2012 (7) TMI 1104 - HC - VAT and Sales Tax

Court Upholds Department's Property Charge Decision

COSMOS CO. OP BANK LTD Versus STATE OF GUJARAT & 4

The court upheld the respondent-Department's first charge on the property, dismissing the petition and discharging the notice. The court found no ... - Issues involved: Petition filed to challenge priority of realization of dues, quash order, exercise rights under SARFAESI Act, and disregard attachment orders.Summary:Priority of Dues:The petitioner-Bank filed a petition challenging the priority of respondent no.5's dues over its own. The petitioner contended that its dues have priority over the respondent-State's dues, citing a Division Bench decision in support. The petitioner had initiated auction proceedings for a mortgaged property of respondent no.2, but respondent no.5's attachment notice interfered with the process, leading to the present petition.Change in Firm Constitution:It was revealed that respondent no.2 had changed the constitution of the firm without informing the prescribed authority, as required under the Value Added Tax Act. This change in the firm's structure was not intimated when the loan was applied for, raising questions about compliance with legal provisions.First Charge by Respondent-Department:Respondent no.5-Department issued a notice for assessment of VAT and CST against respondent no.2, which went unanswered. An ex-parte order was passed demanding payment, leading to proceedings under the Bombay Land Revenue Code. The respondent-Department registered its first charge on the property under Section 48 of the VAT Act. The court found no illegality in the respondent-Department's decision, concluding that the first charge over the property rightfully belonged to the department.In light of the facts and provisions of the VAT Act, the court upheld the respondent-Department's first charge on the property, dismissing the petition and discharging the notice.