TMI Blog2019 (11) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... on 48 of the GVAT Act. The subject property was transferred in favour of the petitioner, prior to the order of attachment and creation of a charge thereon. Therefore, as on the date when the subject property came to be attached and a charge came to be created thereon, it did not belong to the dealer viz. Varun Filaments Pvt. Ltd. The provisions of section 48 of the GVAT Act, therefore, would clearly not be attracted in the facts of the present case. Apart from the fact that the impugned order dated 9.9.2011 is invalid as it has been passed in respect of property in which the defaulter had no right, title or interest; as noticed earlier, the assessment order, which formed the basis for passing the impugned order came to be set aside by the Tribunal and the matter was remanded. Therefore, the very substratum of the order dated 9.9.2011 was lost and hence, such order was rendered ineffective. The impugned order of attachment dated 9.9.2011, made by the second respondent cannot be sustained. However, the right of the department to have the transfer declared as void under section 47 of the GVAT Act is not thereby taken away - Petition allowed. - R/SPECIAL CIVIL APPLICATION NO. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities and informed them that they had already purchased the subject property by way of a registered sale deed dated 14.7.2011. However, despite oral requests being made time and again for removal of the charge and attachment there was no response from the respondent authorities. 5. In view of the charge registered by the respondent authorities, by an order dated 7.1.2013, the Deputy Mamlatdar, Mandvi, rejected the application made by the petitioners for mutating the entry for transfer of the subject property in the name of the petitioners. Being aggrieved, the petitioners preferred an appeal against the said order before the Deputy Collector, Mandvi Prant, Mandvi, who by an order dated 27.8.2015 dismissed the appeal. Against the said order, the petitioner filed a revision application before the Collector, Surat, under rule 108(6) of the Gujarat Land Revenue Rules, 1972, but failed. The petitioners, therefore, approached the Value Added Tax Department again and made a detailed submission contending that since the property had already been purchased by the petitioners, no charge could be entered on the property for alleged dues of the erstwhile owners. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessment order, on the basis of which the attachment was made, was passed on 31.3.2011; however, such order came to be set aside in appeal and the matter was remanded to the adjudicating authority and that the order in respect of the said year as well as subsequent years were all made long after the subject property came to be transferred to the petitioners. It was contended that in the absence of any charge having been registered over the property, the petitioner had no means of knowing about the dues and that the petitioners are bona fide purchasers for consideration. 7.1 It was submitted that in any case, the dues of the erstwhile owners have arisen after the subject property was purchased by the petitioners and hence, it is not permissible for the respondents to attach the subject property and create any charge over it. It was pointed out that the respondents have placed reliance upon section 47 of the GVAT Act to contend that the transfer is a fraudulent transfer, to submit that if that be so, the respondents are required to approach the civil court to get the transfer set aside, if the transfer is void. However, they cannot seek to recover the dues o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Varun Filaments Private Limited has sold its property with a view to defraud the Government revenue and hence, the transaction between Varun Filaments Private Limited and the petitioners is void as the transaction is with a view to defraud the Government exchequer. 8.2 The attention of the court was invited to the provisions of section 47 of the GVAT Act, to submit that in view thereof, the transaction between Varun Filaments Private Limited and the petitioners can be termed as a void transfer as the same was made with a specific intention at the end of Varun Filaments Private Limited to defraud the Government. It was, accordingly, urged that there being no infirmity in the action taken by the respondent authority, there is no warrant for interference by this court and that the petition being devoid of merits, deserves to be dismissed. 9. The facts are not in dispute. The petitioners purchased the subject property by way of a registered sale deed dated 13.7.2011. Thereafter, the petitioners had also obtained a title clearance certificate, which revealed that there was no encumbrance on the subject property. Undisputedly, prior to purchase of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achment and creation of a charge thereon. Therefore, as on the date when the subject property came to be attached and a charge came to be created thereon, it did not belong to the dealer viz. Varun Filaments Pvt. Ltd. The provisions of section 48 of the GVAT Act, therefore, would clearly not be attracted in the facts of the present case. 13. As is evident from the facts noted hereinabove, the order of attachment was made after the property came to be transferred in favour of the petitioners. The attachment order dated 9.9.2011 has been passed in exercise of powers under section 154/155 of the Gujarat Land Revenue Code (hereinafter referred to as the Code ). Section 154 of the Code provides for distraint and sale of defaulter s moveable property, whereas section 155 provides for sale of defaulter s immoveable property. Since the subject property is an immoveable property, it appears that the provisions of section 155 of the Code are sought to be invoked which postulate that the Collector may also cause the right, title and interest of the defaulter in any immoveable property other than the land on which the arrears is due, to be sold. Thus, section 155 of the Code w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g under Rule 11 of the Second Schedule to the Income-tax Act, the Tax Recovery Officer can declare a transfer as void under Section 281. Section 281, as it stood at the relevant time provided as follows:- Section 281: Where, during the pendency of any proceeding under this Act, any assessee 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 assets in favour of any other person with the intention to defraud the revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding; Provided that such charge or transfer shall not be void if made for valuable consideration and without notice of the pendency of the proceeding under this Act. 8. Section 281 declares as void any transfer made by the assessee during the pendency of proceedings under the Act, with the intention to defraud the Revenue. The powers of the Tax Recovery Officer, however, under Rule 11 of the Second Schedule to the Income-tax Act are somewhat differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to file a suit under Rule 11(6) to have the transfer declared void under Section 281. 13. In the present case the Tax Recovery Officer could not have examined whether the transfer was void under Section 281 of the Income-tax Act. His adjudication of the transfer as void under Section 281 is without jurisdiction. The Tax Recovery Officer has relied upon the earlier order of the Income Tax Officer dated 9.5.1974 declaring that the transaction is void under Section 281 of the Income-tax Act. In the earlier proceedings, however, although the High Court has not set aside this order of the Income Tax Officer, the High Court has expressly held that the order amounted only to an intention of declaration on the part of the Department to treat the transaction as void under Section 281. Such a declaration cannot affect the legal rights of the parties affected under Rule 11. The High Court expressly held that the rights of the parties under Rule 11 were not affected in any way by this declaration. The Department, therefore, cannot proceed on the assumption that the transaction is void under Section 281, nor can the Tax Recovery Officer, while proceeding under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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