9911796707
TMI Blog2019 (10) TMI 1445X X X X Extracts X X X X X X X X Extracts X X X X ..... 09, under Document No.3303 dated 22.06.2009. 2. The petitioner, claiming to be a bonafide purchaser, states that he has been in continuous possession and ownership of the property till 2012. On 28.09.2012, the Assistant Commissioner, Commercial Taxes/R1 raised a demand of arrears of sales tax pertaining, admittedly, to R2 pursuant to commercial taxes assessments framed upon her in terms of the Tamil Nadu General Sales Tax Act, 1959 (in short 'TNGST Act'). The demands were again reiterated on 15.10.2012. It is only at that juncture that the petitioner came to be aware that R2 and her husband had been assessed to sales tax on the file of the first respondent and had become liable for certain dues of sales tax raised upon an entity known as Sarathy Engineering Works under the name and style of which business was being carried on by them. The arrears related to the periods 1993-94 to 1997-98 and amounted to a sum of Rs. 6,74,550/-. 3. R1 called upon the petitioner to remit the aforesaid sum under threat of bringing the subject property to public auction in terms of the Tamil Nadu Revenue Recovery Act, 1864 (in short 'RR Act'). 4. The petitioner objected to the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ganesh Kumar Vs. Deputy Commercial Tax Officer, Srivilliputhur and Another [(2011) 41 VST 150]. 11. The petitioner, for its part and in response, points out that the provisions of Section 24 have to be read in tandem with the provisions of Section 24A of the Act that renders void all transfers that are effected to defraud the revenue. 12. My attention is specifically drawn to the proviso under Section 24A, which carves out a category of transfers that shall not be void if they are made for consideration and without notice of pendency of proceedings under the Act or as the case may be without notice of tax or any other sum to be paid by the dealer. 13. Heard learned counsels. 14. The issue that arises for consideration before me relates to the ambit, scope and width of recovery that may be initiated by the Commercial Taxes Department invoking powers under Section 24(2) of the Act. For this purpose, it becomes necessary to extract both Sections 24(1) and (2) as well as Section 24-A, which I do below: Section 24. Payment and recovery of tax.- (1) Save as otherwise provided for in sub-section (2) of section 13, the tax assessed or has become payable under this Act from a dealer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be, without notice of such tax or other sum payable by the dealer; or (ii) with the previous permission of the assessing authority. Explanation. - In this section, "assests" means land, building, machinery, plant, shares, securities and fixed deposits in banks to the extent to which any of the assets aforesaid does not form part of the stock-in-trade of the business of the dealer. 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 content with this entitlement in the light of the stipulation under Section 24(2), which goes on to say 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on 24.04.2013 and enclosing an encumbrance certificate. Thereafter on 08.11.2013, a notice in Form 4 was issued to the defaulter. Thus, for the period 31.12.1999 to 20.03.2013 the Commercial Taxes has rested content with the charge stated to have been created by operation of Section 24(1). This charge has no value whatsoever unless it has been followed up by the specific procedure set out under Sections 26 and 27 of the RR Act. 19. This Court in Varuni Biomass Energy Products Private Ltd. (supra), considers the auction of a property for recovery of commercial tax arrears after considering the procedure contemplated under the RR Act and states at para 36 and 37, as follows: 36.On the basis of the rival submissions and the legal precedents the following proposition emerge: (i) The procedure under the Revenue Recovery Act for selling the property of the judgmentdebtor must be strictly followed. (ii) The illegalities in procedure will vitiate the sale. (iii) The 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tected. 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 distinguishable on facts, since in the aforesaid order the learned Single Judge, holds at para 7, that the transaction as between the petitioner in that case and the defaulting assessee, was collusive in nature. 24. A Full Bench in the case of B. Suresh Chand Vs. State of Tamil Nadu and another [(2006) 4 LW 409], considered the case of a bona fide purchaser in a Letters Patent Appeal. The Suit had been filed by plaintiffs claiming to be bona fide purchasers of the suit property, who had 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 bona fide purchaser for value is bound by the change for payment of arrears of sales Tax created under Section 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e RR Act, having been followed scrupulously by the Commercial Taxes Department. 29. The files were called for and it has been specifically ascertained that the procedure set out under the applicable provisions of RR Act have not been followed in this case. Compilation dated 04.10.2019 filed by the respondent contains a statement of R2 (serial no.1), pre-assessment notices for the four periods of assessment at serial Nos.2 to 5, orders of assessment from serial nos.6 to 9, letter to the Sub-Registrar, Kumarapalayam dated 20.03.2013, letter from the Sub-registrar creating an encumbrance and enclosing the Encumbrance Certificate dated 08.05.2013 at Serial nos.10 and 11. It is only on 08.11.2013 that Notice in Form 4 of the Revenue Recovery Act was issued to the defaulter, i.e., R2, for collection of arrears. Form Nos.5,7 and 7A of the Revenue Recovery Act attaching the property have been issued on 08.11.2013 and 30.12.2013 and the publication of the attachment in the Namakkal District Gazette has been on 21.03.2014 at Serial nos.12, 13 and 14 of the compilation. The affixation of notice conspicuously upon the property in question and the notification of such attachment by proclamatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
