Indirect Tax and Quashing Tax Department's Notice Against Purchaser of Property : A Case Study

 Indirect Tax and Quashing Tax Department's Notice Against Purchaser of Property : A Case Study

Tax Department issued notice under Section 24 of the Tamil Nadu General Sales Tax Act, 1959, calling upon the Petitioner to remit the sales tax arrears with interest thereon of the former owner of the immovable property.

The property was at that time owned by the Petitioner when notice was issued.

Notice demanded amount to be paid to Department within seven days from the date of receipt of the notice failing which steps would be taken to bring the property to sale under the Tamil Nadu Revenue Recovery Act.

Matter went into litigation.

It was explained that "from a perusal of Section 100 of the TPA, it is clear that, unless expressly provided otherwise by any law for the time being in force, unlike a mortgage, a charge can be enforced against the property in the hands of a transferee only if the transferee had notice of the prior charge and was not a bona fide purchaser."

It was then reiterated that "a charge cannot be enforced against a bona fide purchaser without prior notice unless the relevant statute confers an express right to enforce the charge against a transferee without notice."

Tax Department's notice Quashed.

Refer M. Dakshinamoorthy v. Dy Commercial Tax Officer [2019] GCtR 4303 (Madras)

Written by 

Vishal

Delhi

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