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2016 Supreme(Ker) 32
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ASHOK BHUSHAN & A.M.SHAFFIQUE, JJ.
VALSAMMA – Petitioner
Vs.
DISTRICT COLLECTOR, ERNAKULAM – Respondent
W.P.C.Nos.28143 & 24720 of 2007, W.P.C.Nos.23327 & 24024 of 2008, W.P.C.No.16382 of 2009, W.A.No.1835 of 2008 & Cont.Case No.661 of 2011
Decided on : 19.1.2016
Advocate Appeared:
SRI.K.I.MAYANKUTTY MATHER, SMT.S.AMINA, SRI.P.J.MATHEW
SRI.SUDHEESH KUMAR
A charge is created on the property of a person liable to pay tax when there is a default in payment, and any transfer made after demand for tax is void. Revenue authorities were justified in taking action against the properties of E.V.Thomas and his family, but not against subsequent purchasers who were not aware of the tax arrears and against whom no prior proceedings were initiated.
Headnote:
Revenue Recovery - Sales Tax - KGST Act, RR Act - The court considered cases concerning recovery of sales tax due from E.V.Thomas and others. The judgment discussed the validity of property transfers, creation of charge on properties, and the authority of revenue authorities to proceed against properties. The court held that a charge is created on the property of a person liable to pay tax when there is a default in payment, and any transfer made after demand for tax is void. The court found that the revenue authorities were justified in taking action against the properties of E.V.Thomas and his family. However, the court held that the revenue authorities were not entitled to proceed against the properties of subsequent purchasers who were not aware of the tax arrears and against whom no prior proceedings were initiated. The court allowed an appeal and dismissed certain writ petitions, while dropping a contempt case due to a mistake of fact.
Fact of the Case:
The cases concerned recovery of sales tax due from E.V.Thomas and others. The revenue authorities took action against properties acquired by E.V.Thomas, his wife, and children. The petitioners challenged the action, claiming to be bona fide purchasers unaware of the tax arrears.
Finding of the Court:
The court found that a charge is created on the property of a person liable to pay tax when there is a default in payment, and any transfer made after demand for tax is void. The revenue authorities were justified in taking action against the properties of E.V.Thomas and his family. However, the revenue authorities were not entitled to proceed against the properties of subsequent purchasers who were not aware of the tax arrears and against whom no prior proceedings were initiated. The court allowed an appeal and dismissed certain writ petitions, while dropping a contempt case due to a mistake of fact.
Ratio Decidendi: The court held that a charge is created on the property of a person liable to pay tax when there is a default in payment, and any transfer made after demand for tax is void. The revenue authorities were justified in taking action against the properties of E.V.Thomas and his family. However, the revenue authorities were not entitled to proceed against the properties of subsequent purchasers who were not aware of the tax arrears and against whom no prior proceedings were initiated.
Final Decision: The court allowed an appeal and dismissed certain writ petitions, while dropping a contempt case due to a mistake of fact.
Shaffique, J
All these cases concern steps taken by the Revenue Authorities for recovery of sales tax due from one E.V.Thomas. The writ petitioners were proceeded against mainly on the ground that they have acquired properties which belonged to Sri.E.V.Thomas, his wife and children and therefore became liable to the extent of properties acquired by them. The said action of the revenue authorities came to be challenged in separate writ petitions.
2. The writ petitioners are the appellants in W.A.No.1835/2008. They challenge the judgment in W.P.C.No.26177 of 2008 by which the learned Single Judge as per judgment dated 01/09/2008 relegated the writ petitioners to prefer a revision before the Government under Section 83 of the Kerala Revenue Recovery Act (hereinafter referred to as 'the RR Act').
3. W.P.C.No.16382/2009 is also filed by the appellants in W.A.No.1835/2008, seeking for a direction to consider Ext.P3 representation before taking any further proceedings to recover any amount from them.
4. Contempt Case No.661/2011 has been filed by the appellants in W.A.No.1835/2008 alleging wilful disobedience of the interim order passed by the Division Bench staying further proceedings for recovery of amount. It is contended that despite the order staying further proceedings, steps were taken to attach the properties of the petitioner.
5. All the other writ petitions were tagged together for hearing along with W.A.No.1835/2008 as it was submitted that common issues arise for consideration in those writ petitions.
6. First of all, we shall consider W.A.No.1835/2008, the facts of which are: The appellants filed the writ petition challenging Exts.P10 and P11 and for a direction to the District Collector to proceed against the person and properties of respondents 4 to 8 pursuant to Exts.P8 and P9 proceedings. Ext.P10 is an order passed by the Tahsildar on 11/08/2008 inter alia observing that Sri.E.V.Thomas transferred a portion of his property at Muvattupuzha to his wife Chinnamma Thomas. His liabilities towards sales tax had come to an amount of Rs.28,21,105/- for the assessment period 1987-88 to 1990-91. It is alleged that the sale was deliberately made by Sri.E.V.Thomas to avoid payment of sales tax arrears due to the Government. After selling the property, the family moved to Puducode village in Palakkad District, where he purchased land and property in the name of his wife Chinnamma Thomas and his son Saji Thomas. Notices were issued to Chinnamma Thomas and Saji Thomas for recovering the dues. Chinnamma Thomas contended that the property at Muvattupuzha Taluk was conveyed in her name as compensation for utilising her dowry money and it was from the sale of that property, she had purchased the landed properties in Puducode village. Sri.Saji Thomas contended that the money to purchase the land in his name was provided by his maternal uncle. It is further observed that in 2003, Smt.Chinnamma Thomas and Jobin Thomas S/o. E.V.Thomas, sold out certain item of property to P.N.Pushpa Rajan and Smt.Leela Pushpa Rajan. They transferred the said property to Smt.Simi Surendran and Sri.K.K.Rajan, the appellants herein, as per document No.1875/2007 of SRO, Alathur. It was observed that E.V.Thomas had purchased the property in the name of his wife and children from the sale proceeds of Muvattupuzha property, which was deliberately done to defeat the liability towards sales tax and therefore it was declared that the transaction covered as per document No.500/1/03 dated 15/02/2003 and subsequent transfer as per document No.1875/07 of SRO Alathur are null and void. Ext.P11 is passed with reference to certain other item of property wherein also the appellants herein acquired properties from Sri.Saji Thomas and Smt.Ansamma Saji as per document No.2680/1/03 dated 16/06/2007. It is observed that Saji Thomas purchased the property from Chinnamma Thomas, w/o. Sri.E.V.Thomas as per sale deed No.1171/99. Saji Thomas is the son of E.V.Thomas. He later
