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2018 (2) TMI 123

Head Note:
Validity of SCN - recovery of VAT dues of the seller of the flat from the purchaser of the flat in the housing society - case of petitioner is that the impugned notice issued by the respondent authority to the housing society is wholly without jurisdiction, bad and illegal as the petitioner is a bonafide purchaser of property for valuable consideration - Held that: - it is evident that the petitioner had issued public notices dt.1.2.2016 in two newspapers inviting any claim on the property. The respondent authorities did not respond to the same. The petitioner was never informed about the VAT dues either by the sellers or by the Respondents. Therefore, in our opinion the respondents can be said to be negligent in not being attentive to the notice issued by the petitioner, hence, the petitioner cannot be fixed with any constructive notice of the VAT dues.

The core component which emanates from a bare reading of the aforesaid section is that the charge or transfer of the property shall be void if it is made with an “intention of defrauding the government revenue”. Thus, the transfer of property can be declared void provided there is intention to defraud the government revenue. The Act does not lay down any mechanism to declare the transfer as void. In our considered opinion, the only remedy available to the respondent authorities is to approach the Civil Court for a declaration to treat the transfer as void by adducing evidence of an “intention to defraud”.

In the present case no tax was due on the petitioner and no charge is created on the property in question in respect of the alleged dues of the erstwhile owner which is an essential requirement of the section. Hence, the applicability of the provisions of section 47 in the case of the petitioner itself is an argumentative issue. In such circumstances, the only recourse available for the VAT authorities is to approach the Civil Court to annul the transfer on the ground that it was made with an intention to defraud the government.

A conspectus of the aforenoted sections of the Act, will postulate that the authorities are not conferred with any powers to issue any communication/notice to the Society instructing it not to issue a “No due certificate” in relation to the property. In our opinion, such notice will circumvent the provisions of the Act as they do not intend to empower or authorize the department to issue directions/instructions directing the Society to refuse “No due certificate” of the property on which charge is established. By issuing the impunged notice debarring the Society from issuing the No due certificate, the authorities have conferred upon themselves with the power which is lacking in the provisions of the Act, hence, the same can be said to be extralegal and unwarranted. Thus, the impugned notice merits to be set aside as the same travels beyond the scope of the provisions of the GVAT Act. However, the department may, if so desire, take appropriate proceedings in accordance with law for having the transfer to be declared as void under section 47 of the GVAT Act.

Petition allowed.


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