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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 ..... :- 14-7-2021 - Hon'ble Mr. Justice S.M.Subramaniam For the Petitioner : Mr.R.Ganesh Kanna For the Respondents : Mr.V.Veluchamy Government Advocate for R1, No appearance for R2 R3 ORDER The notice and form - 4 demand dated 20.12.2006 in respect of the property bearing Door No.111, Lake View Road, West Mambalam, Chennai 33, is under challenge in the present writ petition. 2. The petitioner company is a flat promoter and they have no arrears of sales 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that recovery of such outstanding amounts shall be in the manner stipulated under the RR Act as land revenue. For this purpose, it becomes necessary for us to go into the relevant provisions of the RR Act that stipulates, in great detail, the procedure to be adopted and followed by the authority for recovery of outstanding dues. The procedure set out in Sections 26 and 27 thereof are in the following terms: 26. Procedure when defaulter neglects to pay.- When the amount due shall not have been paid pursuant to the terms of the demand, and no arrangement for securing the same shall have been entered into to the satisfaction of the Collector, or other officer empowered by the Collector in that behalf, he shall proceed to recover the arrear by the attachment and sale of the defaulter's land in the following manner. 27.Mode of attachment.-The attachment shall be effected by affixing a notice thereof to some conspicuous part of the land. The notice shall set forth that unless the arrear, with penalty and expenses be paid within the date the therein mentioned, the land will be brought to sale in due course of law. The attachment shall be notified by public proclamatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land owner whose property illegally sold is entitled to move this court notwithstanding 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 given to them when auction notice was issued during the year 2004). 20. The procedure set out under the RR Act, which is applicable to auctions under the Commercial Tax Act, has been enacted bearing in mind the interests of all parties. The interests of the Commercial Taxes Department have been protected under Section 24(1) by providing for the creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been put to notice of a third party/statutory claim over the suit property. The question referred to the Full Bench was as follows: 'What is the extent a bonafide purchaser for value is bound by the change for payment of arrears of sales Tax created under Section 24 of the TNGST Act, 1959.' 25. The Bench examined the provisions of Section 24(1) and (2) of the Act holding that property purchased by a bonafide purchaser without notice of the charge created under Section 24(1) cannot be proceeded against for the recovery of sales tax arrears. Thus, while Section 24(1) creates a charge on the properties of a defaulter to the extent of the dues, sub-section (2) of Section 24 states that those dues would have priority over all other claims against those properties except land revenue and claims of the Land Development Bank in regard to the property mortgaged to it. 26. The priority as above, would come into effect only in the event the authority, in this case, the Commercial Tax Department, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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