The Gujarat High court recently in a writ petition filed before it held that if the property was free from Encumbrances the order of property attachment under section 45 Of Gujarat Value Added Tax Act , 2003 for non payment of tax was invalid.
Section 45 Of Gujarat Value Added Tax Act, 2003 defines provisional attachment of property belonging to the dealer for protecting the interest of government revenue.
Petitioner Odhavjibhai Mohanbhai Gadhiya buys a property from Axis bank through auction sale. Before that property was in the name of Pradipkumar Govindbhai Lakkad. After the sale was concluded the petitioner became the successful bidder and the bank issued the sale certificate in favor of the petitioner.
Thereafter petitioner sold the plot No.23 of survey No.1149/2 which had come to his share by executing registered sale deed in favor of one Nitaben Nileshbhai Ramani and Kalpeshbhai Ramani. Respondent No.2- Sub-Registrar, Jamnagar informed the petitioners that since the property sold under the said registered sale deed was ordered to be attached by the sales tax authorities, the sale deed could not be returned. The Sub-Registrar thus kept the sale deed with him pending.
Further the sale tax officer stated that the properties were under attachment under Section 45 of the Gujarat Value Added Tax Act, for non-payment of the tax by original owner of the properties named Pradipkumar Govindbhai Lakkad.Against the order petitioner filed the writ petition before the Court.
A.R.Thakkar counsel for the petitioner contented that Sale certificate pursuant to auction purchased by the petitioners was issued and it was registered. Since property was purchased in auction pursuant to which the sale certificate was also issued and the title of the petitioners was to be complete
It was further submitted that the dues of the bank were secured debts under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for recovery if the auction was held and the petitioner purchased the properties. Section 26E of the SARFAESI Act was relied on to further submit that the dues of the sales tax authorities would not take precedence.
Krutik Parikh counsel for the respondent submitted that before the auction sale conducted there exists an encumbrance in the nature of government dues of unpaid sales tax and the original owner of the properties named Pradipkumar Govindbhai Lakkad did not pay that tax. Hence without paying the sale tax Sub Registrar refused to release the document to the petitioner.
After considering the contentions of the both sides the division bench comprising Justice N.V.Anjaria and Bhargav D. Karia allowed the writ petition filed by the petitioner and observed that,
Since the petitioner had purchased in the auction sale conducted by the bank under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 the property travelled in favor of the petitioner free from any encumbrances
Further bench observed that order of sales tax officer registering the charge over the property in relation to the sales tax and Value Added Tax payable by original owner of the property had no efficacy in law.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan Premium. Follow us on Telegram for quick updates.
