Auction purchaser liability: tax recovery may reach charged property only, not the purchaser's independent bank accounts.

An auction purchaser of charged immovable property does not become the defaulting assessee for the erstwhile owner's sales tax arrears. Recovery for those arrears can be enforced only against the charged property itself, and only to the extent of the existing charge. The purchaser's independent assets, including bank accounts, cannot be attached by garnishee notices where they have no nexus with the charged property. The Karnataka High Court therefore upheld recovery only against the auctioned property and treated garnishee action against the purchaser's bank accounts as impermissible.

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Issues: (i) Whether the Commercial Taxes Department could proceed against the auction purchaser's property for recovery of the erstwhile owners' sales tax arrears and, if so, to what extent; (ii) Whether the Department could attach the auction purchaser's bank accounts by issuing garnishee notices under the Karnataka Sales Tax Act, 1957.

Issue (i): Whether the Commercial Taxes Department could proceed against the auction purchaser's property for recovery of the erstwhile owners' sales tax arrears and, if so, to what extent.

Analysis: The auction purchaser did not step into the shoes of the defaulting assessee merely by purchasing the property in public auction. The tax liability of the erstwhile owners could, at best, be enforced against the property if a charge existed, but the Department's power did not extend beyond the charged property itself. The notice seeking recovery was therefore not wholly invalid, but it could operate only in relation to the specific property purchased in auction and only for the sales tax dues of the erstwhile owners.

Conclusion: The recovery notice was valid only to the limited extent of proceeding against the auctioned property and not beyond it.

Issue (ii): Whether the Department could attach the auction purchaser's bank accounts by issuing garnishee notices under the Karnataka Sales Tax Act, 1957.

Analysis: Garnishee action against the purchaser's bank accounts was impermissible because the purchaser was not the assessee in default and the bank balances had no nexus with the charged immovable property. The statutory power to recover arrears could not be extended to unrelated assets of the auction purchaser.

Conclusion: The garnishee notices attaching the bank accounts were unsustainable and were quashed.

Final Conclusion: The purchaser obtained relief against coercive recovery from its bank accounts, while the Department was left free to proceed only against the auctioned property to the limited extent of the existing tax charge.

Ratio Decidendi: An auction purchaser of charged property does not become an assessee in default, and tax recovery for the predecessor's dues can be enforced only against the charged property itself, not against the purchaser's independent assets.

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