Bona fide purchaser protection prevails where tax department fails to prove fraudulent transfer to defeat revenue recovery.

Section 16-C created a first charge over the dealer's property for tax dues, while section 17-A voided transfers made with intent to defeat revenue recovery. The revenue had to establish, at the outset, that the transfer was fraudulent; only then would the burden shift to the transferee. On the facts discussed, there was no adequate pleading or proof that the purchasers had notice of the arrears or participated in any fraud, and they had paid substantial consideration and obtained registered sale deeds. The purchasers were therefore treated as bona fide transferees protected under the proviso to section 17-A, and the attachment and consequential notices could not be sustained against them.

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Issues: Whether the transfer of immovable property by the tax defaulter was void under section 17-A of the Andhra Pradesh General Sales Tax Act, 1957, and whether the purchasers were protected as bona fide purchasers for adequate consideration without notice of the tax arrears.

Analysis: Section 16-C of the Act creates a first charge on the dealer's property for tax dues. Section 17-A renders transfers void where they are made with intent to defraud the revenue, but the proviso protects transfers made for adequate consideration and without notice of the pending liability or proceeding. The department had to establish, in the first instance, that the transfer was effected to defeat recovery of tax. The record did not show that the petitioners were parties to any fraud or mischief, nor was there adequate pleading or proof that they had notice of the arrears. The petitioners showed payment of substantial consideration, production of relevant certificates, and registration of the sale deeds. The burden did not shift to them on the material placed by the department. The analogical reliance on the principles underlying section 53 of the Transfer of Property Act, 1882, also supported the view that a transferee in good faith for value is protected unless participation in the fraudulent design is established.

Conclusion: The transfer was not shown to be void against the petitioners, and they were treated as bona fide purchasers entitled to protection.

Final Conclusion: The impugned attachment and consequential notices could not be sustained against the purchasers, and the writ petitions were allowed.

Ratio Decidendi: In proceedings challenging a transfer as fraudulent against tax recovery, the revenue must first prove the debtor's intent to defeat recovery; only then does the burden shift to the transferee to establish bona fide purchase for adequate consideration without notice or participation in the fraud.

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