2019 (6) TMI 894 - HC - VAT and Sales Tax

Court rules against tax charge on petitioner's property under Gujarat VAT Act.

MEENABEN NARENDRABHAI PANDYA Versus STATE OF GUJARAT & 1 other (s)

MEENABEN NARENDRABHAI PANDYA Versus STATE OF GUJARAT & 1 other (s) - TMI Issues Involved:1. Legality of the charge under the Gujarat Value Added Tax Act, 2003 (GVAT Act) on the petitioner’s property for the tax dues of M/s. Umiya Oil Industries.2. Applicability of section 57(1)(b) and section 57(2) of the GVAT Act to the petitioner’s case.3. Validity of the attachment and auction proceedings initiated by the respondent authorities.Issue-wise Detailed Analysis:1. Legality of the charge under the GVAT Act on the petitioner’s property:The petitioner, a widow and housewife, purchased the property in question from M/s. Kailash Oil Industries through a registered sale deed dated 15th December 2008. The property was later used by her husband for his business, M/s. Umiya Oil Industries. Following her husband's death, tax dues amounting to approximately Rs. 1.60 crores were raised against M/s. Umiya Oil Industries for the years 2006-07, 2007-08, and 2008-09. The authorities initiated coercive recovery proceedings, including auctioning the petitioner’s property. Despite the petitioner’s continuous efforts and representations, the authorities refused to lift the attachment. The petitioner argued that the property was purchased using her stridhan and thus should not be liable for her husband’s business dues.2. Applicability of section 57(1)(b) and section 57(2) of the GVAT Act:The petitioner contended that section 57(1)(b) of the GVAT Act, which deals with the liability of a legal representative to pay tax dues out of the deceased's estate, did not apply to her case. She argued that the property was her own, purchased with her funds, and not part of her deceased husband's estate. Additionally, section 57(2), which pertains to the partition of a Hindu Undivided Family’s property, was also deemed inapplicable as the property was not partitioned among family members but was solely owned by the petitioner. The court concurred, stating that the provisions of section 57(1)(b) and section 57(2) did not justify the respondents’ actions to recover dues from the petitioner’s property.3. Validity of the attachment and auction proceedings:The court examined the respondents' reliance on section 57(1)(b) and found it misplaced. The court noted that the property was purchased by the petitioner through a registered sale deed and stood in her name. No evidence was presented to show that the petitioner’s husband had any interest in the property. The court emphasized that the respondents could not recover the tax dues from the petitioner’s property as it was not part of the estate of the deceased. Consequently, the charge created over the petitioner’s property was deemed without authority of law. The court also dismissed the argument that the petitioner’s actions in challenging the assessment orders amounted to a continuation of her husband’s business.Conclusion:The court concluded that the respondents were not justified in creating a charge over the petitioner’s property for the tax dues of M/s. Umiya Oil Industries. The attachment and auction proceedings were found to be unsustainable. The petition was allowed, and the respondents were directed to delete/withdraw the charge on the petitioner’s property. Rule was made absolute with no order as to costs.