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TMI Blog2021 (7) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax due to the Government. However, the first respondent issued a notice to the petitioner asking him to pay the sales tax arrears amount of Rs. 55,89,500/- accrued in the name of Madras Oil Tech Engineers Pvt. Ltd., for the Assessment Year 1992 - 93 under the CST Act, 1956. It is informed to the petitioners that they have purchased the property from one of the Directors. The petitioner sent a reply stating that they are no way connected with the arrears of sales tax and even at the time of their purchase of the said property, there was no such encumbrance or attachment by the Commercial Tax Department and thus any recovery of arrears of sales tax is to be made against the defaulter and not against the petitioner. Instead of the reply n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the ambit, scope and width of recovery that may be initiated by invoking powers under Section 24 (2) of the Act in order dated 18.10.2019 in W.P.No.5849 of 2014, the relevant paragraphs are extracted hereunder: "15. Section 24 which deals with payment and recovery of tax provides that where tax is assessed and becomes payable under the Act, it shall be paid within 21 days from date of service of a demand notice. In cases of default, then the entire outstanding shall become a charge on the properties of the assessee or the person upon whom the liability vests. Thus, to this extent, the argument of the revenue that an automatic charge is created upon the assets of the defaulting assessee is correct 16. However, they cannot rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision, that by itself would not suffice to protect the interests of the Department. The requirement under Section 24(2) is specifically to bring to the notice of the public the fact that such encumbrance has been created upon a specific property, pursuant to statutory dues outstanding either by public proclamation on the land or by publication of such notice in the District Gazette. 18. In the present case, let us assume for a moment that an automatic charge has been created by operation of Section 24(1). Such charge, once created has remained within the domain of knowledge of only the Assessing Authority of the defaulter not having been conveyed to the public at large or converted into a tangible and enforceable charge by registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twithstanding the remedy of the suit under section 59. (iv) In an auction sale the properties of the company can be brought to sale and not the properties of the directors of the company. (v) In case of sale of properties of third parties, they are entitled for the notice. 37. In the present case, the procedure for selling the properties by revenue recovery proceedings, the legal procedure, was not followed. No wide publicity was given. The time gap provided under section 36 and 38 of the TNRR Act was not followed. The right of the independent owners including the petitioner in W.P.No. 5324 of 2008 was infringed as no notice was given to him and his brother who were no way connected with the company. (Though such a notice was give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t out under 24(2). Had the procedure only been complied with, as contemplated under both the TNGST as well as the RR Acts, then the public would have been put to notice of creation of encumbrance and the interests of both the general public and the commercial taxes Department would have been adequately protected. 23. There is no allegation by the Department that the purchase of the property in question by the father of the petitioner from R2 was a collusive transaction. In any event, the petitioner being the third in line of ownership to the property, the question of collusion would not arise in this case and neither is this the case of the Department. The decision in the case of Meenakshi J.Ganesh Kumar (supra) relied upon is distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , had been vigilant enough to put into motion the procedure set out under the RR Act and not otherwise. The meaning of the term 'charge on the property' which is also found in Section 100 of the Transfer of Property Act, 1882 (in short 'T.P.Act') is, a simple mortgage. Section 100 of the T.P. Act reads as follows: ' 100.Charges-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 such charge). Nothing in this Section applies to the charge of a trustee on the trust-proper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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