M/S.Tata Consultancy Service vs. Commercial Tax Officer Thiruvanmiyur Assessment Circle, Chennai and Another, [2012] 54 VST 477 (Mad)

Facts
The petitioner company had purchased land from M/S. Gum (India) Ltd. after making due enquiry and had obtained encumbrance certificate which did not disclose any encumbrance over the property in question. The sale deed was executed on 30th March, 2001. The sales tax department issued notice to the petitioner company on 26th May, 2004 to pay amount of sales tax payable by the seller namely M/S. Gum (India) Ltd. under the Tamil Nadu General Sales Tax Act, 1959, for the period 1992-93 to 1998-99 on the ground that the land was purchased by the petitioner company knowing the fact that the selling dealer was in arrears of sales tax. The petitioner company filed writ petition before the Madras High Court to quash the notice issued by the sales tax department for payment of arrears of sales tax payable by the selling dealer.

Held
The High Court on facts of the case held that the petitioner had purchased the land from the selling dealer without notice of charge said to have been created on the property in question in respect of alleged arrears of sales tax payable by the vendor company. As long as the transaction, between the original assessee and petitioner-company, is not shown to be fraudulent in nature, it cannot be said that such transaction is void as per section 24A of the Tamil Nadu General Sales Tax Act, 1959. As the respondent had failed to establish their claim that the petitioner company had purchased the property in question, with the knowledge of liability of employees provident fund, and in respect of the arrears of sales tax said to be payable to the sales tax department, the purchase of said property by the petitioner company cannot be held as invalid in the eyes of law. Accordingly, the High Court allowed the writ petition filed by the company and set aside the impugned notice of demand issued by the sales tax department.