1997 (9) TMI 582 - HC - VAT and Sales Tax

Judgment upheld for purchaser without notice of charge; property not liable for sales tax arrears.

Deputy Commercial Tax Officer, Thudiyalur Assessment Circle, Coimbatore And Another Versus RK. Steels

Deputy Commercial Tax Officer, Thudiyalur Assessment Circle, Coimbatore And Another Versus RK. Steels - [1998] 108 STC 161 (Mad) Issues Involved:1. Enforceability of charge u/s 24(1) of the Sales Tax Act against a transferee.2. Applicability of the Revenue Recovery Act against non-defaulters.3. Protection of bona fide purchasers for value without notice u/s 100 of the Transfer of Property Act.4. Validity of recovery proceedings in light of technical defects in notices.Summary:Issue 1: Enforceability of Charge u/s 24(1) of the Sales Tax Act Against a TransfereeThe court examined whether the charge under section 24(1) of the Sales Tax Act could be enforced against a transferee of the property from a defaulter. It was concluded that the charge in favor of the revenue had priority over all other claims against the property of the dealer and could be recovered as land revenue. However, the court noted the difficulty in enforcing this charge against a bona fide purchaser for value without notice of the charge.Issue 2: Applicability of the Revenue Recovery Act Against Non-DefaultersThe court discussed the provisions of the Revenue Recovery Act, particularly section 5, which allows the recovery of arrears by the sale of the defaulter's property. The court emphasized that the Act does not enable the attachment and sale of land not registered in the defaulter's name for arrears of revenue due from the defaulter. The court did not decide on this issue conclusively but highlighted the importance of the property being in the defaulter's name.Issue 3: Protection of Bona Fide Purchasers for Value Without Notice u/s 100 of the Transfer of Property ActThe court heavily relied on the Supreme Court judgment in Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai, which held that a bona fide purchaser for value without notice of the charge is protected unless expressly provided otherwise by any law. The court found that the respondent was a bona fide purchaser without notice of the charge under section 24(2) of the Sales Tax Act, and therefore, his property could not be proceeded against for the recovery of sales tax arrears.Issue 4: Validity of Recovery Proceedings in Light of Technical Defects in NoticesThe court acknowledged the respondent's objections regarding technical defects in the notices issued by the appellants. However, it did not delve into this issue, as the primary decision was based on the protection afforded to bona fide purchasers under section 100 of the Transfer of Property Act.Conclusion:The court confirmed the judgment of the learned single Judge, dismissing the writ appeal and holding that the respondent, being a bona fide purchaser for value without notice of the charge, could not have his property proceeded against for the recovery of sales tax arrears. The court did not address the issues related to the applicability of the Revenue Recovery Act against non-defaulters or the technical defects in the notices.