Bona fide purchaser protection limits enforcement of sales tax charge against property bought without notice of arrears.

A sales tax charge under the Tamil Nadu General Sales Tax Act, 1959 may attach to a dealer's property, but Section 24-A protects a transfer for adequate consideration made without notice of the tax liability or pending proceedings. Applying the settled principle under Section 100 of the Transfer of Property Act, 1882, the court noted that a statutory charge cannot be enforced against a transferee for value without notice unless the statute clearly excludes that protection. On the facts, the sale notices did not alert the purchaser to the vendor's tax dues, and there was no material showing actual or constructive notice or any encumbrance entry. The purchaser was therefore treated as bona fide, and recovery from the purchased property was unsustainable.

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Issues: Whether the auction purchaser was a bona fide purchaser without notice of the sales tax charge and, if so, whether the sales tax authorities could proceed against the purchased property for recovery of arrears due from the defaulting company.

Analysis: Section 24(1) of the Tamil Nadu General Sales Tax Act, 1959 creates a charge on the property of the dealer for tax arrears, while Section 24-A protects a transfer made for adequate consideration without notice of the pendency of proceedings or the tax liability. The court applied the settled principle under Section 100 of the Transfer of Property Act, 1882 that a charge cannot be enforced against a transferee for consideration without notice unless the statute clearly excludes that protection. On the facts, the sale notices did not disclose that the purchaser would be saddled with the vendor's tax dues, there was no material showing actual or constructive notice of the charge, and no encumbrance had been entered to alert a prospective buyer. The court therefore treated the purchaser as a bona fide purchaser entitled to statutory protection.

Conclusion: The purchaser was not liable to discharge the defaulting company's sales tax arrears, and the attachment and recovery proceedings were unsustainable.

Ratio Decidendi: A charge for sales tax arrears under the TNGST Act cannot be enforced against a purchaser for adequate consideration without notice of the charge or liability, and such a bona fide purchaser is protected unless the statute expressly displaces that protection.

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