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2018 (10) TMI 1457 - GUJARAT HIGH COURTGVAT Act - recovery proceedings - SARFAESI Act - liability of purchaser of property in auction - Creation of charge on immovable property - Held that:- The petitioner was a purchaser through auction held by lending bank for default of the borrower. Further the charge which is presently created was entered only after the auction was completed, sale price deposited and sale was completed. This charge is not for any assessed dues but is only for possible dues that may arise upon completion of pending assessments. Section 47 of the VAT Act provides that where a dealer after any tax has become due from him creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer whatsoever of any of his property in favour of any other person with an intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer. This is not a case where property is transferred after any tax has become due from the dealer. In facts of the case, we are doubtful whether department can also sustain the allegation of such property having been transferred with an intention of defrauding the Government revenue. Sale of the property was a compulsory action initiated by the lending bank and was not an action of volition on part of the dealer. In the present case, admittedly, before the auction sale or even after that no provisional order of attachment was passed. The petitioner thus purchased the property in auction conducted by the lending bank since the borrowers had failed to repay the loan. At such time, the only outstanding dues of the dealer to the department were ₹ 18,913/. The action of the respondents in creating the charge over the property in question is found illegal - it is directed that that such charge shall be removed - petition allowed.
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