IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 2274 of 2007(U)
1. K.S. RASHEED, AGED 42,
... Petitioner
Vs
1. SALES TAX OFFICER-II, MUVATTUPUZHA.
... Respondent
2. TAHSILDAR, MUVATTUPUZHA.
3. VILLAGE OFFICER, MULAVOOR.
4. T.V. POULOSE,
For Petitioner :SRI.ESM.KABEER
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :21/05/2009
O R D E R
S.SIRI JAGAN, J.
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W.P(C).No.2274 of 2007
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Dated this the 21st day of May, 2009
J U D G M E N T
The petitioner purchased certain properties from the 4th
respondent on 19.2.1997 as per sale deed registered as No.829/97
(sub registry office is not mentioned in the writ petition).
Subsequently, by Ext.P4 notice, the said properties were put to sale by
the revenue recovery authorities for realisation of sales tax arrears
due from the 4th respondent. The petitioner is challenging Ext.P4 notice
in this writ petition. The petitioner submits that the first notice issued
to the 4th respondent in respect of the sales tax arrears is Exts.P3
dated 7.8.1998, which is subsequent to the date of sale. Therefore,
according to the petitioner, the property purchased by the petitioner
from the 4th respondent cannot be put to sale for recovery of the
arrears of sales tax due from the 4th respondent in so far as the
arrears became due subsequent to the transfer of title in the property
to the petitioner and therefore, S.26A of the Kerala General Sales Tax
Act is not attracted.
2. The learned Government Pleader strongly opposes the writ
petition. According to him, in view of Section 26A, the petitioner
cannot contend that the property purchased by the petitioner from a
defaulter is not liable to be proceeded against. According to the
w.p.c.2274/07 2
Government Pleader, it is not necessary that for attracting Section
26A, a demand for tax should have been made prior to the sale.
Pendency of some proceedings in respect of the sales tax arrears
would be sufficient to attract Section 26A of the Kerala General Sales
Tax Act, 1963. He also relies on the Division Bench decision in Hamsa
v. Asst. Commissioner [2008 (3) KLT 180] in support of his
contentions.
3. I have heard both sides in detail.
4. In Hamsa’s case (supra), in paragraph 9, this Court held
thus:
‘9. To attract S.26A, it is not necessary that the assessment
should be completed. It is also not necessary that a demand should be
made to the assessee to pay any amount. If the transfer is made by the
assessee during the pendency of any proceedings , such transfer shall be
void as against any claim in respect of any tax or any other sum payable
by the assessee under the K.G.S.T. Act. Inspection of the shop, factory or
business premises of the assessee by the sales tax officers would also
come within the meaning of the expression “during the pendency of any
proceedings” under S.26A. The transfer as such is not void. It would be a
valid transfer as between the transferor and the transferee. But it would
be void against any claim in respect of any tax or any other sum payable
by the assessee-transferor under the Act. The transferee is not entitled to
put forward any defence that the transfer was made for valid
consideration or that he is a bonafide purchaser for value. Such defences
are outside the purview of S.26A of the Act. Once the ingredients of
S.26A are attracted, the transfer made by the assessee would be void.
The transferee cannot claim any valid title in such cases as against” any
claim in respect of any tax or any other sum payable by the assessee”
under the K.G.S.T. Act. In the present case, the transfers were effected
after proceedings were initiated against the assessee under the Act.
Therefore, the assignment deeds executed by the partners of the
assessee firm in favour of the petitioners are void under S.26A. Exhibit
P2 order is valid and the learned Single Judge has rightly rejected the
contentions raised by the petitioners.’
In this case, as is clear from Ext.P3 notice itself, for the year 1994-95,
w.p.c.2274/07 3
the 4th respondent had filed annual return under the KGST Act, the
proceedings in respect of which were pending prior to the date of sale.
It is settled law that for a particular year return should be filed before
the 10th of May of the succeeding year. That being so, clearly the 4th
respondent had filed returns prior to the purchase of the property by
the petitioner and therefore, the proceedings for assessment were
pending. In fact the Government Pleader would submit that
assessment proceedings were pending for the years 1994-95 to 96-97.
That being so, the ratio of the decision of the Division Bench in
Hamsa’s case (supra) is clearly attracted to the facts of the present
case. Therefore, I do not find anything wrong with the impugned
recovery proceedings. Accordingly, following that judgment, this writ
petition is dismissed.
Sd/-
sdk+ S.SIRI JAGAN, JUDGE
///True copy///
P.A. to Judge