Bona fide purchaser protection limits tax recovery where property is bought for value without actual or constructive notice of arrears.

Section 24 of the Tamil Nadu General Sales Tax Act, 1959 creates a charge on the dealer's property, while Section 24-A voids transfers meant to defeat revenue but preserves transfers for adequate consideration made without notice of the tax liability or recovery proceedings. The Madras High Court applied notice principles under the Transfer of Property Act, 1882 and accepted that a statutory charge is not enforceable against a transferee for value without actual or constructive notice unless the statute clearly excludes that protection. On the stated facts, the purchaser's bona fides and absence of collusion or wilful abstention from inquiry brought the transfer within the proviso to Section 24-A, making the distraint order unsustainable.

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Issues: Whether a subsequent purchaser of immovable property is protected from recovery proceedings for sales tax arrears under the proviso to Section 24-A of the Tamil Nadu General Sales Tax Act, 1959, and whether the distraint order could be sustained against such purchaser.

Analysis: Section 24 of the Tamil Nadu General Sales Tax Act, 1959 creates a charge on the properties of the person liable to pay tax, and Section 24-A renders transfers intended to defeat revenue void, but the proviso protects a transfer made for adequate consideration and without notice of the proceedings or tax liability. The Court applied the principles of notice under Section 3 of the Transfer of Property Act, 1882, and accepted the line of authorities holding that a charge is not enforceable against a transferee for value without actual or constructive notice unless the statute clearly excludes that protection. On the facts, the petitioner purchased the property years after the assessment had been finalised, pleaded verification of encumbrance records, and there was no effective rebuttal showing collusion, wilful abstention from inquiry, or constructive notice.

Conclusion: The petitioner was held to be a bona fide purchaser entitled to the statutory protection under the proviso to Section 24-A, and the distraint order was unsustainable.

Final Conclusion: The recovery action against the subsequent purchaser could not be maintained, and the writ petition succeeded with the impugned distraint order set aside.

Ratio Decidendi: A statutory charge for tax arrears cannot be enforced against a purchaser for value who acquired the property without actual or constructive notice of the liability, where the transfer is not shown to be collusive or intended to defraud revenue.

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