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Judgment
S. Ramalingam, J.—One M. A. Jinnah, who is not a party in this writ petition, was an assessee under the Tamil Nadu General Sales Tax
Act, 1959. When he was carrying on business under the name and style of Brothers Auto Syndicate, it is stated that the said Jinnah was in arrears
of sales tax for the assessment year 1962-63 to 1976-77 to the extent of Rs. 47,985.66. M. A. Jinnah took in court auction sale a property and
the sale was confirmed in his favour on 18th January, 1980. On 23rd July, 1980, Jinnah sold the property (land of an extent of 1.50 acres) to the
petitioners. On 5th January, 1982, notice was issued by the first respondent herein (Deputy Commercial Tax Officer, Kodaikanal) asking the
petitioners to pay the arrears of sales tax due from M. A. Jinnah failing which it was stated that the property purchased by them on 23rd July, 1980
from M. A. Jinnah would be brought in public auction. This writ petition has been filed questioning the validity of the said notices issued to the
petitioners under the provisions of the Revenue Recovery Act.
Learned counsel for the petitioners submits that regarding the sales tax arrears said to be due and payable by M. A. Jinnah for the years 1962-
63 to 1976-77, though section 24 of the Tamil Nadu General Sales Tax Act (hereinafter referred to as ""the Act"") states that if default is made in
paying the tax according to the notice of assessment, the whole of the amount outstanding on the date of default shall become immediately due and
shall be a charge on the property of the person or persons liable to pay the tax under the Act, nevertheless, in the instant case, when the
assessment was completed and the amount became due thereunder, no charge could be created on the property because the property itself came
to be acquired by Jinnah long after in the year 1980. Secondly, it is submitted that the petitioners have purchased the property from Jinnah after
due enquiries for valuable consideration and it was found that there were no encumbrances over the property and therefore, u/s 24A of the Act,
they being bona fide purchasers for value and the transfer made by Jinnah was not intended to defraud the Revenue, the sale by Jinnah in their
favour is valid and the property in their hands cannot be treated as if it belongs to the defaulter.
Learned counsel for the petitioners relies on the decision in K. Nagammal v. Joint Commercial Tax Officer, Karur South, Karur [1973] 31 STC
In that case, after executing a settlement of a property by the petitioner''s husband in favour of their minor daughter, the sales tax department
sought to attach and bring that property to sale under the Tamil Nadu Revenue Recovery Act, 1864 for the sales tax arrears of the petitioner''s
husband in pursuance of orders of assessment passed subsequent to the date of the settlement. On these facts, it was held that there is no provision
in the Tamil Nadu Revenue Recovery Act, 1864, which enables the Collector to attach and sell land not registered in the defaulter''s name for
arrears of revenue due from defaulter. It was also held that the said property was not the property of the defaulter on the day when action was
initiated to attach and sell the same and the statutory authority functioning under the Revenue Recovery Act could neither attach nor sell the same
as if the property was that of the defaulter. In this view of the matter, the proceedings initiated under the Revenue Recovery Act were quashed.
Learned counsel for the petitioners, relying on this judgment, submits that in the instant case on the dates when the assessments were made for the
years 1962-63 to 1976-77, M. A. Jinnah was not the owner of the property which the petitioners subsequently acquired from Jinnah and
consequently, even by operation of section 24 of the Act, no charge is created over the non-existent properties. In other words, a charge could be
created u/s 24 of the Act only over the properties which were then owned by the assessee and not over the properties which the assessee
acquired long after the assessments were over.
Learned Government Advocate for Taxes, Mr. Lokapriya, submits that the decision in K. Nagammal v. Joint Commercial Tax Officer, Karur
South, Karur [1973] 31 STC 607 is clearly distinguishable in the sense that there was a settlement in favour of the daughter long prior to the
assessment and therefore, the property which did not belong to the assessee but belonged to a third party could not be proceeded against; but in
the instant case, the assessee Jinnah became the owner of the property in the year 1980 and when once he became such an owner, the charge u/s
24 of the Act attaches itself to the future acquisitions also.
On a careful consideration of the submissions made on both sides, I am at a loss to comprehend how, when a charge is created under the
provisions of a statute, the language of the charging section could be extended so as to include within its scope not only the property of the
assessee then owned by him, viz., on the date of the assessment but also the properties which he may come to acquire in the future. If the intention
of the legislature was that even in respect of the future acquisitions, the charge is created, nothing prevented the legislature from making a provision
to that effect. But as section 24 of the Act stands today, it is capable of only one interpretation, i.e., the charge is created over the property which
was owned by the assessee on the date when the assessments were made. Hence, in the instant case, from the above facts, it is seen that M. A.
Jinnah was not the owner of the property purchased by the petitioners herein during the period from 1962-63 to 1976-77 and consequently, there
was no property in the hands of Jinnah to be charged u/s 24 of the Act. Whatever may be, in respect of the property which Jinnah purchased only
on 18th January, 1980, no statutory charge is created u/s 24 of the Act because the acquisition of property was long after the assessments were
completed and notice u/s 21 of the Act had been issued to Jinnah.
From this it follows that only if the property in the hands of Jinnah was liable to be charged for the arrears of sales tax due and payable by him,
then that charge could be attached to that property and it could be enforced against the subsequent purchaser. In the instant case, since there was
no charge created by operation of law and the property was purchased by Jinnah only on 18th January, 1980, automatically it follows that when
the petitioners acquired that property on 23rd July, 1980, they did so without any liability for payment of sales tax arrears due from Jinnah.
Learned Government Advocate relies on the decision reported in (1) Deputy Commercial Tax Officer, Nannilam Taluk, (2) District Revenue
Officer, Thanjavur v. Azha Kumari 1985 WLR 240 (Mad.) wherein it was held that by operation of section 24 of the Act, when notices of
assessment are served upon the assessee and if default occurs, a charge is created on the properties of the assessee and if he transfers those
properties in favour of third person, the department is entitled to proceed against the transferee and the question of bona fide does not arise for
consideration. But in the instant case, the facts are clearly different. As stated earlier, on the date when the notice of assessment was served on
Jinnah and on the expiry of 21 days thereafter when the liability to pay the tax arose, Jinnah was not the owner of the property and he came to
acquire the property long after in the year 1980. Hence this contention of the learned Government Advocate has no force.
In the result, the writ petition is allowed. There will be no order as to costs.
Writ petition allowed.