Court quashes recovery notice for tax arrears, grants relief to innocent purchaser under Section 24-A.

The court partially allowed the writ petition, quashing the recovery notice for tax arrears from a concern. It determined that the petitioner, as an innocent purchaser, could rely on Section 24-A due to lack of notice of tax arrears. The court directed the petitioner to pay the specific amount the property was pledged for to the tax department within thirty days. The petitioner was relieved of tax liability, with permission for recovery from the vendor's estate and further action against the defaulting party.

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Issues:
Challenge to recovery notice for arrears of tax due from a concern, property purchase, encumbrance certificate, liability of purchaser, conflicting views on legal decisions.

Analysis:
The petitioner challenged a recovery notice demanding payment for arrears of tax due from a concern under the Tamil Nadu General Sales Tax Act, 1959. The petitioner purchased a property from the father of the second respondent, who had defaulted in tax payments. The petitioner claimed to be a bona fide purchaser, unaware of the property's encumbrance. The petitioner argued that the demanded sum far exceeded the property's value, citing legal precedents to support their case (i, ii, iii, iv).

The Government Advocate contended that the property was offered as security to the Commercial Tax Department, creating a conflicting situation. The vendor had pledged the property for a specified sum, as required by law. The advocate highlighted pending appeals and conflicting court decisions, emphasizing the need for due diligence on the purchaser's part.

Upon considering the arguments, the court found that the property was indeed offered as security for a specific amount under Section 21 of the Act. The petitioner, not being the direct buyer from the concerned party, could avail the defense under Section 24-A for purchasing without notice of tax arrears. The court distinguished previous cases where the burden of proof was on the buyer to establish bona fide purchase, providing liberty to approach a Civil Court for remedy.

The court noted the availability of Form XIX-B, clarifying the transaction details. As the property was mortgaged for a specific sum, the court directed the petitioner to pay that amount to the Commercial Tax Department within thirty days. The petitioner was absolved of the tax arrears liability, with liberty granted for recovery from the vendor's estate and further proceedings against the concerned party. The writ petition was partly allowed, quashing the order and specifying the payment due to the tax department.

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