Attachment of third-party property invalid where transfer preceded attachment; sale may be registered without a tax NOC.

Whether a prohibitory attachment affecting a transferred property is sustainable: the court applied principles limiting attachment to property owned by the taxpayer at the time of the order and to cases where tax liability is crystallized or company assets are insufficient on winding up; personal liability of a director under the VAT regime requires winding up and insufficiency of company assets. Because the subject property had been validly transferred before the attachment and statutory conditions for third party attachment and director liability were not met, the prohibitory communication and the registrar's check slip were set aside and registration was allowed without a tax NOC.

---

---

Issues: (i) Whether the prohibitory/attachment communication dated 21.01.2025 and the Sub Registrar's check slip dated 25.02.2025 insofar as they affect the subject property are sustainable in law and whether the sale deed dated 25.02.2025 must be registered without a No Objection Certificate from the State Tax Officer.

Analysis: The attachment was issued on 21.01.2025, after the property had been settled in favour of the vendor and subsequently sold to the purchaser by registered deed dated 20.02.2024 and thereafter conveyed leading to the sale deed presented on 25.02.2025. Under Section 37 of the VAT Act, personal liability of a director arises when the company is wound up and company assets are insufficient to meet tax dues; no winding up or crystallized inability of the company to satisfy tax dues is shown. Sections 43 of the VAT Act and 82 of the GST Act address transfers made to defeat revenue where tax liability has become payable and crystallized; those provisions do not support attachment of property that was not owned by the debtor at the time the attachment order was made. Statutory conditions for attaching property of a third party are not satisfied on the facts because the property had already been transferred prior to the attachment order.

Conclusion: The prohibitory communication in Na.Ka.No.A3/1237/2015 dated 21.01.2025 insofar as it concerns the subject property is set aside; the Sub Registrar's check slip dated 25.02.2025 is quashed; the sale deed dated 25.02.2025 shall be re-presented and registered if otherwise in order without insisting on a No Objection Certificate from the State Tax Officer.

---