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2023 (4) TMI 823 - HC - VAT and Sales TaxSeeking recovery of arrears of tax - petitioner mainly contended that Form 19 B signed by the said Kanthimathi would reveal that it is a security bond given by her, personally undertaking to pay the Tax Fee or other amount due that will occur against the said Kanthimathi - HELD THAT:- As the dealer did not pay the tax arrears of Rs.2,99,525/- action was initiated under the Revenue Recovery Act by initially addressing the Sub-Registrar, Vadavalli by creating encumbrance on the property belonging to the defaulter's wife, which was made as security at the time of registration. Subsequently, the Department came to know that the writ petitioner / Tmt.M.Karpagam had purchased the property under sale deed dated 07.03.2008 - The Government usually does not create mortgage at the time of registration. However, such security bonds are executed with the property details and with a personal undertaking and therefore, the said undertaking is binding in respect of the property schedule provided in the bond. Thus, the contentions of the writ petitioner is to be rejected. The Explanation-I to Section 24 (15-A) of the erstwhile Tamil Nadu General Sales Tax Rules, 1959 reveals that, where the security furnished in the form of immovable property, the person furnishing it may in any town to which Sub-Section (f) of Section 58 of the Transfer of Property Act, 1882 Central Act IV of 1883 is applicable, mortgage such property to the Government by deposit of title deeds. Therefore, it is necessary to create a mortgage as contemplated under the Transfer of Property Act. In the absence of creating any such mortgage, mere personal undertaking cannot be construed as a mortgage or charge created under Explanation I to Section 24 (15-A) of the erstwhile TNGST Act or under the Transfer of Property Act. The Form 19-B security bond signed by the vendor of the petitioner smt R.Kanthimathi is restricted only to the extent of her personal undertaking and there is no mortgage or charge created in respect of the property purchased by the petitioner from the said Kanthimathi. Thus, the security bond executed by the vendor of the petitioner is not in consonance with the Form prescribed under the erstwhile TNGST Rules - When the subject property, which has not been mortgaged or charge has been created in consonance with the provisions of the erstwhile TNGST Act and Rules. The contention of the respondent that they are entitled to create an encumbrance in the office of the Sub-Registrar is untenable and the encumbrance made without creating any mortgage or charge cannot be held as in consonance with the provisions of the erstwhile TNGST Act. This being the factum established, the actions initiated against the petitioner is in violations of the provisions of the TNGST Act and more so the petitioner is not a sales tax assessee and she is the bonafide purchaser of the property from her vendor Smt.Kanthimathi. The order impugned and the consequential entry of encumbrance made by the 2nd respondent / Sub-Registrar of Assurances on the petitioner's property Door No.12/36 A Ramalakshmi Nagar, Goundampalayam Road, Idayarpalayam, Coimbatore – 641 044 are quashed - Writ Petition stands allowed.
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