- (1.) THE petitioner seeks the issue of a writ of Certiorari to quash the proceedings dated 18.7.2008 in ROC-2192/99 A3 from the Commercial Tax Officer, Madurai, in respect of the tax dues from a defaulter for the period 1993-1994 to 1997-1998.
(2.) IT is seen that in respect of the tax arrears of a defaulter assessee, the respondent herein issued notice in Form IV on 26.8.1999 under the Revenue Recovery Act and attached the property of the assessee. The attachment was published in the District Gazette on 8.12.2000 and notice as to bring the property for sale was published in the newspaper on 4.3.2001. placing reliance on the decision reported in [1999] 115 STC 545 (E.T. & T.D. Corpn. Ltd. Vs. State of Rajasthan) that the State Government's dues have the first charge over any other arrears, the respondent issued notice to the petitioner in Form B6 and called upon the petitioner to remit within fifteen days the amount realised by the Bank towards its dues by auction sale of the said property given as security along with interest at 2% per month in terms of Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959. Since there was no response from the petitioner Bank, a reminder was sent on 10.3.2008. On 24.3.2008, the petitioner Bank replied contending that the property in 228-C, Chinnakadai Street, Madurai, was mortgaged by one Somalingam, the proprietor of Ashok Jewels, as early as 29.10.1993. Since there was default on the part of the borrower, the petitioner filed a suit before the Debts Recovery Tribunal and in execution of the decree obtained, the mortgaged property was sold in auction sale and the auction sale was confirmed by a registered certificate dated 20.11.2006. Since the auction purchaser was a bona fide purchaser for value entitled to protection under Section 41 of the Transfer of Property Act, the sale could not be questioned even otherwise. IT was pointed out that the mortgage fetched a sum of Rs.14,30,000/- (Rupees fourteen lakhs and thirty thousand only) only as against the recovery certificate issued by the Debts Recovery Tribunal to the tune of Rs.47,37,929/- (Rupees forty seven lakhs thirty seven thousand nine hundred and twenty nine only). The petitioner further contended that Section 24 of the Tamil Nadu General Sales Tax Act provided for a charge on the asset of the defaulting assessee and does not provide for the charge on sale proceeds. Hence, the sale proceeds could not be traced for recovery. The petitioner also contended that the decision reported in [1999] 115 STC 545 (E.T. & T.D. Corpn. Ltd. Vs. State of Rajasthan) relied on by the respondent, related to the case of transferee (auction purchaser) purchasing not only the assets but also the entire business of the defaulter on "as is where is" basis. The respondent, however, replied on 7.5.2008 and supported their action in terms of Section 26 of the Act. This was replied on 6.6.2008 by the petitioner that Section 26 of the Tamil Nadu General Sales Tax Act or Section 45 of the Tamilnadu Value Added Tax Act, 2006, have no application and resisted the action of the respondent. Since the respondent rejected the claim of the petitioner, the present writ petition is filed before this Court contending that the mortgage in favour of the petitioner is much prior to the demand raised. Hence, the question of the petitioner's charge being defeated by reason of Section 24 of the Act does not arise. In this connection, learned counsel for the petitioner placed reliance on the decision of the Hon'ble Apex Court reported in 2000 (IV) CTC 170 = 120 STC 610 (Dena Bank Vs. Bhikhabhai Prabhudas Parkesh and Co. and others) that the priority of the charge available to the State cannot supersede the commercial transactions under which the property had already been subjected to charge in favour of the Bank.
(3.) IN the above circumstances, learned counsel for the petitioner seeks the issue of a writ of Certiorari to quash the order dated 18.7.2008. On notice, the respondent has filed a counter affidavit wherein, they have given the details as to the date of assessment and the demand made on the defaulter assessee. Placing reliance on Section 24(1) and (2) of the Tamil Nadu General Sales Tax Act and on the decisions in: (i) State Bank of Bikaner & Jaipur Vs. National Iron and Steel Rolling Corporation and others reported in (1995) 96 STC 612 (SC); (ii) Dena Bank Vs. Bhikhabhai Prabhudas Parkesh and Co. and others reported in 2000 (IV) CTC 170 = [2000] 120 STC 610 (SC); (iii) Central Bank of India Vs. State of Tamil Nadu reported in 113 STC 145 (Mds) and (iv) Thane Janata Bahakari Bank Ltd. Vs. Commissioner of Sales Tax and others reported in (2006) 148 STC 32 (Bom.), the respondent contended that the State has the preferential right over that of the petitioner Bank; consequently, the contention of the petitioner has to be rejected. ;