Transfers made by a defaulting taxpayer are void; bona fide purchasers must establish their claims through a civil suit under the TNGST Act.

ORDER :

C. SARAVANAN, J.

1. The petitioner has challenged the Impugned Communication/Order dated 07.01.2015 issued by the 1^st respondent.

2. By the Impugned Communication dated 07.01.2015 addressed to the petitioner, the petitioner has been called upon to pay tax and interest upto 07.01.2015 of Rs.6,64,011/- (Tax of Rs.1,25,102/- and interest of Rs.5,52,814/-). Relevant portion of the Impugned Communication/Order dated 07.01.2015 issued purportedly under Section 24 -A of Tamil Nadu General Sales Tax (TNGST) Act, 1959, reads as under:-

“It was learnt that, you have purchased the immovable properties of the defaulters situated at Sy.No.55/1B, while pendency of charges, transfer of immovable, Pagalapalli Village, Dharmapuri Taluk and District property in favour of you was void as per Section 24A of TNGST Act, 1959 and also it is responsibility of the buyers to settle the entire Sales tax due held by the defaulted company namely Tvl.Swathi Cones, Sy.No.55/1B1, Pagalahalli Village, Salem Main Road, Dharmapuri Taluk and District.

In this circumstances, the buyers of the immovable properties namely Tvl.T.Palanisamy is hereby directed to pay the tax and interest upto 07-01-2015 of Rs.6,64,011/- (Rupees Six Lakhs Sixty Four Thousand and Eleven only) (Tax of Rs.1,25,102/- and interest of Rs.5,52,814/- (as on 07-01-2015 and it will changes till the date of payment of principal of Rs.1,25,012/-) being the sales tax dues held by Tvl.Swathi Cones, Sy.No.55/1B1, Pagalahalli Village, Dharmapuri Taluk and District with Seven days from the date of receipt of this notice, failing which action will be initiated as per Section24(2)(a) and Section 26 of TNGST Act, 1959.”

3. The petitioner herein has purchased the property from an assessee under default namely, one G.Venkatesan, Proprietor of M/s.Swathi Cones, who had avaied the benefit of Interest Free Sales Tax Deferral/Waiver Scheme for the period between 1992-1993 and 2000-2001 for a sum of Rs.6.58 Lakhs based on the Eligibility Certificate issued by the Tamil Nadu Industrial Investment Corporation Limited, Madras in their Letter No.IFST/D/003/IX/N/DPI/92-93 dated 01.06.1992

4. The said G.Venkatesan, Proprietor of M/s.Swathi Cones, was required to start paying tax from 2001 till 2010 i.e., 9^th year from the commencement of availment of the Interest Free Sales Tax Deferral/Waiver Scheme. The said G.Venkatesan, Proprietor of M/s.Swathi Cones, however defaulted in making payments to the Commercial Tax Department and proceeded to sell his properties contrary to Agreement dated 19.08.1994 signed with the Assistant Commissioner (CT), Dharmapuri to the petitioner.

5. As per the Agreement dated 19.08.1994, the said G.Venkatesan, Proprietor of M/s.Swathi Cones, agreed not to alienate/dispose/encumber/lease out the fixed assets until the Government loan i.e., Interest Free Loan was fully discharged/repaid under the Scheme. Similarly, under the Agreement, the movable and immovable properties of the Proprietary concern, were liable to be attached/proceeded towards the realization of the outstanding Government Loan under the Revenue Recovery Act, 1890 together with interest at 24% per annum (simple interest) calculated from the due date for repayment of loan.

6. The Agreement clearly states that in default of repayment of Government loan or cancellation of the deferral facility for violation of any of the conditions as mentioned in Paragraphs 3, 4, 5, 6 and 7 of the Agreement, such Government loan, tax and interest due shall be thereon recoverable in such manner as spe