Statutory tax charge defeats a later settlement transfer, preserving the State's auction recovery rights against the property.

Tax arrears under the Tamil Nadu Value Added Tax Act, 2006 create a statutory charge on the dealer's property, and transfers intended to defeat revenue can be treated as void against the tax claim unless statutory exceptions apply. A settlement transfer to a legal heir, made without valuable consideration and challenged only at the last moment before auction, did not displace the State's recovery rights on the facts stated. The security-based objection was not accepted, and the limited liability principle under the Act was also noted in relation to the petitioner's status. The auction notice was upheld.

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Issues: Whether interference was warranted with the auction notice issued for recovery of tax dues under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The tax arrears had crystallised into a statutory charge on the property under Section 42(1) of the Tamil Nadu Value Added Tax Act, 2006. Section 43 of that Act renders transfers made with intent to defeat revenue void against the tax claim, subject to the statutory exceptions of adequate consideration and absence of notice or prior permission. The petitioner's title arose through a settlement from the dealer, not for valuable consideration, and the challenge was brought at the last moment when the auction was already fixed. The plea based on security provisions was not accepted in the facts, and the petitioner's status as legal heir also engaged the limited liability principle under Section 26 of the same Act.

Conclusion: Interference was declined and the auction notice was upheld against the petitioner.

Ratio Decidendi: Tax arrears create a statutory charge on the dealer's property, and a transfer without valuable consideration made in circumstances suggesting defeat of revenue will not defeat the State's recovery rights.

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