2012 (2) TMI 458 - HC - VAT and Sales Tax

State Property Sale Invalid; Legal Heirs Granted Reconveyance Despite Govt's Non-Compliance

The court found the sale of the property by the State Government for tax recovery invalid as it was not conducted on behalf of the Central Government. ... Reconveyance of the property - Whether the party has to apply within two years from the date of confirmation of the sale? Held that:- The legal heirs of the petitioner are entitled to reconveyance of the property, notwithstanding the long delay in approaching the Government for reconveyance, which is in the peculiar facts and circumstances of this case. A democratic Government cannot take a shylockian attitude in such matters, especially when the sales tax authorities have also not done what they ought to have done after the appellate order. The Government Pleader was not able to satisfy me that the Government has actually taken possession of the property, since no document had been produced in respect of the same. The petitioner has stated in the writ petition that he continued to be in possession of the property even after the sale, about which, he was not aware and had no notice of. Therefore, the legal heirs of the petitioner paying the amounts due as per the appellate order, they are entitled to reconveyance of the property. Accordingly, this writ petition is disposed of with the directions to first respondent directing to pass fresh orders. If the legal heirs of the petitioner pay the amounts due as per the said assessment with interest at statutory rate till payment and meet the expenses for reconveyance, the property shall be reconveyed to the legal heirs of the original petitioner notwithstanding the fact that the petitioner did not apply within two years. Issues:1. Validity of the sale of property by the State Government for recovery of tax.2. Delay and laches on the part of the petitioner in seeking reconveyance of the property.3. Compliance with appellate orders and issuance of fresh notices for revised assessment.4. Legality of the sale conducted by the State Government on behalf of the Central Government.5. Entitlement of legal heirs to reconveyance of the property.6. Possession of the property and lack of notice to the petitioner.Issue 1: Validity of the sale of property by the State Government for recovery of tax:The petitioner, an assessee under the Central Sales Tax Act, challenged the sale of their property by the State Government for recovery of tax amount. The petitioner contended that the sale was invalid as it was not conducted on behalf of the Central Government, as required by law. The court noted that the Government's purchase of the property for a nominal amount raised concerns about the legality of the sale. The court referenced a previous decision stating that such sales should be made in the name of the authority to whom the amount is due, which was not done in this case.Issue 2: Delay and laches on the part of the petitioner in seeking reconveyance of the property:The State Government argued that the petitioner delayed in seeking reconveyance of the property, waiting for over 20 years after the sale was confirmed. The court acknowledged the delay but emphasized that in the peculiar circumstances of the case, the legal heirs of the petitioner were entitled to reconveyance. The court highlighted that the Government's actions and the lack of proper assessment procedures contributed to the delay, and equity considerations favored the legal heirs in this situation.Issue 3: Compliance with appellate orders and issuance of fresh notices for revised assessment:The court observed that after the appellate order setting aside the original assessment, the assessing officer was required to issue a fresh notice to the petitioner for revised assessment. However, this procedure was not followed, and no further steps were taken to complete the assessment. The court held that without a reassessment and notice of demand, the Government could not rely on the sale of the property as the petitioner's default status had changed post-appellate order.Issue 4: Legality of the sale conducted by the State Government on behalf of the Central Government:The court reiterated that the sale conducted by the State Government should have been in the name of the Central Government, as the tax amount was due to the Central Government under the Central Sales Tax Act. Failure to adhere to this requirement raised questions about the validity of the sale. The court emphasized the importance of proper procedures and legal compliance in such matters.Issue 5: Entitlement of legal heirs to reconveyance of the property:Despite the delay in seeking reconveyance, the court ruled in favor of the legal heirs of the petitioner, granting them the right to reclaim the property upon payment of the assessed amounts. The court highlighted the Government's failure to take possession of the property and the lack of proper documentation regarding the sale, supporting the legal heirs' claim for reconveyance.Issue 6: Possession of the property and lack of notice to the petitioner:The petitioner, until discovering through an encumbrance certificate in 1998, was unaware of the sale of their property to the State Government. The court noted the petitioner's continued possession of the property and lack of notice regarding the sale proceedings. This lack of communication and awareness on the petitioner's part further supported the court's decision to grant reconveyance to the legal heirs.In conclusion, the court directed the assessing officer to pass fresh orders in line with the appellate tribunal's decision and instructed the legal heirs to pay the assessed amounts for the property's reconveyance. The judgment highlighted the importance of procedural compliance, equitable considerations, and proper legal ownership in matters involving the sale and reconveyance of properties for tax recovery purposes.