2016 (1) TMI 953 - HC - VAT and Sales Tax

Property purchasers liable for unpaid tax dues despite full payment; High Court grants temporary stay on auction pending dues deposit.

The High Court of Gujarat heard separate petitions by property purchasers concerning unpaid tax dues on the property. The court noted the purchasers' lack ... Recovery proceedings - purchasers of the property over which Sales Tax Department has created charge for unpaid tax dues of the seller - In the revenue records, attachment of the Sales Tax Department was duly records - petitioners would be willing to deposit before this Court the total amount of sales tax dues of the seller, which comes to ₹ 55,00,000/- (approximately) within reasonable time. - Held that:- In view of the fact that the Sales Tax Department has fixed auction of the property in question today, let there be stay against such auction on the condition that the petitioners deposit a sum of ₹ 55,00,000/- (Rupees fifty five lacs only) with this Court in three equal monthly installments starting from 01.02.2016. In case there is failure to deposit any one of the installments it would be open for the respondents to re-schedule the auction. Issues:Separate petitions by purchasers regarding property charge for unpaid tax dues; Failure to inform purchasers about tax dues; Payment of full sale consideration; Stay against auction; Deposit of tax dues in installments.Analysis:The High Court of Gujarat heard separate petitions filed by purchasers of a property over which the Sales Tax Department had created a charge for the unpaid tax dues of the seller. The purchasers claimed that the seller did not inform them about the sales tax dues. However, the court noted that the attachment by the Sales Tax Department was duly recorded in revenue records, raising questions about the purchasers' diligence in verifying the records themselves.The purchasers argued that they had already paid the full sale consideration for the property, a total of Rs. 2,50,00,000, to the lending bank and the seller. They expressed willingness to deposit the total amount of sales tax dues of the seller, approximately Rs. 55,00,000, within a reasonable time frame. The government pleader highlighted that the liability of sales tax only represented the principal tax unpaid by the seller based on self-assessment returns, excluding any interest for delayed payment.Given the imminent auction of the property by the Sales Tax Department, the court ordered a stay on the auction contingent upon the purchasers depositing Rs. 55,00,000 with the court in three equal monthly installments starting from 01.02.2016. The court warned that failure to deposit any installment would allow the respondents to reschedule the auction. This arrangement was deemed temporary and subject to potential modifications or further directions in the future, with the next hearing scheduled for 15.02.2016.