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2020 (2) TMI 601 - HC - VAT and Sales TaxRecovery of arrear of tax - charge was created in respect of the property - HELD THAT:- The facts are not in dispute that the registered dealer was in arrears of tax and therefore by virtue of section 24 of the Tamil Nadu General Sales Tax Act, 1959 and Section 42 of the TNVAT Act, 2006, a charge over the property of such defaulting dealer stood created in favour of the 1st respondent Commercial Tax Department Further as per Section 100 of the Transfer of Property Act, 1882 also a charge is said to have been created in favour of the 1st respondent as if the dealer had created simple mortgage in favour of the 1st respondent. It was held that section 24 (2) of the Tamil Nadu General Sales Tax Act, 1959 does not provide anything contrary to section 100 of the Transfer of Property Act, 1882 and unless a provision is made in any statute contrary to the rule in Section 100 of the aforesaid Act, a bona fide purchaser for consideration without notice of charge is protected - On facts it was concluded that the appellant had no notice prior to the transfer. It also held that there was no material to show that the appellants had constructive notice of the charge and no submissions were made by the respondent on this issue. Under those circumstances, the Division Bench of this Court took a view that the property in the hands of the appellants for a value above consideration without notice of the sales tax arrears of the defaulting company or the subsequent charge created over the property was free in the hands of the appellant therein. Coming to the facts of the present case, it is noticed that the vendor of the property from whom the petitioner’s vendor purchased the property was in arrears of sales tax to the 1st respondent. Though the property had been subject matter of encumbrance as early as 2011, at the behest of the 1st respondent Commercial Tax Department, it was not reflected in the encumbrance certificate obtained by the petitioner’s vendor on 19.4.2012 or by the petitioner himself on 12.10.2012 and on 6.12.2012. Only in the encumbrance certificate issued by the second respondent through online portal dated 24.6.2016 the charge has been reflected in favour of the 1st respondent - it is incumbent on the petitioner as purchaser to have also made a physical search in the records before taking a final decision as to whether the property was free from any encumbrance or not. The present writ petition is liable to be dismissed - decided against petitioner.
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