15.09.2021 GLIMPSE OF A LATEST VERDICT WP No.28927 of 2012 G.E.Govindaraj .VS.1.The Assistant Commissioner (CT), Arisipalayam Assessment Circle, Salem. THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM THE HONOURABLE HIHG COURT QUASHED DEMAND OF ARREARS OF SALES TAX FROM
15.09.2021 GLIMPSE OF A LATEST VERDICT
WP No.28927 of 2012 G.E.Govindaraj .VS.1.The Assistant Commissioner (CT), Arisipalayam Assessment Circle, Salem.
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
THE HONOURABLE HIHG COURT QUASHED DEMAND OF ARREARS OF SALES TAX FROM A PURCHASER OF PROPERTY OF A TAX DEFAULTER AFTER 6 YEARS OF TAX DUE AND HELD AS FOLLOWS;
1.The petitioner purchased the subject property on 31.06.2006. The sales tax defaulter has to pay the arrears of sales tax within a period of 30 days, as contemplated under the provisions of the Act. If the arrears of sales tax is not paid by the defaulter and if no appeal was filed against the order passed by the Original Authority, then the Authority Competent is empowered to initiate action against the defaulter to recover the arrears of sales tax by following the procedures contemplated under the TNGST Act.
2.However, in the present case, no such action was taken. Contrarily, the arrears of sales tax for the years 2000-2001 and 2001-2002, is sought to be recovered by issuing notice to the third party purchaser of the property in the year 2012. Thus, there is a blatant lapse on the part of the Competent Authorities of the Commercial Tax Department in pursuing the matter for recovery of arrears of sales tax.
3.Section 24-A stipulates ‘Transfers to defraud revenue void’. Accordingly, “where, during the pendency of any proceeding under this Act or after the completion thereof, any dealer creates a charge on,or parts with the possession (by way of sale, mortgage, gift, 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 dealer as a result of the completion of the said proceeding or otherwise”.
4.However, Section 24-A further contemplates “provided that, such charge or transfer shall not be void if it is made- (i) for adequate consideration and without notice of the pendency of such proceeding under this Act or, as the case may be, without notice of such tax or other sum payable by the dealer; or (ii) with the previous permission of the assessing authority.Therefore, the sale made for adequate consideration and without notice of pendency of such proceedings, then such sale shall not be void.
5.Common women and men are lamenting and witnessing the corrupt activities of these Commercial Tax Department officials, as they are indulging in demand and acceptance of freebies openly from the business community. Much more freebies and corrupt activities are openly witnessed by the people in general during the festival seasons. It is akin to that of getting mamul by the Police Department officials and this Court dealt with the practice of mamul by the police in a writ petition in the case of N.Ulagaraj vs. Secretary to Government and Another [pronounced on 05.10.2020 in WP(MD) No.16185 of 2012].
6.Accordingly, this Court is inclined to pass the following orders:-
(1) The impugned order passed by the first respondent in proceedings Na.Ka.221/2006/A3 dated 04.10.2012 is quashed;
(2) Respondents 3 and 4 are directed to issue suitable orders to all the subordinate authorities across the State of Tamil Nadu to identify the cases where no actions are taken or actions are taken belatedly after efflux of time regarding collection of tax or arrears of tax and initiate appropriate actions against all the officials, who all are responsible and accountable for such lapses, negligence or dereliction of duty. If the misconduct or otherwise is proved, then further actions are to be initiated to recover the loss of State revenue from those officials;