TaxTMI 
TaxTMI 
2018 (3) TMI 1327
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....d on 17.04.2003, conducted by the Recovery Officer II, Debt's Recovery Tribunal I, Chennai, fourth respondent herein, for a sale consideration of Rs. 1,20,10,000/- in execution of Certificate No.150/2002, dated 27.08.2002 issued in O.A.No.1032/1998 by the Debt's Recovery Tribunal, Chennai - 2, for recovery of debts due to State Bank of India, represented by its Branch Manager, fifth respondent herein, from M/s.Moolchand Industries Ltd., and 10 others. 3. Petitioner has further contended that, after clearing all the Income Tax formalities, the Recovery Officer II, Debt's Recovery Tribunal I, Chennai, fourth respondent herein, issued a sale certificate, dated 22.05.2003 in favour of the petitioner and the same was duly registered as Document No.828/2003 on the file of the Joint Sub-Registrar-II, Saidapet, Chennai-15. Since 22.05.2003, the petitioner is in absolute possession and enjoyment of the property. 4. Vide order of this Court, in C.P.No.254/1994, dated 22.06.2000, Official Liquidator was appointed for M/s.Moolchand Exports Limited, (In Liquidation), Chennai. Petitioner has also purchased another immovable property bearing Door No.2/4, Mount Poonamallee Road, Rama....
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.... defaulter company, and that without even waiting for the completion of 7 days, as given in Form 4 notice dated 05.01.2006, the Commercial Tax Officer, Alandur Assessment Circle, first respondent herein, has issued an attachment notice in Form 5 dated 16.01.2006. 10. Contending inter alia that the petitioner is not liable to pay tax stated to have been defaulted by M/s.Moolchand Exports Limited and that the Commercial Tax Officer, Alandur Assessment Circle, first respondent herein, has failed to consider the fact that the petitioner had purchased the immovable property for valuable consideration without notice of the sales tax arrears and thus a bonafide purchaser, protected under the Transfer of Property Act, 1872, and placing reliance on the decisions of the Hon'ble Division Bench of this Court in the case of M/s.R.K.Steels, reported in 108 STC Page 161 (Madras) and the decision of the Hon'ble Supreme Court in the case of Shreyas Papers (P) Ltd., reported in 2006 (1) CTC 290, instant writ petition has been filed to quash the proceedings dated 16.01.2006 of the Commercial Tax Officer, Alandur Assessment Circle. 11. Writ petitioner has further contended that a bonafide pu....
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....r. 16. Heard the learned counsel for the parties and perused all the materials available on record. 17. Section 24 of the Tamil Nadu General Sales Tax Act, 1959, reads thus:- "24. Payment and recovery of tax -- (1) Save as otherwise provided for in sub-section(2) of Section 13, the tax assessed or has become payable under this Act from a dealer or person and any other amount due from him under this Act shall be paid in such manner and in such installments, if any, and within such time as may be specified in the notice of assessment, not being less than twenty-one days from the date of service of the notice. The tax under sub-section (2) of Section 13 shall be paid without any notice of demand. In default of such payments the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or interest under this Act. (2) Any tax assessed on or has become payable by, or any other amount due under this Act from a dealer or person and any fee due from him under this Act, shall, subject to the claim of the government in respect of land revenue and the claim of the Land Develo....
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.... amount shall be refunded to the dealer after adjustment of arrears of tax, if any, due from him. Where the excess amount is not refunded to the dealer within a period of ninety days from the date of the order of assessment or revision of assessment and in the case of order passed in appeal, revision or review, within a period of ninety days from the date of receipt of the order, the Government shall pay by way of interest, where the amount refundable is not less than one hundred rupees, a sum equal to a sum calculated at the rate of one per cent or part thereof such amount for each month or part thereof after the expiry of the said period of ninety days. Explanation- For the purpose of this section, the expression order passed in appeal, revision or review shall not include order passed in such appeal, a revision or review with direction to make fresh assessment order. 24-A. Transfers to defraud revenue void:- Where, during the pendency of any proceeding under this Act or after the completion thereof, any dealer creates a charge on,or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of any of his assets in favour of....
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....comprised in Survey No.151/2 of No.102, RAMAPURAM VILLAGE, SAIDAPET TALUK, CHENGALPATTU MGR DISTRICT in patta No.184, measuring 50 cents and bounded on the north by poonamallee to Madras Road, South and East by land belonging to B.K.METAL PRODUCTS, west by land belonging to SOUTH INDIA SURGICAL COMPANY. UPSET PRICE: Rs. 1,20,00,000/- (Rupees one crore and twenty lakhs only) 2. All that place and parcel of land situated at OTHIVAKKAM VILLAGE, KATTANKOLATHUR PANCHAYAT UNION, CHENGALPAT TALUK, KANCHEEPURAM DISTRICT comprised in Survey Nos.46/17, 17D, 17E and 17F admeasuring about 18.38 acres located at GUDAVANCHERRY THIRUPORUR ROAD AT OTHIVAKKAM VILLAGE. UPSET PRICE: Rs. 22,00,000/- (Rupees Twenty Two Lakhs only). For further details contact the undersigned or the Manager of the Bank personally or on phone Nos.28603234, 2860 3243. CONDITIONS: 1.The property can be inspected between 11.00 a.m. And 3.00 p.m. 2.The intending bidders should pay 10% of the upset price ad EMD (for each property separately) by means of a D.D. Drawn in favour of the Recovery Officer, Debts Recovery Tribunal-1, Chennai, payable at Chennai before 12.00 Noon, on the date of auction. 3.The success....
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....l that piece and parcel of land together with superstructure thereon bearing Door No.2/4, Mount Poonamalle Road, Chennai 89, as detailed below situated in 102, Ramapuram Village, Saidapet Taluk, Chingelput District, comprised in part of S.No.151/2, in Patta No.184 measuring 50 cents (9 grounds & 180 Sq.ft.) bounded on the North by Ponamallee to Madras Road, South and East by land belonging to B.K.Metal Products and West by land belonging to Sough India Surgical Company, land having linear measurement of East to West on the Northern side 90 links (about 60 ft.); on the Southern side 90 links (about 60 ft.); North to South on the Eastern side 548 links (360 ft.) and on the Western side 565 links (370 ft.) and situate within the Sub-Registration District of Alandur and Registration District of Chennai-South. Details of Superstructure: 1.Two two storeyed buildings on the front side facing the road, with a constructed area of 3220 Sq.ft. In each floor (3220 sq.ft. * 4 = 12880 Sq.ft.) 2.One three storeyed building on the rear side with a constructed area of 4200 sq.ft. In each floor. (4200 sq.ft. * 3 = 12600 sq.ft.) Total constructed area in all the floors in the three buildings....
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....ction was received by Official Liquidator in this regard till date. Details of Earnest Money Deposit to be paid with the tenders are available in the Terms and Conditions which can be obtained alongwith Tender Form from the Office of the undersigned from 20.8.2004 to 27.8.2004 during office hours. The last date of receipt of tender is 27.8.2004 upto 4.00 p.m. The tenders shall be opened on 30.8.2004 by the Hon'ble High Court, Madras (in the Court presided over by Hon'ble Mr.Justice Kulasekaran) in the presence of tenderers who may remain present and they shall be given an opportunity to raise their bid. The sale will be conducted by the Hon'ble High Court, Madras. The intending purchasers may take inspection of the above mentioned landed property and the movable assets of the company in liquidation at the above address on 23.8.2004 between 11 a.m. and 4 p.m. Dated at Chennai this (H.BANERJEE) 17th day of August 2004. OFFICIAL LIQUIDATOR Address:- HIGH COURT, MADRAS. O/o. the Official Liquidator, High Court, Madras, Kuralagam Building, Block, I Floor, Esplanade, Chennai 600 108. Phone Nos.25342127/25341473. 23. Perusal of the sale notice dated 17.0....
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....rty transferred which are in the hands of the transferee. Thus even if transferer is not taken to be defaulter, the property in his hands can be proceeded against R.R.Act. 4) In view of the above circumstances, you are requested to reply as to why Revenue Recovery Proceedings should not be enforced against you for the recovery of arrears of sales tax due by Tvl. Moolchand Exports Limited under R.R.act. Commercial Tax Officer, Alandur Assessment Circle To Thiru.Dr.S.Gupta, Managing Partner, Tvl. Gupta and Company, No.8 & 11, Ekkattuthangal Road, Guindy, Chennai 600 032.)" 26. On the same day, the Commercial Tax Officer, Alandur Assessment Circle, has also issued Form 4, dated 05.01.2006, under Section 25, which is a Demand, Prior to Attachment of Land, and the same is extracted hereunder:- "Rc.A3/23/2006 Office of the Commercial Tax Officer, Alandur Assessment Circle, No.62, Pudupet Street, Alandur, Chennai 600 016. Dated : 05.01.2006 Form No.4 SECTION 25 DEMAND PRIOR TO ATTACHMENT OF LAND Notice of demand to Tvl. Moolchand Exports Limited at No.151/1, Mount Poonamallee Road, Ramapuram, Chennai 600 089 of Manapakkam Village in Saidapet Taluk. T....
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....A3, dated 16.01.2006, Commercial Tax Officer, Alandur Assessment Circle, has directed the petitioner to submit a reply as to why Revenue Recovery Proceedings against the petitioner for the recovery of arrears of sales tax due by Tvl.Moolchand Leathers Limited, and reply dated 17.01.2006 and 20.01.2006 respectively, are stated to have been sent. 29. Though the instant writ petition has been filed in the year 2006 against the recovery proceedings initiated by the Commercial Tax Officer, Alandur Assessment circle, Chennai, first respondent herein, the same has been tagged along with a batch of writ petitions, on the issue, as to whether the claim of the secured creditor would prevail over the unsecured creditor, which was the subject matter of reference, before a Hon'ble Full Bench of this Court in W.P.No. 6267 of 2006 and W.P.No.253 of 2011. The issues for which reference was sought for, are hereunder:- "a) As to whether the Financial Institution, which is a secured creditor, or the department of the government concerned, would have the 'Priority of Charge' over the mortgaged property in question, with regard to the tax and other dues. b) As to the status and the rig....
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....Court in the decisions in Deputy Commercial Tax Officer v. Azha Kumari, 1985 WLR 240 and Coramandel Indag Products India Limited v. Commercial Tax Officer and others, 1993 (3) MTCR 8, are no longer good law. We hold that the property purchased by a bona fide purchaser without notice of the charge under Section 24(1) of the Act cannot be proceeded against for the recovery of sales tax arrears." In Union of India and others vs. SICOM Limited and another, reported in (2009) 2 SCC 121, the issue before the Hon'ble Supreme Court was whether the State Financial Corporation from whom money was borrowed, by executing a mortgage to the corporation, would have priority over Central Government, which intended to realise the central excise dues, by attachment and seizure of the mortgaged properties. After considering several decisions, the Hon'ble Supreme Court in SICOM's case at paras 9 and 23, held as follows:- "9. Generally, the rights of the Crown to recover the debt would prevail over the right of a subject. Crown debt means the debts due to the State or the King; debts which a prerogative entitles the Crown to claim priority for before all other creditors . [See Advanced L....
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....issue to be considered is when a bona fide purchaser of a property would be protected from the proceedings under the Revenue Recovery Act,under section 24A of the Act. In N. Padma Coffee Works' case [1999] 114 STC 494 (TNTST), the Tamil Nadu Special Taxation Tribunal, Chennai,considered a claim made by a subsequent purchaser, for protection under section 24A of the Act. After considering section 24A of the Act, section 3 of the Transfer of Property Act, 1882, section 101 of the Indian Evidence Act, 1872, the earlier decisions of this court, as well as the decision of the honourable Supreme Court in Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussebhai reported in [1971] 1 SCC 757; AIR 1971 SC 1201, Chogmal Bhandari v. Deputy Commercial Tax Officer reported in [1977] 40 STC 207 (SC) and Deputy Commercial Tax Officer v. R.K. Steels reported in [1998] 108 STC 161 (Mad); the Tamil Nadu Special Taxation Tribunal, Chennai, at paragraph Nos. 2, 4 and 6 held as follows (pages 96-98 in 114 STC): "2. It is no doubt true that an honest and a bona fide purchaser who had no knowledge about the encumbrance of the tax liability of the original owner is ....
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....o make enquiry, but due to his own negligence he failed to make enquiry, he falls in the category of a person, with notice. A purchaser of the property when claims the transaction to be bona fide without notice, the yardstick to be applied for the 'notice' is given in section 3 of the Transfer of Property Act, 1882 and only by the application of this provision, a purchaser who This copy was printed from VATLaws licensed to: R.S. GoyalVATLaws (Readable Version) - Wednesday, March 19, 2014 seeks protection under section 24A of the Tamil Nadu General Sales Tax Act, is to be identified, whether he is a purchaser for value without notice. The necessity of the purchase, the intention of the transfer, the relationship between the vendee and vendor are all vital factors to find out the reasonableness of the person in purchasing the property. Sometimes unexplained secrecy or the haste in the transactions may also throw some light as to the bona fide or mala fide. To decide whether a transaction was genuine or bona fide or mala fide, all facts relating to the conduct of the parties to the transaction have to be weighed as a whole. Such enquiry on disputed facts is not possible in the....
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....(MD). No. 130 of 2005, dated February 7, 2008 (R. Balasubramaniam v. Additional Deputy Commercial Tax Officer), decided subsequently, there is no reference to the earlier decision of the honourable First Bench in D. Senthil Kumar's case, reported in [2006] 148 STC 204 (Mad). Probably, the parties to W.A. (MD). No. 130 of 2005, dated February 7, 2008 (R. Balasubramaniam v. Additional Deputy Commercial Tax Officer), would not have brought to the notice of the earlier decision to the Bench. 17. When the correctness of a notice of recovery issued to a subsequent purchaser came up for consideration before the Division Bench in D. Senthil Kumar's case, reported in [2006] 148 STC 204 (Mad), it has been contended, inter alia, that the appellant therein was a bona fide purchaser for valuable consideration, and hence, his case was covered within the exempted category, as provided under section 24A of the Act. The appellant has also contended that no encumbrance could be created, in view of the fact that the property had already been transferred in his favour, and hence, the question of creating any encumbrance in respect of the same does not arise. Reference has also been mad....
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....ainst a transferee if he/she has had no notice of the same, unless by law, the requirement of such notice had been waived. The provisions of section 100 of the Transfer of Property Act fell for consideration of the Supreme Court in Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai [1971] 1 SCC 757; AIR 1971 SC 1201. In that case, the respondent was in arrears of property tax, due under the Bombay Provincial Municipal Corporation Act, 1949. Consequently, the Municipal Corporation created a charge over the property of the defaulter. However, the property was sold in execution of a mortgage decree. When the Municipal Corporation purported to exercise their charge over the property, the purchaser in court auction filed a suit for a declaration that he was the owner of the property and that the arrears of municipal taxes due by the transferor were not recoverablefrom him by proceeding against the property purchased in the auction. In the appeal before the Supreme Court, the MunicipalCorporation's main argument was that where the local law provided for the creation of a charge against a property for which municipal taxes were due, transfer....
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....ought to the surface. This is further borne out by the correspondence between the first respondent and the Corporation. Thus, it is evident that the first respondent had no actual notice of the charge prior to the transfer. As to whether the first respondent had constructive notice of the charge, no substantive argument on this issue was made, either before the High Court or at any rate before us. Hence, we cannot hold that the first respondent had constructive notice of the charge. 23. In these circumstances, we are of the view that the first respondent was a purchaser for value without notice of the sales tax arrears of the defaulting company or the consequent charge on the property. This would, therefore, attract the principle laid down by this court in Ahmedabad Municipal Corporation's case [1971] 1 SCC 757; AIR 1971 SC 1201, which is also embodied in the proviso to section 100 of the T.P Act. Thus, the property in the hands of the first respondent was free of the charge and it is not open to the appellants to enforce the liabilities of the defaulting company in this manner against the first respondent.' In Shreyas Papers' case [2006] 144 STC 331 (Karn); [2006] ....
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.... Co-operative Land Development Bank Act, 1934. Therefore, it is very evident that except the claim of the Land Development Bank, the tax arrears would be given priority and it would be the 'first charge' on the property and would have priority over other claims." 21. Following the aforesaid decision in A. Senthilkumar's case [2011] 1 CTC 828, a honourable judge of this court in W.P. No. 36547 of 2007, dated June 6, 2011 (Ravindranath (K) v. Authorised Officer and Chief Manager, Indian Bank), has set aside the recovery notice issued section 11(2) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, in respect of arrears of contribution, wherein a charge was created in respect of the property. 24. Placing reliance on a judgment of this court in A. Senthilkumar v.This copy was printed from VATLaws licensed to: R.S. GoyalVATLaws (Readable Version) - Wednesday, March 19, 2014 Assistant Commissioner (CT), Koyembedu Assessment Circle, Chennai reported in [2011] 1 CTC 828, a honourable judge set aside the impugned demand notice issued by the Regional Provident Fund Commissioner II and Recovery Officer, the second respondent therein. 25. Thus, in the l....