ARJUN MOTORS PVT LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THIS petition is filed by M/s. Arjun Motors Pvt. Ltd. to set aside the order dated 20-3-2003 passed in C. Misc. No. 240 2002 on the file of the Spl. JMFC (Sales Tax)rejecting his objection in the said case.

(2.) THE respondent No. 2 herein was an assessee and he was due in a sum of Rupees twenty Lakhs towards sales tax and cst. Since respondent No. 2 has not paid the arrears of tax, the respondent No. 1 filed an application under Section 13 (b) of the kst Act for recovery of Rs. 20 Lakhs from respondent No. 2. When the matter was pending before the Special JMFC (Sales Tax), bangalore, the petitioner herein appeared as an objector and resisted the recovery proceedings against respondent No. 2. The contention taken by the petitioner in this revision petition is that the respondent No. 2 raised a loan from ICICI Bank. On being unable to repay the said loan to the bank, the bank issued a demand notice dated 23-11-2002 under Section 13 (2) of the securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein referred to as the"securitisation Act") and a public notice has been issued about taking over possession of the property of respondent as per Annex-ure-C. The contention taken by the petitioner-objector is that on the very same day, the petitioner addressed a letter to the ICICI bank showing its willingness to purchase the property belonging to the assessee namely the respondent herein which had been taken possession of by the bank and the ICICI bank purchased the said property of the second respondent. There is no stipulation of clause that for the arrears of sales tax due by the respondent No. 2, the purchaser is liable to pay the said arrears of the asses-see-company. Accordingly, the bank has given consent for him and entered into an agreement. The assessee has leased out the premises along with the plant and machinery to this petitioner. Since April 2002 it continues to be in possession as a lessee and the lease agreement had been entered into on 23-12-2001. The assessee as on date neither owns the property, plant and machinery nor is in possession of the property. Hence, this petition.

(3.) HEARD the arguments of the learned counsel for the petitioner. Learned counsel submits that the petitioner had entered into a lease agreement with the ICICI bank and continued to be in possession of the plant and machineries of the respondent No. 2 company. Section 13 of the Securitisation act provides measures for the recovery of the secured debt from the borrowers. The second respondent-company has become a sick industry. Therefore, under Section 15 of the Sales Tax Act, tax if any payable by the assessee cannot be claimed from it by the concerned authorities. Therefore, the provisions of Section 10 (4) (b) (c) and (d) are very much applicable. Under Section 13 (3) (b), the sales tax Court cannot recover the amount from the transferee of the assets. Since respondent No. 2 approached the competent authority for winding up of the company, therefore, the revision petitioner who has taken the land, plant and machinery for lease from the ICICI bank is not liable to pay any tax due by the respondent No. 2. Hence prays for allowing the petition.