RAVI FOOD INDUSTRIES Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THIS writ petition was filed in the Rajasthan High Court, Jaipur Bench, Jaipur for quashing the notice dated December 21, 1990 (annexure 6) and for declaring that the transfer of the property belonging to M/s. Jai Food Industries to the petitioner was to defraud the Revenue and the petitioner is liable to pay the tax against M/s. Jai Food Industries (sic). On the establishment of this Tribunal, it stood transferred to it under Section 15, Rajasthan Taxation Tribunal Act, 1995.

(2.) IT has been averred in the writ petition, in short, as follows. On October 18, 1989, the petitioner entered into an agreement (annexure 1) with M/s. Jai Food Industries for purchase of land and building for Rs. 11,41,000. On October 23, 1989, another agreement (annexure 1 -A) was entered into in between them for the purchase of machinery for Rs. 1,61,000 and raw materials for Rs. 11,960. Dues of Rajasthan Financial Corporation (in short "RFC") and the State Bank of Bikaner and Jaipur (in short "SBBJ") to the extent of Rs. 44,400 and Rs. 2,70,542 (Rs. 2,09,205 + Rs. 61,337) respectively were outstanding against M/s. Jai Food Industries, Ajmer. Their movable and immovable properties were pledged/hypothecated with RFC as a first charge and with SBBJ as a second charge. The total liability of Rs. 3,14,942 was outstanding against M/s. Jai Food Industries, Ajmer. The petitioner was not aware of the dues outstanding against M/s. Jai Food Industries of the Commercial Taxes Department. The petitioner has made payment of Rs. 2,70,542 to the SBBJ vide receipt (annexure 4). RFC agreed to transfer the said land in favour of the petitioner and an agreement (annexure 5) has been executed. The land in question was belonging to the Rajasthan State Industrial and Development Corporation (in short "RIICO") and the said property was leased by it to the petitioner as per agreement dated February 12, 1990 (annexure 5A). On December 20, 1990, the Commercial Taxes Officer, Ajmer (respondent No. 2) issued notice (annexure 6) stating that certain dues were outstanding against M/s. Jai Food Industries, Ajmer, transfer of the said factory to the petitioner was invalid and the petitioner is liable for the payment of the sales tax dues and it was directed to deposit Rs. 1,13,746 outstanding against the said firm. On December 29, 1990, reply (annexure 7) was filed along with an affidavit stating that the petitioner was not aware of any liability of the Sales Tax Department against M/s. Jai Food Industries, Ajmer and the provisions of Section 11AAA of the Rajasthan Sales Tax Act, 1954 (in short, "the Act") are not applicable. No order was passed. An application for issuing a certified copy of the proceedings of December 29, 1990 was made but no copy was issued. The petitioner was threatened by the respondent No. 2 for depositing the said amount. It has become difficult for the petitioner to carry on its business.

(3.) IN the rejoinder, the petitioner averred that it is absolutely incorrect that it has purchased the business. Machineries and building have simply been purchased. It is a bona fide purchaser and for valuable consideration. The lease deed (annexure 5A) has been executed and registered in favour of the petitioner. The Commercial Taxes Department has no right, title or interest in the land. Notice issued under Section 11AAA is void. The provisions of Sections 9 and 11AAA are not applicable. The respondent No. 2 cannot take law in its own hand. The respondent No. 2 has not given any proof that the petitioner was aware of outstanding dues of the department. The action of the respondent is not protected under Section 18 of the Act.