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2019 (10) TMI 1445 - HC - VAT and Sales TaxRecovery of arrears of sales tax - charges existing against property or not - case of the petitioner is that he is a bona fide owner and his father from whom the property devolved upon him is a bona fide purchaser - encumbrances upon title of the property or not - HELD THAT:- In the present case, let us assume for a moment that an automatic charge has been created by operation of Section 24(1). Such charge, once created has remained within the domain of knowledge of only the Assessing Authority of the defaulter not having been conveyed to the public at large or converted into a tangible and enforceable charge by registration of an encumbrance with the Sub-Registrar. The orders of assessment passed upon R2 in the present case are dated 22.11.1999 for four periods of assessment, 1994-95 to 1997-98. The first move that the Commercial Taxes Department has made to consolidate their so-called claim upon the property is by issuance of letter to the office of the Sub-Registrar (SRO) on 20.03.2013 - for the period 31.12.1999 to 20.03.2013 the Commercial Taxes has rested content with the charge stated to have been created by operation of Section 24(1). This charge has no value whatsoever unless it has been followed up by the specific procedure set out under Sections 26 and 27 of the RR Act. The procedure set out under the RR Act, which is applicable to auctions under the Commercial Tax Act, has been enacted bearing in mind the interests of all parties. The interests of the Commercial Taxes Department have been protected under Section 24(1) by providing for the creation of an automatic charge. It is further protected by Section 24-A that envisages a situation where a defaulting assessee may transfer its properties to a third party merely to defraud the interests of the revenue. In such an event, the provisions of Section 24-A would kick in and render any such transfer, which has been effected merely to defraud the revenue, void. Section 24(1) of the Act equates commercial tax dues with a simple mortgage over the properties of a defaulter. Section 24(2) elevates the charge to the status of an enforceable priority over all other claims against any property except claims for land revenue and of the Land Development Bank subject to the procedure for recovery of such dues as set out under the RR Act, having been followed scrupulously by the Commercial Taxes Department. It is only on 08.11.2013 that Notice in Form 4 of the Revenue Recovery Act was issued to the defaulter, i.e., R2, for collection of arrears. Form Nos.5,7 and 7A of the Revenue Recovery Act attaching the property have been issued on 08.11.2013 and 30.12.2013 and the publication of the attachment in the Namakkal District Gazette has been on 21.03.2014 at Serial nos.12, 13 and 14 of the compilation. The affixation of notice conspicuously upon the property in question and the notification of such attachment by proclamation have, admittedly not been carried out. Moreover, the events at serial nos.12 onwards have transpired long after purchase of the property by the father of the petitioner on 29.03.2002 and settlement of the property in question in favour of the petitioner on 22.06.2009 - the impugned order of attachment is set aside. Petition allowed.
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