Anti-fraud tax recovery: transfer can be challenged during pending assessment, and attachment may proceed without prior civil decree.

Recovery authorities under the Andhra Pradesh General Sales Tax Act and the Revenue Recovery Act may examine whether a transfer was bona fide or made to defraud revenue, and may proceed with attachment without first obtaining a civil court decree. Section 17-A was read broadly to cover assessment proceedings already initiated, so a sale made after show-cause and assessment steps could fall within its anti-fraud scope. The transferee's separate civil remedy to establish title remained available, but it did not bar recovery action against the property.

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Issues: (i) Whether the Deputy Commercial Tax Officer could attach the property and record that the transfer in favour of third parties was void as having been made to defraud revenue. (ii) Whether section 17-A of the Andhra Pradesh General Sales Tax Act, 1957 was attracted where assessment proceedings had already been initiated before the sale.

Issue (i): Whether the Deputy Commercial Tax Officer could attach the property and record that the transfer in favour of third parties was void as having been made to defraud revenue.

Analysis: The recovery proceedings were taken under section 17-C of the Andhra Pradesh General Sales Tax Act, 1957 read with section 27 of the Andhra Pradesh Revenue Recovery Act, 1864. Section 17 of the Andhra Pradesh Revenue Recovery Act, 1864 recognises attachment and sale of the defaulter's property and provides a civil remedy to a third party claiming title or interest. On that scheme, the statutory authority was competent to examine whether the transfer was bona fide or fraudulent and to record a finding that it was made to defraud public revenue. The authority was not required to obtain a prior declaratory decree from a civil court before proceeding under the revenue recovery machinery.

Conclusion: The objection to the authority's jurisdiction failed and the attachment against the property was held valid.

Issue (ii): Whether section 17-A of the Andhra Pradesh General Sales Tax Act, 1957 was attracted where assessment proceedings had already been initiated before the sale.

Analysis: Section 17-A applies both during the pendency of any proceeding under the Act and after its completion. The expression "any proceeding" was read broadly and was held to include assessment proceedings, so as not to render the second limb of the provision redundant. Since show-cause notices and assessment steps had been initiated before the sale deeds, the statutory condition of pendency stood satisfied. The transfer was therefore capable of being treated as void against the revenue claim if effected with intent to defraud revenue.

Conclusion: Section 17-A was held applicable, and the transfers were treated as falling within its scope.

Final Conclusion: The writ petitions failed because the revenue authorities were entitled to proceed against the property and the impugned transfers were within the mischief of the anti-fraud recovery provision.

Ratio Decidendi: Under the Andhra Pradesh General Sales Tax Act, 1957 and the Andhra Pradesh Revenue Recovery Act, 1864, a recovery authority may inquire whether a transfer was made to defraud revenue and proceed against the property where assessment proceedings had already commenced, while the transferee retains a separate civil remedy to establish title.

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