Sales-tax Dept. cannot attach property of a person to recover outstanding sales tax dues of proprietary concerns of his mother and father:

The petitioner bought a Shed from a person who had bought the same from a Bank in a public auction. The said shed was situated at an Industrial estate which in the nature of a Co-Operative Society and the said society refused to transfer the said shed in the name of the petitioner on the count that the said shed was attached by Sales tax Dept. since there were huge outstanding sales tax dues recoverable from two proprietary concerns of father and mother of the original owner of the said shed. The Hon’ble High Court observed that the original owner of the shed stood as a guarantor in respect of loan granted by the concerned bank (which conducted the auction) to the proprietary concern of his mother and this transaction took place prior to attachment of the said shed by the sales tax Dept. Since the proprietary concern of mother of shed’s original owner couldn’t pay off her dues to bank, the bank auctioned the shed as per the provisions of SARFAESI Act and the sales tax Dept. didn’t raise any objection when the bank issued a public notice in respect of the said auction. It was held that the original owner of the shed had no legal relation with the said two proprietary concerns and hence, the sales tax Dept. couldn’t have attached the shed for recovering the dues of the said entities moreso when the original owner had no outstanding sales tax dues. Hence, the attachment by sales tax Dept. was set-aside and the Co-Operative Society was directed to register the said shed in the name of the petitioner.

[GIRIRAJ M. SHAH - SCA 10707 of 2012 - GHC]