COCHIN CANDIMENTS PVT. LTD. Vs. DISTRICT COLLECTOR

JUDGEMENT

(1.) Petitioner is challenging recovery proceedings initiated against his property for recovery of arrears of sales tax due from 5th respondent for the assessment year 1993-94. Petitioner s case is that petitioner purchased property from defaulter s wife on 03/02/1998 and since the person from whom petitioner purchased the property is not in arrears of sales tax, the property purchased by petitioner cannot be proceeded against in recovery proceedings. However, the case of the respondent is that defaulter transferred the property on 20/01/1994 to his wife to avoid recovery of sales tax and the defaulter s wife in turn sold the property to petitioner. Therefore, property can be attached and sold in recovery proceedings by virtue of Section 26A of the KGST Act is the case of the respondent.

(2.) Learned Counsel for the petitioner referred to decision of the Supreme Court in State of Karnataka and Anr. v. Shreyas Papers (P) Ltd. and Ors., and contended that sales tax is not a charge on the property and so much so recovery can not be continued against the property. Learned Government Pleader has referred to decision of this Court in Hamsa v. Asst. Commissioner,2008 3 KLT 180 and contended that property of a dealer can be proceeded against for recovery even if assessment and demand were not raised at the time of sale of property to others, and even after the sale, pr6perty can be proceeded against recovery, if there is any proceedings pending under the Act. Section 26A of the KGST Act is quoted below:

(3.) However, it is strange that petitioner did not critically take note of the title of the person from whom he purchased the property i.e. the wife of the defaulter. The transaction of sale of property between husband and wife has to be always examined closely and critically because such transaction of sale normally does not take place. If petitioner was little careful, it would have come to his knowledge without any difficulty that the seller is a defaulter or a person who has statutory liability under the Sales Tax Act, and therefore, the title obtained by his wife through transfer of property by defaulter will always be defective. I am of the view that petitioner consciously or indifferently entered into the transaction and he has no escape from the consequences.