Act provides for a special mode of recovery for the amount of monies due from a dealer and that the petitioner is neither a dealer within the meaning of such expression as defined under section 2(10) of the GVAT Act, nor does he hold any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 44 of the Gujarat Value Added Tax Act, 2003 and that the petition being devoid of merits deserves to be dismissed. 6. From the facts as emerging from the record, it can be seen that by the impugned notice dated 18.7.2018, which does not refer to any provision of law, the petitioner was informed that it is liable to pay the outstanding as well as future dues of the third respondent as the subject property had been purchased on as is where is and whatever is basis, and was called upon to pay an amount of ₹ 17,67,45,934/- towards the assessments for assessment years 2012-2013 and 2013-2014 within a period of seven days from the date of receipt of the communication. 7. In response to the above notice, the petitioner addressed a reply dated 20.8.2018 to the State Tax Officer disputing its liability to pay any such amount. The petitioner has thereafter addressed other communications on 24.8.2018 and on 14.9.2018. However, by the impugned order dated 26.9.2018, the second respondent bank was directed to pay a sum of ₹ 17,67,45,934/- together with interest at the rate of 18% per annum as it was holding such amount on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale notice was issued on 21.11.2016. The sale certificate was issued on 20.3.2017, whereupon the subject property ceased to belong to the third respondent. The notice of sale pursuant to which the petitioner purchased the subject property was issued prior to the assessment orders being passed against the third respondent; therefore, as on the date when the sale notice was issued, there was no charge over the subject property. When the petitioner purchased the subject property on as is where is basis , it purchased the property with all the advantages and disadvantages associated with the said property as existing on the date when the sale notice was issued. As noted hereinabove, on the date when the sale notice was issued, the assessment orders in the case of the third respondent, on the basis of which recovery is sought to be made from the petitioner, were not even passed. Therefore, the petitioner had purchased such property without any encumbrance. 12. Under section 48 of the GVAT Act, any amount payable by a dealer shall be a first charge on the property of such dealer or any other person on account of tax, interest or penalty for which he is liable to pay to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder this section shall be deemed to have made the payment under the authority of the dealer, and the receipt thereof by the Commissioner shall continue a good and sufficient discharge of the liability of such person to the extent of the amount specified in the receipt. ( 4) Any person discharging any liability to the dealer after receipt of the notice referred to in this section, shall be personally liable to the Commissioner to the extent of the liability discharged or to the extent of the liability of the dealer for tax, penalty and interest, whichever is less. ( 5) Where a person to whom a notice under this section is sent objects to it by a statement in writing that the sum demanded or any part thereof is not due or payable to the dealer or that he does not hold any monies for or account of the dealer, the Commissioner shall hold an inquiry and after giving to such person or dealer a reasonable opportunity of being heard, make such order as he thinks fit. ( 6) Any amount of monies which the aforesaid person is required to pay to the Commissioner, or for which he is personally liable to the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable or would become payable by the petitioner in future to the third respondent by reason of an existing obligation. In the present case, it is not the case of the first respondent that the petitioner is a debtor of the third respondent. The first respondent seeks to recover the above amount from the petitioner as it has purchased the properties belonging to the third respondent in an auction sale held by the second respondent bank on as is where is and whatever is basis . As noticed earlier, on the date when the sale notice was issued, the assessment orders in the case of the third respondent, on the basis of which recovery is sought to be made from the petitioner, were not even passed. Therefore, the petitioner had purchased such property without any encumbrance. The petitioner being a bona fide purchaser who has purchased the subject property in sale proceedings under the Securitisation Act prior to any charge having been created in favour of the first respondent has no liability to discharge the debts of the third respondent. Therefore, it cannot be said that the petitioner was holding any amount on behalf of the third respondent on account of having purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the affidavit-in-reply filed by it has not made reference to any such notice having been issued to it nor has any averment to that effect been made in the affidavit-in-reply filed on behalf of the first respondent. Therefore, the basic requirement for invoking the provisions of section 44 of the GVAT Act, viz. service of notice to the dealer under sub-section (1) thereof, has not been satisfied. 19. Another aspect of the matter is that a condition precedent for issuing notice under section 44 of the GVAT Act to the second respondent bank is that the said bank should be holding or may subsequently hold monies on account of such dealer. The expression dealer has been defined under section 2(10) of the GVAT Act to mean any person who, for the purpose of or consequential to his engagement in or, in connection with or incidental to or in the course of business buys, sells, manufactures, makes supplies or distributes goods directly or otherwise, whether for cash or deferred payment, or for commission, remuneration or otherwise and includes the categories of persons enumerated thereunder. In the present case, it is not the case of the first respondent that the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X
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