TMI Blog2018 (3) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3 shall be decided in appropriate proceedings before the appropriate forum in accordance with law - petition allowed. - WRIT PETITION NO.2220 OF 2017 - - - Dated:- 1-8-2017 - S.C. Dharmadhikari and S. Sangitrao Patil, JJ. P. M. Shah, Senior Advocate instructed by with N. B. Suryawanshi for the petitioner. S. G. Karlekar, Additional Government Pleader and D. M. Shinde for the respondents. JUDGMENT Rule, returnable forthwith. With the consent of the learned counsel for the parties and the learned A.G.P., heard finally. 2. The petitioner has challenged the communications dated 29th November, 2016 and 23rd January, 2017, issued by respondent No. 2 seeking recovery of sugarcane purchase tax and arrears of sales tax, amounting to ₹ 7,04,10,624/, from the petitioner, which were liable to be recovered from respondent No. 4. 3. The petitioner is a Sugar Factory, registered under the Maharashtra Cooperative Societies Act, 1960 ( MCS Act , for short) and is engaged in the business of manufacturing sugar by crushing sugarcane. Respondent No. 4 also is a Sugar Factory registered under the provisions of the MCS Act. It was engaged in the same business. Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .m. on 16 th February, 2012. 5. The petitioner being interested in purchasing the secured assets of respondent No. 4, submitted its offer on 14th February, 2012 to purchase the same for ₹ 48.51 crores. The petitioner being the highest bidder, its offer was accepted and the sale was concluded in its favour. The sale certificate was duly registered in accordance with law on 27th November, 2012. The actual physical possession of the secured assets of respondent No. 4 was given to the petitioner by respondent No. 3 on 22nd November, 2012. 6. Respondent No. 2 had addressed a communication dated 6th March, 2012 to respondent No. 3 stating therein that the amount of ₹ 7,04,10,624/was due and payable from respondent No. 4 towards sugarcane purchase tax, Bombay sales tax and Central sales tax and asking respondent No. 3 to treat this amount as the first charge on the saleproceeds of the secured assets of respondent No. 4 proposed to be sold out and recover the same. Respondent No. 3 replied that communication on 2nd February, 2013 and denied its liability to recover any amount from the sale proceeds of the secured assets of respondent No. 4. Respondent No. 3 further infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be recovered from the sale-proceeds of the secured assets of respondent No. 4 towards sugarcane purchase tax and arrears of Bombay sales tax and Central sales tax vide letter dated 6th March, 2012. Respondent No. 2 further informed the Talathi and the Circle Officer of Sajja Hadsani, Taluka Hadgaon, District Nanded vide communication dated 21st February, 2012 to record charge/lien in the Record of Rights of the secured assets of respondent No.4 for the above mentioned dues. Accordingly, Mutation Entry No. 1747 was effected and the charge was shown in the 7/12 extracts of the lands of respondent No. 4. The learned A.G.P. submits that the entries in the Record of Rights of the lands of respondent No. 4 in respect of the charge for the amount of ₹ 7,04,10,624/would amount to constructive notice to all the parties including the petitioner, who placed bids in the auction sale of the secured assets. Therefore, the petitioner cannot evade payment of the said charges to respondent No.2. The learned A.G.P. further submits that after getting the sale certificate dated 27th November, 2012, the petitioner started its business of manufacturing sugar in the immediate next crushing seas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attachment order dated 29th April, 2013 (actually signed on 2 nd May, 2013), was passed by the Sales Tax Authorities against the immovable property purchased by the petitioners pursuant to an auction sale conducted by SICOM, secured creditor, under the provisions of the SARFAESI Act. 12. It was the case of the petitioners that they purchased the immovable property belonging to M/s Iccon Oil and Specialities Ltd. (for short called as Iccon Oil Ltd. ) for valuable consideration without any notice of the alleged charge of the Sales Tax Authorities. The sale notice was issued on 25th august, 2012 under the SARFAESI Act, inviting offers in respect of the secured assets on an As is where is and As is what is basis. The petitioners being desirous of purchasing the said secured assets, placed bid in the public auction held on 10th September, 2012. The offer of the petitioners came to be accepted by SICOM. SICOM confirmed receipt of the entire sale consideration on 1st April, 2013 and requested the petitioners to proceed with the execution of the sale certificate. It was the case of the petitioners that prior to purchasing the secured assets, they undertook a complete title due di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of enforcement of charge, which read as under: 18. The next limb of Mr Hegde's arguments was that since Section 13(2)(i) of the KST Act creates a charge on the property of the defaulting company, the charge would continue on the properties, even if it changes hands by transfer. 19. While the expression charge is not defined by the KST Act, this concept is well known in property law and has been defined by Section 100 of the Transfer of Property Act, 1882 (hereinafter the TP Act ). Here charge is defined as: 100. Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property, and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge. Nothing in this section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle laid down in Ahmedabad Municipal Corpn. [(1971) 1 SCC 757, 75961 (paras 3 4) : AIR 1971 SC 1201, 120204( para 3)] has been correctly applied in a sales tax case similar to the present case. [CTO v. R.K. Steels, (1998) 108 STC 161 (Mad)]. 16. In the case at hand, the facts are almost similar. The notice for auction of the secured assets of respondent No. 4 under the provisions of SARFAESI Act was published by respondent No. 3 in Daily Sakal newspaper on 16th January, 2012. Respondent NO. 2 or any other Sales Tax Authority did not object to the proposed auction of the secured assets of respondent No. 4. It is the specific case of the petitioner that it obtained 7/12 extracts of the lands subject matter of the auction sale prior to placing bid in the auction. In the said 7/12 extracts, the charge of Sales Tax Authorities was not reflected. The said 7/12 extracts are the part and parcel of the sale certificate dated 21st November, 2012. 17. It is stated by the petitioner that the Sales Tax Officer had informed respondent No. 3 vide letter dated 6th March, 2012 that there were dues to the tune of ₹ 7,04,10,624/payable from respondent NO. 4 towards sugarcane pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sold by respondent No. 3 by auction as per the public notice dated 16th January, 2012. Respondent No. 3 had taken possession of the secured assets of respondent No. 4 on 1st March, 2011 itself. In the letter dated 21st February, 2012, addressed by respondent No.2 to the Talathi/Circle Officer, Sajja Hadsani, Taluka Hadgaon, there is specific mention about defunct status of the Sugar Factory of respondent No.4. The letter dated 6th March, 2012 addressed by respondent No.2 to respondent No.3 also contains a positive statement that the Sugar Factory of respondent No.4 is defunct. The Sugar Factory of respondent No. 4 was in possession of respondent No. 3 from 1st March, 2011 onwards. Admittedly, respondent No.3 had no licence to run Sugar Factory. It is not the case of any of the respondents that it was being run by respondent No.3 for manufacturing sugar until issuance of public notice for auction sale on 16th January, 2012 and even thereafter till it was given in possession of the petitioner on 22nd November, 2012. If the petitioner makes such defunct factory functional and starts manufacturing sugar under its own licence, it cannot be said that the petitioner purchased the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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