2006 (1) TMI 243 - SUPREME COURT

Whether the purchaser of assets of a concern sold by a State Financial Corporation, in exercise of its powers under section 29 of the State Financial Corporations Act, 1951 would be liable under the Karnataka Sales Tax Act, 1957 for the arrears of sales tax of the concern whose assets have been transferred?

Under what circumstances does a charge created on a property become unenforceable against a transferee of such a property?

Held that:- Appeal dismissed. Since it is not a matter of dispute that there was only the transfer of individual assets of the defaulting company, rather than the defaulting company being sold as a going concern, in the light of our expressed views, section 15 of the KST Act is not attracted.

As 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. 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.