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Tata Consultancy Service, A Division of Tata Sons Ltd. v/s Commercial Tax Officer Thiruvanmiyur Assessment Circle & Another


Company & Directors' Information:- TATA SONS LIMITED [Active] CIN = U99999MH1917PLC000478

Company & Directors' Information:- TATA SONS PRIVATE LIMITED [Active] CIN = U99999MH1917PTC000478

Company & Directors' Information:- H S CONSULTANCY PVT LTD [Active] CIN = U74140WB1988PTC044368

Company & Directors' Information:- S M CONSULTANCY PVT LTD [Active] CIN = U74140WB1992PTC057293

Company & Directors' Information:- N AND T CONSULTANCY SERVICE PRIVATE LIMITED [Strike Off] CIN = U67120MH2001PTC130680

Company & Directors' Information:- E TO E CONSULTANCY PRIVATE LIMITED [Active] CIN = U63030KA2008PTC048557

Company & Directors' Information:- R. A. CONSULTANCY PVT. LTD. [Under Process of Striking Off] CIN = U67120WB1994PTC066521

Company & Directors' Information:- V G CONSULTANCY PRIVATE LIMITED [Active] CIN = U74899DL1993PTC054746

Company & Directors' Information:- K .P. A. CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140WB2010PTC142889

Company & Directors' Information:- T K M CONSULTANCY INDIA PRIVATE LIMITED [Strike Off] CIN = U74140KL1998PTC012694

Company & Directors' Information:- A & A CONSULTANCY PVT. LTD. [Active] CIN = U74140WB1986PTC040777

Company & Directors' Information:- Y K CONSULTANCY (INDIA) PRIVATE LIMITED [Active] CIN = U74140DL2003PTC121113

Company & Directors' Information:- L M J CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140DL2010PTC208950

Company & Directors' Information:- M U S INDIA CONSULTANCY LIMITED [Strike Off] CIN = U74900WB2013PLC191253

Company & Directors' Information:- R A D CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140DL2011PTC224038

Company & Directors' Information:- Y. K. M. CONSULTANCY PRIVATE LIMITED [Active] CIN = U74900DL2013PTC254940

Company & Directors' Information:- J. P. CONSULTANCY PRIVATE LIMITED [Active] CIN = U51909GJ2002PTC040433

Company & Directors' Information:- P C CONSULTANCY PVT LTD [Active] CIN = U74210WB1991PTC053835

Company & Directors' Information:- J A CONSULTANCY PRIVATE LIMITED [Under Process of Striking Off] CIN = U93090MH2008PTC188284

Company & Directors' Information:- S K A CONSULTANCY PRIVATE LIMITED [Active] CIN = U74999UP2020PTC136502

Company & Directors' Information:- U G CONSULTANCY SERVICE PRIVATE LIMITED [Strike Off] CIN = U99999DL1992PTC051418

Company & Directors' Information:- D M M CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140WB2010PTC151887

Company & Directors' Information:- C I S (INDIA) CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74120BR2013PTC021019

Company & Directors' Information:- P S P CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74900DL2011PTC222022

Company & Directors' Information:- N. K. CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140HR2006PTC036471

Company & Directors' Information:- M E CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74140KL2012PTC031172

Company & Directors' Information:- V F C CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140RJ2015PTC048025

Company & Directors' Information:- E & C CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74140TN2007PTC062260

Company & Directors' Information:- L & R CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140TN2009PTC072839

Company & Directors' Information:- M F S CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140MH2008PTC177948

Company & Directors' Information:- H H S CONSULTANCY PRIVATE LIMITED [Active] CIN = U74120MH2013PTC250345

Company & Directors' Information:- M & W CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74910TN2004PTC053384

Company & Directors' Information:- M P CONSULTANCY PVT LTD [Strike Off] CIN = U74120WB1996PTC081085

Company & Directors' Information:- J. L. CONSULTANCY PVT LTD [Active] CIN = U74140WB1985PTC039818

Company & Directors' Information:- S E S CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74999WB2011PTC170939

Company & Directors' Information:- M J M CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74140DL2005PTC133200

Company & Directors' Information:- A C G CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74140DL2005PTC140720

Company & Directors' Information:- H M S CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140DL2010PTC201488

Company & Directors' Information:- D & G CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U65990DL2011PTC214142

Company & Directors' Information:- R H H H CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74900AP2014PTC095348

Company & Directors' Information:- R. S. U. CONSULTANCY SERVICE PRIVATE LIMITED [Strike Off] CIN = U74900MP2009PTC021755

Company & Directors' Information:- A & C CONSULTANCY PRIVATE LIMITED [Active] CIN = U74140KA2008PTC046754

Company & Directors' Information:- J SONS CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74900KA2013PTC072472

Company & Directors' Information:- A P R CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U93000KA2014PTC073639

Company & Directors' Information:- D C D CONSULTANCY PRIVATE LIMITED [Active] CIN = U74999RJ2020PTC071399

Company & Directors' Information:- V Z CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74140MH2007PTC170875

Company & Directors' Information:- F T CONSULTANCY PRIVATE LIMITED [Strike Off] CIN = U74900CH2007PTC030854

Company & Directors' Information:- M AND M CONSULTANCY PVT LTD [Strike Off] CIN = U74140PB1985PTC006557

    W.P.No.22679 of 2004

    Decided On, 22 March 2012

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE M. JAICHANDREN

    For the Petitioner: R. Yashod Vardhan, Senior Advocate for R. Sunil Kumar, Advocate. For the Respondents: S. Kanmani Annamalai, Government Advocate.



Judgment Text

(Prayer: Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari calling for the records of the respondent in Rc.3396/2002/A3, date 26.5.2004, and quash the said proceedings.)

1. Heard the learned counsel for the petitioner and the learned counsel appearing on behalf of the respondents.

2. It is stated that the petitioner company is one of the highly reputed companies in the business of Information Technology and Software Consulting. The petitioner has executed several turnkey projects for some of the top companies in India and in some foreign countries. As such, the petitioner had procured large tracts of land for setting up a world-class software centre, at Sholinganallur, Chennai.

3. It has been further stated that M/s.Gum (India) Limited, a Public Limited Company had one of its manufacturing facilities at Sholinganallur. Two plots of land, in Survey Nos.408/9, 408/10, situated in Sholinganallur Village, were lying adjacent to the software centre, established by the petitioner company. Therefore, the petitioner company was interested in buying the said plots of land, from M/s.Gum (India) Limited. At the time of the negotiations M/s.Gum (India) Limited had assured the petitioner company that the property in Survey No.408/10, in Sholinganallur Village, measuring an extent of 1.038 acres was free from encumbrances. Two other properties of M/s.Gum (India) Limited, measuring 1.887 acres, in Survey Nos.408/9 and 408/10, had been notified for acquisition by the Tamilnadu Housing Board. The acquisition proceedings had been challenged before this Court. However, the property measuring 1.038 acres, in Survey No.408/10, was not subject to any acquisition proceedings. No cases were pending in respect of the said land.

4. In such circumstances, the petitioner company had entered into an agreement for sale, on 24.1.2001, with M/s.Gum (India) Limited, for the purchase of 1.038 acres, in Survey No.408/10, Sholinganullur Village, for a sum of Rs.28,00,000/-. An advance of Rs.20,00,000/- had been paid on the same day. Later, a sale deed had been registered, on 30.3.2001, by which the property in question had been purchased by the petitioner company, from M/s.Gum (India) Limited.

5. It has been further stated that one of the clauses in the sale deed declared that the property in question does not suffer from any infirmity, as to its title or otherwise, and that it is not subject to any encumbrances, acquisition proceedings, lis pendens, charges, lien or holding of any kind, and that there are no legal proceedings against the vendor, whereby the alienation of the scheduled property is prohibited or impaired.

6. It had also been sated that the petitioner company had made due enquiries before purchasing the land in question. The Special Tahsildar, Tamilnadu Housing Board Schemes, had given a certificate, on 23.10.2000, confirming that the said land did not come under the land acquisition proceedings of the Tamilnadu Housing Board. Further, the encumbrance certificate, upto the period ending 13.9.2000, did not disclose any encumbrance over the property in question. The petitioner company had also applied for the necessary permission from the appropriate authority of the Income Tax department and an order under Section 269 UL (1) of the Income Tax Act, 1961, was also given, on 24.1.2001, stating that there was no objection to the transfer of the property in favour of the petitioner.

7. The petitioner had exercised due diligence and had made the necessary enquiries relating to the land. Only thereafter the petitioner had purchased the property in question, with the bona fide belief that the land was free of all encumbrances, and that there were no proceedings pending against the vendor. Further, as the vendor had stated, at the time of the execution of the sale deed, on 30.3.2001, that a sum of Rs.8,00,000/- was payable to the Employees Provident Fund, the said sum had been paid to the Employees Provident Fund Organization.

8. It has been further stated that the petitioner company has been in possession and enjoyment of the property in question, without any hindrance or claim by third parties. While so, the first respondent had issued a demand notice, dated 5.5.2003, asking the petitioner company to pay a sum of Rs.43,36,216/-, as the alleged arrears of sales tax due, from M/s.Gum (India) Limited, the original assessee.

9. The demand notice had been issued under Section 26(ii) of the Tamilnadu General Sales Tax Act, 1959, on the ground that the petitioner is a person holding money for, or on account of the assessee, namely, M/s.Gum (India) Limited. The demand notice had alleged that the assessee was due to pay the sales tax arrears, for the assessment years 1992-1993 to 1998-1999. The demand notice had proceeded on the basis that the petitioner had purchased the properties in question, in spite of knowing the fact that it was in arrears of sales tax.

10. By a letter, dated 3.6.2003, the petitioner had informed the first respondent that it was a bona fide purchase, for adequate consideration. It had also been stated that the property in question had been purchased by the petitioner company, without any notice of the charges or encumbrances, in respect of the property in question. The petitioner company had purchased the property with due diligence, after making the necessary enquiries regarding the property in question. Therefore, the impugned demand notice, issued by the first respondent, dated 26.5.2004, is arbitrary, illegal and void.

11. The learned counsel appearing on behalf of the petitioner had submitted that the impugned demand notice, dated 26.5.2004, issued by the first respondent, is ex facie illegal, as it is contrary to the relevant provisions of law. He had submitted that the first respondent ought to have seen that the petitioner company was a bona fide purchaser of the properties in question, without notice of the alleged arrears of the sales tax by the vendor namely M/s.Gum (India) Limited, the original assessee. When the petitioner company had purchased the property in good faith and for a valid consideration, without having notice of the sales tax arrears said to be due from the vendor, it would not be open to the first respondent to proceed against the petitioner company, or against the property in question, for collecting such sales tax arrears.

12. It has been further stated that, Section 24-A of the Tamilnadu General Sales Tax Act, 1959, makes it clear that, during the pendency of any proceedings under the said Act or after the completion thereof, if any dealer creates a charge on, or parts with the possession of any of his assets, in favour of any other person, with the intention to defraud the revenue, such charge or transfer shall be void as against any claim, in respect of any tax or any other sum payable by the dealer. However, the proviso to the said section states that such charge or transfer shall not be void if it is made for adequate consideration and without notice of the pendency of such proceedings under the Act, or without notice of such tax or other sum payable by the dealer. In the present case the petitioner company had no knowledge of the proceedings initiated against the vendor of the property, under the provisions of the Tamilnadu General Sales Tax Act, 1959.

13. It had also been pointed out that Section 100 of the Transfer of Property Act, 1882, also makes it clear that no charge shall be enforced against any property in the hands of the person to whom such property had been transferred for consideration and without notice of the charge.

14. The learned counsel for the petitioner had also submitted that necessary enquiries had been made by the petitioner company, regarding the pendency of acquisition proceedings. The Special Tahsildar, Land Acquisition, had given a certificate that no such proceedings were pending at the time of the purchase of the land in question. It had also been stated that the impugned demand notice had been issued by the first respondent, without considering the fact that the petitioner was not holding any money due to the dealer, the vendor of the property in question and therefore, the petitioner company would not be liable to pay any amount, said to be due from the dealer. It had been further stated that the constitutional right of the petitioner company, under Article 300-A of the Constitution of India, has been infringed by the passing of the impugned order, by the first respondent.

15. The learned counsel appearing on behalf of the petitioner had relied on the decision of a Division Bench of this Court, in A.Senthil Kumar Vs. Assistant Commissioner (CT) 2011(1) CTC 828, wherein, it had been held that the properties of bona fide purchasers, for valuable sale consideration, without notice of the sales tax arrears, cannot be brought to sale, by auction, for the sales tax dues of the borrowing company.

16. The learned counsel appearing on behalf of the petitioner had also relied on the following decisions, while reiterating his stand that a bona fide transferee, who had purchased the property in question, for valid consideration, without notice of the charge, is protected under the provisions of Section 24-A of the Tamilnadu General Sales Tax Act, 1959, and Section 100 of the Transfer of Property Act, 1882.

a) Ahmedabad Municipality Vs. Haji Abdul (AIR 1971 SC 1201)

b) Deputy Commercial Tax Officer Vs. R.K.Steels (1998 108 STC 161)

c) State of Karnataka and another Vs. Shreyas Papers (P) Ltd. And others (2006) 1 SCC 615

d) D.Senthil Kumar Vs. Commercial Tax Officer (2006) 3 M.L.J. 1019.

e) Tamilnad Mercantile Bank Ltd. Madurai Vs. The Commercial Tax Officer, Madurai (Madurai Bench) (2009-2-L.W.979)

f) M.Nagarajan Vs. The Deputy Commercial Tax Officer & another (2009-4-L.W. 386)

g) AI Champdany Industries Limited Vs. The Office Liquidator and another (2009(2) Supreme 631).

17. A counter affidavit had been filed on behalf of the respondents stating that the writ petition filed by the petitioner is not maintainable, both in law and on facts. The issue as to whether the petitioner is a bona fide purchaser of the property in question, for a valid consideration, without notice of the arrears of sales tax liable to be paid by its vendor, could be a disputed question of fact, which cannot be gone into by this Court, in a writ petition filed under Article 226 of the Constitution of India.

18. It has been further stated that such contentious questions of facts can only be agitated before a Civil forum. As per Section 24(1) of the Tamilnadu General Sales Tax Act, 1959, the tax payable under the provisions of the Act should be paid in accordance with the notice of demand. In default of such payment the whole of the amount outstanding on the date of the default shall become due and shall be a charge on the properties of the person liable to pay the tax in question. Accordingly, the assessee, under the Tamilnadu General Sales Tax Act, 1959, the vendor of the property in question, had committed default in paying the sales tax arrears, to the first respondent, to the tune of Rs.43,36,216/-. As the assessee had not paid the said amount to the first respondent, as arrears of sales tax, a charge had been created in the land in question, purchased by the petitioner. Therefore. the claim of the petitioner company that it is not liable to pay the arrears of sales tax, payable by the vendor of the property in question, cannot be accepted.

19. The learned counsel appearing on behalf of the respondents had relied on the decision of the Tamilnadu Taxation Special Tribunal, in N.Padma Coffee works Vs. Commercial Tax Officer, Trichy (114 STC 494), wherein, it had been held that a disputed question of fact, relating to the bona fide nature of the purchase of the property in question, cannot be decided by this Court, under Article 226 of the Constitution of India. Such issues have to be agitated before the appropriate Civil forum, to be proved by evidence.

20. The learned counsel had also relied on a decision of this Court, dated 14.7.2005, made in W.P.No. 5155 of 2003, wherein this Court had dismissed the writ petition filed by the petitioner therein, in view of the decision reported in N.Padma Coffee works Vs. Commercial Tax Officer, Trichy (114 STC 494), leaving open all the issues raised by the petitioner, to be agitated before the appropriate Civil forum. Therefore, the writ petition filed by the petitioner company is devoid of merits and therefore, it is liable to be dismissed.

21. In view of the submissions made on behalf of the petitioner, as well as the respondent, and on a perusal of the records available, and on considering the decisions cited supra, this Court is of the considered view that the impugned demand notice, dated 26.5.2004, issued by the first respondent, is liable to be set aside, as it has been issued without the authority of law.

22. The impugned demand notice issued by the first respondent cannot be held to be valid in view of the fact that the petitioner had purchased the property in question, from M/s.Gum (India) Limited, for a valid consideration, without notice of the charge said to have been created on the property in question, in respect of the alleged arrears of sales tax payable by the vendor, who is the original assessee.

23. From the available records it is seen that the petitioner had made the necessary enquiries from the Special Tahsildar, Land Acquisition, as to whether there were any land acquisition proceedings, in respect of the land in question. The petitioner had also paid the Employees Provident Fund arrears of the vendor of

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the property in question, at the time of the execution of the sale deed. Further, nothing has been shown on behalf of the respondents to substantiate the claim that the purchase of the property by the petitioner company was not bona fide in nature. 24. The respondents have not been in a position to show that the petitioner company had knowledge of the arrears of sales tax, liable to be paid by the original assessee, who is the vendor of the property in question. In such circumstances, the proviso to Section 24-A of the Tamilnadu General Sales Tax Act, 1959, would come to the rescue of the petitioner company. 25. As long as the transaction, between the original assessee and the petitioner company, is not shown to be fraudulent in nature it cannot be said that such transaction is void, as per Section 24-A of the Tamilnadu General Sales Tax Act, 1959. As the respondents have failed to establish their claim that the petitioner company had purchased the property in question, with the knowledge of liability of the Employees Provident Fund, and in respect of the payment of the sales tax arrears, said to be payable to the respondents, the purchase of the said property, by the petitioner company, cannot be held to be invalid in the eye of law. As such, the contentions raised on behalf of the respondents cannot be countenanced. In such view of the matter, this Court finds it appropriate to set aside the impugned demand notice, dated 26.5.2004, issued by the first respondent. Accordingly, the writ petition stands allowed.
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