IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH TUESDAY, THE 25TH NOVEMBER 2008 / 4TH AGRAHAYANA 1930 WP(C).No. 19538 of 2007(A) -------------------------- PETITIONER(S): --------------- THOMAS PETER, PAVELIL, EZHUPUNNA VILLAGE, CHERTHALA. BY ADV. SRI.D.SOMASUNDARAM RESPONDENT(S): --------------- 1. TAHSILDAR, CHERTHALA. 2. C.P. VIJAYAKUMAR, CHIRAYIL, ERAMALLOOR, CHERTHALA (C.C.INDUSTRIES, CHANDIROOR, AROOR). GOVERNMENT PLEADER ADV.SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: P1 COPY OF SALE DEED DT 10.5.06 P2 COPY OF NOTICE DT 29/8/06 P3 COPY OF EXPLANATION DT 27.9.06 P4 COPY OF ORDER DT 16.5.07 P5 COPY OF SCHEDULE OF PROPERTIES. // TRUE COPY // P.A. TO JUDGE K.M. JOSEPH, J. ```````````````````````````````````````````````````` W.P.(C) No. 19538 OF 2007 A ```````````````````````````````````````````````````` Dated this the 25th day of November, 2008 J U D G M E N T Petitioner purchased property under Ext.P1 sale deed from the 2nd respondent. The 2nd respondent was in arrears under the KGST Act, 1963. Notice was issued to the petitioner and the petitioner preferred Ext.P3 objection. Ext.P4 is the decision taken by the Tahsildar. Petitioner challenges Ext.P2 notice as well as Ext.P4 order. Petitioner seeks a declaration that the property purchased is not liable for sales tax arrears be realised from the 2nd respondent. Direction is sought to refrain 1st respondent from further proceedings under Ext.P4. Counter affidavit is filed and so also a reply affidavit. 2. I heard learned counsel for the petitioner and learned Government Pleader. Learned counsel for petitioner would submit that Ext.P1 is dated 10.5.2006. Mutation was effected. He points out that recovery notice is issued on 15.7.2006 which is after the date of Ext.P1 sale deed. He relies on a decision of the Madras High Court in P.Kannamba and others Vs. The Board of WPC.19538/07 : 2 : Revenue(C.T.), Madras and another [1967 STC 456] to contend that the property of the petitioner cannot be proceeded against having regard to the fact that the certificate is issued only after the date of sale. 3. In the decision of the Madras High Court, the learned single Judge in its judgment dated 8.11.1966 was considering the case under the Madras General Sales Tax Act (1 of 1959) and Revenue Recovery Act (2 of 1864). It was a case where the house belonging to the assessee was purchased by the writ petitioner. The assessee was without sufficient means to pay the sales tax. The writ petitioner questioned the recovery proceedings launched against the property purchased by her from the defaulter assessee. The learned single Judge took the view that even though for arrears of sales tax due for the business of the assessee, the necessary certificate under the Central Revenue Recovery Act from the authorities was received on 12.3.1959, the house had been sold long before and the writ petitioner and her representatives could not be considered as defaulters and the house belonging to the first petitioner could not be proceeded WPC.19538/07 : 3 : against. The learned single Judge referred to section 6 of the Central Revenue Recovery Act, 1 of 1890. Section 6 of the Act states that when the Collector of a district receives a certificate under the above provision, he may issue a proclamation prohibiting the transfer or charging of any immovable property belonging to the defaulter in the district. Section 6(3) of the Act rendered any private alienation of the property or of any interest of the defaulter therein made after the issue of the proclamation and before the withdrawal thereof void as against the government. Thereafter, taking note of the fact that necessary certificate from the authorities was received by the authorities in Madras only on 12.3.1959 but the property in Madras came to be sold long prior to that date, it was found that the property could not be proceeded against. This court also took note of the provisions defining the word ‘ defaulter ‘. It was found that at the time of attachment the property had ceased to be the property of the defaulter. The court also took the view that the position is different in the case of arrear of land revenue due in respect of piece of land. 4. The principle laid down in the above decision cannot WPC.19538/07 : 4 : be applied to the instant case. The KGST Act came to be amended with effect from 1.4.1993 and section 26A was incorporated. It reads as follows: “ 26A. Certain transfers to be void:- Where, during the pendency of any proceedings under this Act or after the completion thereof, any assessee 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 person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee under this Act.” Section 26B was incorporated with effect from 1.4.1999 which reads as follows. “ 26B. Tax payable to be first charge on the property:- Notwithstanding anything to the contrary contained in any other law for the time being in force, any amount of tax, penalty, interest and any other amount, if any, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer, or such person.” 5. In view of the provisions contained in section 26A of WPC.19538/07 : 5 : the Act and the facts of this case, it is beyond doubt that Ext.P1 transfer will be void. Ext.P1 is effected clearly after the conclusion of the proceedings under the KGST Act in relation to the 2nd respondent. It is pointed out by the learned Government Pleader that a demand is raised on the second respondent calling upon him to pay the amount on 23.3.2006 and it is after the said date on 10.5.2006 that by Ext.P1 the petitioner purchased the property. In short, in view of section 26A, the transaction covered by Ext.P1 is to be treated as void. The law mandates that the said transaction should be treated as void. If the transaction is treated as void, then whatever may be the position in respect of the parties to the transaction, as far as the government dues recoverable by the government under the KGST Act is concerned, it is open to the respondent to proceed against the property of the petitioner. 6. Learned counsel for petitioner then points out that the second respondent has got other properties and they may be proceeded against. In fact, on the basis of the order passed by this court, the petitioner filed an affidavit showing the list of properties. A report has been filed by the respondent stating that WPC.19538/07 : 6 : there is difficulty to proceed against the said properties of the defaulter as there are court attachment. Therefore, it cannot be said that in this case government has not proceeded against other properties also. Of course, service remains unserved on the 2nd respondent till this date. In the light of this, writ petition fails and it is dismissed. Sd/- (K.M.JOSEPH, JUDGE) aks // TRUE COPY // P.A. TO JUDGE