Madras High Court
The Office Of Assistant Commissioner … vs V.Ramyalakshmi on 12 August, 2025
Author: Anita Sumanth
Bench: Anita Sumanth
2025:MHC:2009
W.A.Nos.1019 of 2020 etc. batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 12.08.2025
CORAM :
THE HONOURABLE DR.JUSTICE ANITA SUMANTH
and
THE HONOURABLE MR.JUSTICE N.SENTHILKUMAR
W.A.Nos.1019 of 2020
and CMP.No.12450 of 2020
and
W.P.No.18840 of 2020
and
W.A.Nos.2903, 2965 & 2912 of 2021
and CMP.Nos.19598, 19711 & 20133 of 2021
and
W.A.Nos.293, 708, 727, 726, 162 & 1761 of 2022
and CMP.Nos.2215, 5045, 4915, 1097,
12870, 18771, 5037 & 5038 of 2022
W.A.No.2903 of 2021:
The Office of Assistant Commissioner (CT),
Saligramam Assessment Circle,
No.21, G.K.Industrial Estate 1st Main Road,
Alapakkam, Porur, Chennai-600 116. .. Appellant
vs
1.V.Ramyalakshmi
2.The Sub-Registrar,
Virugambakkam, Chennai.
3.V.Shivakumar .. Respondents
1/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
Prayer in W.A.No. 2903 of 2021: Appeal filed under Clause 15 of Letters
Patent against the common order passed in W.P.No.30458 of 2015 dated
28.02.2020.
AND
W.A.No. 1019 of 2020:
I.Jeyarajhan .. Appellant
vs
The Commercial Tax Officer
Tondiarpet Assessment Circle
Office of the Assistant Commissioner (C.T)
No.19 & 20, Kummalamman Koil Street
Tondiarpet, Chennai-600 081. .. Respondent
Prayer in W.A.No. 1019 of 2020: Appeal filed under Clause 15 of Letters
Patent to call for the records relating to the order dated 10.02.2020 made
in W.P.No.29090 of 2016, set aside the same and consequently allow the
writ petition.
AND
W.P.No.18840 of 2020:
1.V.Sivalingam
2.R.Kamatchi
3.M/s.Sree Saravana Traders,
Rep. by its Partner – N.Vadivel,
No.628-A, Fort Main Road,
Shevapet, Salem 636 002. .. Respondents
(R3 impleaded vide order dt. 05.04.2022
made in WMP.12364/2021 in WP.18840/2020)
2/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
Prayer in WP.No.18840 of 2020 : PETITION filed under Article 226 of
the Constitution of India praying for the issuance of Writ of Mandamus
directing the first respondent to remove/lift the attachment created in
certificate on the petitioner's property situated at Ward D, Block 3, Survey
No.71 bearing Door No.20B, Kabini Chetty Street, Arisipalayam, Salem,
by addressing suitable communication to the 2nd Respondent.
Case Nos. For Appellants/Petitioners
For Respondents/
Respondents
WA.1019 of Mr.M.Ganesh Mr.Haja Nazaruddin,
2020 Additional Advocate
General
Assisted by
Ms.Amrita
Dinakaran,
Government
Advocate
and
Mr.P.Hari Babu,
Government
Advocate
W.A.293 of Mr.Haja Nazaruddin, Mr.V.Srikanth, for
2022 Additional Advocate R1
General
Assisted by R2 – Insufficient
Ms.Amrita Dinakaran, Address
Government Advocate
and
Mr.P.Hari Babu,
Government Advocate
W.A.708 of Mr.Haja Nazaruddin, Mr.N.Prasad, Senior
2022 Additional Advocate Counsel
General For Mr.Inbarajan
Assisted by
3/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
Ms.Amrita Dinakaran,
Government Advocate
and
Mr.P.Hari Babu,
Government Advocate
W.P.18840 of Mr.G.Murugendran Mr.Haja Nazaruddin,
2020 Additional Advocate
General
Assisted by
Ms.Amrita
Dinakaran,
Government
Advocate
and
Mr.P.Hari Babu,
Government
Advocate
For R1 & R2
R3 – Tapal returned
no such person
W.A.727 of Mr.Haja Nazaruddin, Mr.V.Regunathan,
2022 Additional Advocate for R1
General
Assisted by Mr.P.Harish, for R3
Ms.Amrita Dinakaran, Government
Government Advocate Advocate
and
Mr.P.Hari Babu, No Appearance – for
Government Advocate R2 & R4
No such person –
(R5 & R6)
W.A.726 of Mr.Haja Nazaruddin, Ms.R.Hemalath,
2022 Additional Advocate for R1 to R3
General
Assisted by R4 – unclaimed
4/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
Ms.Amrita Dinakaran,
Government Advocate
and
Mr.P.Hari Babu,
Government Advocate
W.A.2903 of Mr.Haja Nazaruddin, Mr.P.Harish, for R2
2021 Additional Advocate Government
General Advocate
Assisted by
Ms.Amrita Dinakaran, No Appearance – for
Government Advocate R1 and R3
and
Mr.P.Hari Babu,
Government Advocate
W.A.2965 of Mr.Haja Nazaruddin, Mr.G.Krishnakumar,
2021 Additional Advocate for R1 & R2
General
Assisted by
Ms.Amrita Dinakaran,
Government Advocate
and
Mr.P.Hari Babu,
Government Advocate
W.A.162 of Mr.Haja Nazaruddin, Mr.D.Baskar
2022 Additional Advocate
General
Assisted by
Ms.Amrita Dinakaran,
Government Advocate
and
Mr.P.Hari Babu,
Government Advocate
W.A.1761 of Mr.Haja Nazaruddin, Mr.K.Elango
2022 Additional Advocate
General
Assisted by
Ms.Amrita Dinakaran,
5/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
Government Advocate
and
Mr.P.Hari Babu,
Government Advocate
W.A.2912 of Mr.Haja Nazaruddin, Mr.C.Baktha
2021 Additional Advocate Siromani
General
Assisted by
Ms.Amrita Dinakaran,
Government Advocate
and
Mr.P.Hari Babu,
Government Advocate
COMMON JUDGMENT
(Delivered by Dr. ANITA SUMANTH.,J)
This is a batch of 10 writ appeals and one Writ Petition. Nine Writ
Appeals have been filed by the State challenging common order dated
28.02.2020 passed in W.P.Nos.39939 of 2005 etc. batch and one Writ
Appeal, viz., W.A.No.1019 of 2020 has been filed by the purchaser
challenging an order dated 10.02.2020 passed in W.P.No.29090 of 2020.
2. W.P.No.18840 of 2020 has been filed by the purchasers seeking
a direction to the first respondent/assessing officer to lift the attachment
created on the petitioners’ property.
3. In common, the issue relates to a challenge to encumbrances on
various properties (in common referred to as ‘properties’/‘subject
properties’) owned by the respondents (referred to as purchasers) on the
6/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
file of the various Sub Registrars within whose jurisdiction the properties
are located. The basis of the encumbrance was pending arrears of dues
either under the Tamil Nadu General Sales Tax Act, 1959 (in short
‘TNGST Act) or Tamil Nadu Value Added Tax Act, 2006 (in short
‘TNVAT Act’).
4. The submissions of the Respondents who are the writ petitioners
(in short and in common, ‘respondents’), before the writ Court had been
that they are bonafide purchasers of the subject properties, had paid valid
consideration for the same and had exercised due diligence by verifying
the encumbrance prior to purchase. In no case was there any charge
created by the Commercial Taxes Department in respect of the subject
properties. They had referred to and relied upon the provisions of Sections
24 and 24A of the TNGST Act, Sections 42 & 43 of the TNVAT of Act,
Section 3 and Section 100 of the Transfer of Property Act (TP Act) and
several decisions, in consideration of which the Writ Court had allowed
the writ petitions.
5. The auction sale notices that had been issued were set aside and
the matters had been remanded to the concerned authorities to consider
whether there was any encumbrance of the charge reflected on the subject
7/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
properties before the concerned jurisdictional registering offices. The
Court held that in the absence of such encumbrance of charge, the
properties shall be released free from charge created, if at all, under the
provisions of the TNGST Act or TNVAT Act and the entirety of the
exercise shall be completed within a period of four weeks from date of
receipt of that order.
6. Liberty had been granted to the purchasers to produce all
necessary documents and representations for release of the properties.
Liberty was also granted to the Commercial Taxes Department to
approach the Civil Courts, if at all they were in a position to establish that
the transfer of the property was fraudulent and malafide with the intention
of defrauding the revenue. Likewise, in order dated 10.02.2020 passed in
W.P.No.29090 of 2016. It is as against those orders that the State and the
purchaser are in appeals.
7. The following are the submissions of Mr.Haja Naziruddin,
learned Additional Advocate General assisted by Ms.Amrita Dinakaran,
learned Government Advocate, and Mr.P.Haribabu, learned Government
Advocate appearing for the State. Firstly, they point out that the vendors
have not been made as parties to the proceedings. Since the vendors in
8/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
whose names the tax dues stand are both proper and necessary parties to
the proceedings, they ought to have been impleaded, and hence, the writ
petitions were itself not maintainable.
8. We do not agree. The challenge laid by the Respondents is as
against the encumbrances created upon the subject properties. They are
admittedly unconnected with the sales tax assessments framed and
demands raised. The Department has not brought on record any material to
establish collusion between the defaulters and the Respondents, and in
fact, there are no allegations/averments/pleadings in this regard. The
bonafides of the purchasers/the purchasers has never been questioned by
the Department at any point in the proceedings.
9. There are really no disputed facts at play and the only act of
commission by the Respondents is that they have purchased the subject
properties from the defaulting assessees for valuable consideration and
after exhibiting due caution as is expected from a purchaser. Such a
challenge does not, in our view, require the presence of the sales tax
defaulters.
10. We draw support in this regard from a judgment of the Supreme
Court in The General Manager, South Central Railway, Secunderabad
9/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
and another v. A.V.R.Siddhantti and others1 in the context of a similar
prayer, where the position is made clear that in such cases, the vendor is
not a necessary party. It thus follows that unless the department
specifically alleges in the pleadings that there has been fraud, connivance
or collusion, in which case the vendor would have to be part of the
proceedings, there is no necessity for the vendor to be arrayed as a party.
11. Learned AAG takes us through the scheme of the TNGST,
TNVAT and TP Acts relying on the same provisions that have been
highlighted by the purchasers before us. The provisions under the
aforesaid Sales tax enactments exonerate only a bonafide purchaser of the
subject properties and the question of bonafides or otherwise is not a
matter for examination by the writ court as it involves marshalling of
various necessary facts to arrive at such a determination.
12. The dues in the hands of the assessees i.e., the vendors are
statutory demands that must be discharged by either the vendors
themselves, if they failed to do so, by the purchasers of the property. All
latent and patent defects to the title to the property should have been
verified by the purchasers prior to the purchase of the property and for this
purpose he relies on the principle of caveat emptor i.e., the purchaser
1 (1974) 4 SCC 335
10/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
should beware of any defects in the title and either protect himself by
abstaining from the transaction or by making good the title to the property.
In such circumstances, the remedy of the purchasers is not as against the
Commercial Taxes Department but as against the vendors, and that too,
after settlement of the outstanding tax dues.
13. He makes a distinction between a charge created by act of the
parties and charge created by operation of law. In the present case,
according to him, it is a charge that is created by operation of law as per
the statutory provisions of the TNGST/ TNVAT Act from which the
purchasers cannot escape.
14. The Respondents rebut this argument stating that even in such
an event, where a charge could be said to have been created by operation
of law, the legal position was that the mere creation of such a charge
would not automatically infer presumption of knowledge on the intending
purchasers. Hence they reiterate there was no liability that could be
attributed to them in respect of the dues of their vendors.
15. Learned AAG would object to this submission, arguing that
constructive notices are deemed to have been issued to them by virtue of
Section 3 of the TP Act and they cannot hence hide behind the smoke
11/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
screen of principles of natural justice which are deemed to have been
satisfied in the present cases.
16. In summary, he would say that the purchase of the subject
properties by the purchasers is tainted and conditional upon the
satisfaction of the charge on the property by the Commercial Taxes
Department which they would have to satisfy. He relies on the following
judgements:
1.Shailesh K. Bothra and Others v. State of Maharashtra and Others2
2.S.Sundaram Pillai and Others v. V.R.Pattabiraman and Others3
3.K.Saradambal v. Jagannathan and Brothers (Automobile Engineers &
Motor Works (P.) Ltd.)4
5.Balkishen Goenka v. Special Assistant Commercial Tax Officer for
Sales Tax Collection, Thanjavur6
6.State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling
Corporation and Others7
7.Commissioner of Customs (Preventive) v. Aafloat Textiles India Private
Limited and Others8
8.Jan Pieter Le Roux v. Christiaan Frederik Zietsman and another9
9.Sher Singh Kartar Singh and Another v. The Tehsildar (Sales Tax) Tis
Hazari, Delhi, and others10
10.Mithilesh Kumar v. Manohar Lal11
2 2023 SCC OnLine Bom 1394
3 (1985) 1 SCC 591
4 1971 SCC OnLine Mad 273
5 (WA(MD)No.130 of 2005 dated 07.02.2008)
6 1971 SCC OnLine Mad 430
7 (1995) 2 SCC 19
8 (2009) 11 SCC 18
9 [2023] ZASCA 102
10 1964 SCC OnLine Punj 363
11 (1997) 9 SCC 5412/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
17. The Respondents rely on the following decisions to buttress
their submissions:
1.Deputy Commercial Tax Officer, Triplicane Division, Mount Road,
Madras, and another v. The Cosmopolitan Club, represented by the
Honorary Secretary, P.M.Balasubramania Mudaliar12
2.East India Commercial Co., Ltd., Calcutta and Another v. Collector of
Customs, Calcutta13
3.D.Senthil Kumar and Others v. Commercial Tax Officer, Erode and
Another14
4.N.Padma Coffee Works and Others v. Commercial Tax Officer,
Rockfort Assmt. Circle, Trichy15
6.M.Thirumaran v. Commercial Tax Officer, Sengottai Assessment
Circle, Sengottai and another17
7.The Ahmedabad Municipal Corporation of The City of Ahmedabad v.
Haji Abdulgafur Haji Hussenbhai18
9.B.Suresh Chand v. State of Tamil Nadu rep. by the Secretary Revenue
Department, Fort St. George, Madras-9 and another20
12.Shyam Telelink Ltd. now Sistema Shyam Teleservices Ltd. v. Union of
India23
13.M/s.Sri Bakgyam Engineering Corporation by its Managing Partner
12 (1955) 68 LW 132
13 1962 SCC OnLine SC 142
14 (2006) 148 STC 204 (Mad)
15 (1999) 114 STC 494
16 (1998) 6 SCC 658
17 (2019) 62 GSTR 459 (Mad)
18 1971 (1) SCC 757
19 ILR 1943 ALL 453
20 2006-4-L.W. 409
21 (2015) 77 VST 226 (T and AP)
22 1998 (1) CTC 124
23 (Civil Appeal No.7236 of 2003 dated 05.10.2010)13/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchA.Radhakrishnan Coimbatore 641 037 v. The Deputy Commercial Tax
Officer Avrampalayam Circle, Coimbatore24
14.R.Dakshinamoorthy v. The Deputy Commercial Tax Officer, Tirupur
(Bazaar Street), Tirupur25
15.Rukmani v. Deputy Commercial Tax Officer I, Pattukottai I,
Assessment Circle, Pattukottai26
16.Gupta & Company v. Commercial Tax Officer, Alandur Assessment
Circle, Alandur, Chennai and Others27
17.Suraj Lamp and Industries Private Limited Through Director v. Stae
of Haryana and Another28
18.Philips India Ltd. and Another v. Asstt. Commr., Commercial Taxes,
Calcutta and others29
19.Oriental Bank of Commerce, Overseas Branch, represented by its
Chief Manager, A.Srinivas Sharma, Padma Complex, 467, Mount Road,
Chennai-600 035 v. The Commercial Tax Officer, Moore Market (North)
Assessment Circle, 191, NSC Bose Road, Chennai-600 001 and others30
20.Chogmal Bhandari and others v. Deputy Commercial Tax Officer, II
Division, Kurnool31
21.The General Manager, South Central Railway, Secunderabad and
another v. A.V.R.Siddhantti and others32
18. We have heard both sides keenly and have also perused the
material papers, the relevant statutory provisions and the case law.
19. The provisions of both the TNGST as well as TNVAT Acts set
out the scheme by which assessments are framed on dealers/assessees, and
demands statutorily raised for settlement within the time frame provided.
In the absence of compliance by the assessees, which is an admitted
24 (WP.No.37309 of 2002 dated 16.12.2015)
25 (WP.No.36469 of 2006 dated 26.03.2019)
26 (2013) 62 VST 369 (Mad)
27 (2019) 67 GSTR 399 (Mad)
28 (2009) 7 SCC 363
29 (2004) 10 SCC 436
30 (WP.21496 of 2008 dated 20.01.2025)
31 (1976) 3 SCC 749
32 (1974) 4 SCC 335
14/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
position in the present cases, it falls upon the Revenue to ensure that their
interests are protected by securing properties of those assessees in order to
liquidate and fulfil the statutory demands.
20. The defaulting assessees have sold properties to purchasers who
are before us as respondents. The case of the Revenue before us is that the
sales to these purchasers are compromised as void in view of Section 24-
A/43 of the sales tax enactments, whereas the purchasers would argue that
they are bonafide purchasers who have purchased the properties for
valuable consideration.
21. It is hence necessary for us to appreciate the scheme of the Sales
tax enactments. Under the TNGST Act, assessments are completed
following the procedure set out under Section 12. Section 13 provides for
advance payment of tax by an assessee, Section 24 refers to payment and
recovery of tax and Section 24-A deals with transfers to defraud the
revenue and states that such transfers shall be void. Section 24-A based
on which the impugned attachments have been made, reads as under:
‘Section 24-A Transfers to defraud revenue void.- Where,
during the pendency of any proceedings under this Act or
after the completion thereof, any dealer creates, a charge
on, or parts with the possession (by way of sale, mortgage,
gift, exchange or any other mode of transfer whatsoever) of
any of his assets in favour of any other person, with the15/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchintention 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 as a result of the
completion of the said proceeding or otherwise:
Provided that, such charge or transfer shall not be
void if it is made-
(i) for adequate consideration and without notice of
the pendency of such proceeding under this Act or, as the
case may be, without notice of such tax or other sum payable
by the dealer; or
(ii) with the previous permission of the assessing
authority.
Explanation- In this section, “assets” means land,
building, machinery, plant, shares, securities and fixed
deposits in banks to the extent to which any of the assets
aforesaid does not form part of the stock-in-trade of the
business of the dealer.’
22. The TNVAT Act contains provisions in pari materia with
Section 24-A of the TNGST Act. Assessments are made under Section 22,
Section 42 deals with payment and recovery of tax and penalty and
Section 43, in line with Section 24-A of the TNGST Act, states that
transfers to defraud the revenue would be void. Section 43 reads as
follows:
43. Transfers to defraud revenue void.- Where, during the
pendency of any proceedings under this Act or after the
completion thereof, any dealer creates, a charge on, or
parts with the possession by way of sale, mortgage, gift,
exchange or any other mode of transfer whatsoever 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 as a result of the completion of the16/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchsaid proceeding or otherwise:
Provided that, such charge or transfer shall not be void
if it is made-
(a) for adequate consideration and without notice of the
pendency of such proceeding under this Act or, as the case
may be, without notice of such tax or other sum payable by
the dealer; or
(b) with the previous permission of the assessing
authority.
23. Barring W.A.1019/202 that falls under the provisions of the
TNVAT Act, all other writ appeals fall under the provisions of the TNGST
Act. Both Section 24A of the TNGST Act and Section 43 of the TNVAT
Act state that, where a charge is created by an assessee, or the assessee
parts with the possession of his assets by way of sale, mortgage, gift,
exchange or any other mode of transfer, in favour of another person,
pending proceedings under the Act or after completion thereof, such
charge or transfer, shall be void as against the statutory demand. The
caveat is that such transfer should have been with the intention of
defrauding the revenue.
24. The proviso to Section 24-A thus protects cases of bonafide
purchasers where the transfers had been made for adequate consideration
and without notice to the purchaser, of either the pendency of the tax
proceedings or raising of the tax demand on the defaulting assessee, that
is, the vendor. Clause (ii) protects those transactions made with the
17/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
previous permission of the assessing authority which does not apply in the
present case.
25. A careful perusal of the pleadings does not reflect allegations of
connivance or collusion inter se the purchasers and their vendors, and no
material has been brought on record by the Department to incriminate the
transfer in any way. Such a pleading/incriminating material, is necessary to
enable the Department to take the argument that the protection under the
proviso does not apply to a transfer.
26. The existence of collusion/fraud/intent to defraud the revenue, is
the very foundation/premise, upon which Sections 24-A/43 stand. Hence,
to have the benefit of, or obtain jurisdiction under the aforesaid provisions,
it is mandatory for the Revenue to establish the jurisdictional fact of ‘intent
to defraud’ on the part of the purchaser.
27. This issue has been discussed in detail in Arun Kumar and Ors.
Vs. Union of India (UOI) and Ors (286 ITR 89), and the operational
portions of the judgement read thus:
…….
41. It is, therefore, clear that before Section 17(2)(ii)
can be invoked or pressed into service and before calculation
of concession as per Rule 3 is made, the authority exercising
power must come to a positive conclusion that it is a18/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchconcession. ‘Concession’, in our judgment is, thus a
foundational, fundamental or jurisdictional fact. A
“jurisdictional fact” is a fact which must exist before a Court,
Tribunal or an Authority assumes jurisdiction over a
particular matter. A jurisdictional fact is one on existence or
non-existence of which depends jurisdiction of a court, a
tribunal or an authority. It is the fact upon which an
administrative agency’s power to act depends. If the
jurisdictional fact does not exist, the court, authority or
officer cannot act. If a Court or authority wrongly assumes
the existence of such fact, the order can be questioned by a
writ of certiorari. The underlying principle is that by
erroneously assuming existence of such jurisdictional fact, no
authority can confer upon itself jurisdiction which it
otherwise does not possess.
42. In Halsbury’s Laws of England, it has been stated;
Where the jurisdiction of a tribunal is dependent on the
existence of a particular state of affairs, that state of affairs
may be described as preliminary to, or collateral to the
merits of, the issue. If, at the inception of an inquiry by an
inferior tribunal, a challenge is made to its jurisdiction, the
tribunal has to make up its mind whether to act or not and
can give a ruling on the preliminary or collateral issue; but
that ruling is not conclusive.
The existence of jurisdictional fact is thus sine qua non or
condition precedent for the exercise of power by a court of
limited jurisdiction.
43. In Raja Anand Brahma Shah v. State of U.P. and
Ors. MANU/SC/0214/1966 : [1967]1SCR373 , Sub-section
(1) of Section 17 of the Land Acquisition Act, 1894 enabled
the State Government to empower Collector to take
possession of ‘any waste or arable land’ needed for public
purpose even in absence of award. The possession of the
land belonged to the appellant had been taken away in the
purported exercise of power under Section 17(1) of the
Act. The appellant objected against the action inter alia
contending that the land was mainly used for ploughing
and for raising crops and was not ‘waste land’, unfit for
19/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
cultivation or habitation. It was urged that since the
jurisdiction of the authority depended upon a preliminary
finding of fact that the land was ‘waste land’, the High
Court was entitled in a proceeding for a certiorari to
determine whether or not the finding of fact was correct.
Upholding the contention and declaring the
direction of the State Government ultra vires, this Court
stated;
In our opinion, the condition imposed by Section 17(1) is a
condition upon which the jurisdiction of the State
Government depends and it is obvious that by wrongly
deciding the question as to the character of the land the
State Government cannot give itself jurisdiction to give a
direction to the Collector to take possession of the land
under Section 17(1) of the Act. It is well-established that
where the jurisdiction of an administrative authority
depends upon a preliminary finding of fact the High Court
is entitled, in a proceeding of writ of certiorari to
determine, upon its independent judgment, whether or not
that finding of fact is correct.
(Emphasis Supplied)
44. In State of M.P. and Ors. v. D.K. Jadav
MANU/SC/0029/1968 : [1968]2SCR823, the relevant
statute abolished all jagirs including lands, forests, trees,
tanks, wells etc., and vested them in the State. It, however,
stated that all tanks, wells and buildings on ‘occupied land’
were excluded from the provisions of the statute. This Court
held that the question whether the tanks, wells etc., were on
‘occupied land’ or on ‘unoccupied land’ was a jurisdictional
fact and on ascertainment of that fact, the jurisdiction of
the authority would depend. The Court relied upon a
decision in White & Collins v. Minister of Health (1939) 2
KB 838 : 108 LJ KB 768, wherein a question debated was
whether the court had jurisdiction to review the finding of
administrative authority on a question of fact. The relevant
Act enabled the local authority to acquire land
compulsorily for housing of working classes. But it was
20/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
expressly provided that no land could be acquired which at
the date of compulsory purchase formed part of park,
garden or pleasure-ground. An order of compulsory
purchase was made which was challenged by the owner
contending that the land was a part of park. The Minister
directed public inquiry and on the basis of the report
submitted, confirmed the order.
Interfering with the finding of the Minister and setting aside
the order, the Court of Appeal stated;
The first and the most important matter to bear in mind is
that the jurisdiction to make the order is dependent on a
finding of fact; for, unless the land can be held not to be
part of a park or not to be required for amenity or
convenience, there is no jurisdiction in the borough council
to make, or in the Minister to confirm, the order. In such a
case it seems almost self-evident that the Court which has to
consider whether there is jurisdiction to make or confirm
the order must be entitled to review the vital finding on
which the existence of the jurisdiction relied upon depends.
If this were not so, the right to apply to the Court would be
illusory.
[See also Rex v. Shoredich Assessment Committee (1910) 2
KB 859 : 80 LJ KB 185].
45. A question under the Income Tax Act, 1922
arose in Raza Textiles Ltd. v. Income Tax Officer, Rampur
MANU/SC/0333/1972 : [1973]87ITR539(SC) . In that
case, the ITO directed X to pay certain amount of tax
rejecting the contention of X that he was not a non-resident
firm. The Tribunal confirmed the order. A single Judge of
the High Court of Allahabad held X as non-resident firm
and not liable to deduct tax at source. The Division Bench,
however, set aside the order observing that “ITO had
jurisdiction to decide the question either way. It cannot be
said that the Officer assumed jurisdiction by a wrong
decision on this question of residence”. X approached this
Court.
Allowing the appeal and setting aside the order of
the Division Bench, this Court stated;
21/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
The Appellate Bench appears to have been under the
impression that the Income-tax Officer was the sole judge of
the fact whether the firm in question was resident or non-
resident. This conclusion, in our opinion, is wholly wrong.
No authority, much less a quasi-judicial authority, can
confer jurisdiction on itself by deciding a jurisdictional fact
wrongly The question whether the jurisdictional fact has
been rightly decided or not is a question that is open for
examination by the High Court in an application for a writ
of certiorari. If the High Court comes to the conclusion, as
the learned single Judge has done in this case, that the
Income-tax Officer had clutched at the jurisdiction by
deciding a jurisdictional fact erroneously, then the assesses
was entitled for the writ of certiorari prayed for by him. It is
incomprehensible to think that a quasi- judicial authority
like the Income-tax Officer can erroneously decide a
jurisdictional fact and thereafter proceed to impose a levy
on a citizen.
(Emphasis Supplied)
From the above decisions, it is clear that existence of
‘jurisdictional fact’ is sine qua non for the exercise of
power. If the jurisdictional fact exists, the authority can
proceed with the case and take an appropriate decision in
accordance with law. Once the authority has jurisdiction in
the matter on existence of ‘jurisdictional fact’ , it can decide
the ‘fact in issue’ or ‘adjudicatory fact’ . A wrong decision
on ‘fact in issue’ or on ‘adjudicatory fact’ would not make
the decision of the authority without jurisdiction or
vulnerable provided essential or fundamental fact as to
existence of jurisdiction is present.
46. In our opinion, the submission of Mr. Salve is well
founded and deserves to be accepted that “concession”
under clause (ii) of Sub-section (2) of Section 17 of the Act
is a ‘jurisdictional fact’ . It is only when there is a
‘concession’ in the matter of rent respecting any
accommodation provided by an employer to his employee
that the mode, method or manner as to how such concession
22/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
can be computed arises. In other words, concession is a
‘jurisdictional fact’; method of fixation of amount is ‘fact in
issue’ or ‘adjudicatory fact’ . If the assessee contends that
there is no ‘concession’, the authority has to decide the said
question and record a finding as to whether there is
‘concession’ and the case is covered by Section 17(2)(ii) of
the Act. Only thereafter the authority may proceed to
calculate the liability of the assessee under the Rules. In our
considered opinion, therefore, in spite of the legal position
that Rule 3 is intra vires, valid and is not inconsistent with
the provisions of the parent Act under Section 17(2)(ii) of
the Act, it is still open to the assessee to contend that there
is no ‘concession’ in the matter of accommodation provided
by the employer to the employee and hence the case did not
fall within the mischief of Section 17(2)(ii) of the Act.
…………………..
28. In D.Senthil Kumar (supra), a Division Bench of this Court
considered the recovery of sales tax dues in the context of a charge upon
the property of a dealer. In that case, it was an auction sale conducted
through the Bank. The short question that had been framed was whether
the charge created on a property under the TNGST Act was enforceable as
against the purchaser of such property. Noting that the expression of
‘charge’ was not defined under the TNGST Act, they referred to Section
100 of the TP Act and the definition of ‘charge’ therein as follows:
“Where immovable property of one person is by act of
parties or operation of law made security for the payment of
money to another, and the transaction does not amount to a
mortgage, the latter person is said to have a charge on the
property; and all the provisions hereinbefore contained
which apply to a simply mortgage shall, so far as may be,23/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchapply to such charge.
Nothing in this section applies to the charge of a
trustee on the trust-property for expenses properly incurred
in the execution of his trust, and, save as otherwise
expressly provided by any law for the time being in force,
no charge shall be enforced against any property in the
hands of a person to whom such property has been
transferred for consideration and without notice of the
charge.”
29. Even Section 100 of the TP Act would support the position that
a charge by the operation of law cannot be enforced against a purchaser, if
he or she had no notice of the same unless the requirement of such notice
had been waived by law.
30. In Ahmedabad Municipal Corporation of the City of
Ahmedabad V.Haji Abdul Gafur Haji Hussenbhai33, the Supreme Court
considered whether a transferee of properties, as against which property
tax arrears were sought to be enforced by the Municipal Corporation of
Ahmedabad, could be imputed with constructive knowledge of charge
created as against those properties.
31. The Court rejected the argument holding that while constructive
notice was sufficient to satisfy the notice in the proviso to Section 100 of
the TP Act, the position whether the transferee had had constructive notice
33 (1971) 1 SCC 757
24/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchof the charge had to be determined in the facts and circumstances of each
case. Hence, there could be no fixed presumption or assumption that the
transferee had had constructive notice unless the facts and circumstances
established so.
32. In the present cases, the Revenue has not demonstrated, or even
averred for that matter, that notice of the pending arrears had been given to
the Respondents. The ratio was applied yet again in State of Karnataka V.
Shreyas Papers P. Ltd.34, which refers to an earlier order of the Division
Bench of this Court in Deputy Commercial Tax Officer V. R.K.Steels35. In
the case of RK Steels, where an identical question had been considered by
the Court, it was seen that the purchaser of the properties from the default
firm had had no notice of the charge over the property, exonerating the
purchaser from such a liability.
33. In the facts of the case in Senthil Kumar too, the Court noted
that no notice of the sale tax arrears of the defaulting assessee had been
given to the purchasing company and hence, the liabilities of the defaulting
assessee could not be enforced as against such purchasers.
34. A similar conclusion was arrived at in the case of
34 (2006) 144 STC 331
35 (1998) 108 STC 16125/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchN.Thirumaran (supra), where also after considering the case of D.Senthil
Kumar, Kannamba (P) V. Board of Revenue (C.T.)36 and Ahmedabad
Municipal Corporation of the City of Ahmedabad (supra), on facts, the
Court held that protection under Section 24A was available to
M.Thirumaran as well.
35. As in that case, in the matters before us too, the purchasers have
specifically verified the encumbrances prior to purchasing the property,
finding no encumbrance created by the Commercial Taxes Department.
Hence, the efforts of the purchasers in this regard, and the caution
exercised by them are apparent, and we are hard pressed to see what else
they could have done to secure their interest in purchasing the properties.
36. In fact, the encumbrance certificates applied for, and obtained
by the Respondents at the relevant point in time, have been placed before
us and serve to establish in those cases that there were no encumbrances
created at the instance of the Revenue. In some cases, there has been no
charge registered at all by the Revenue, and in those few cases where the
Revenue has created/registered the charge, it has only been post the dates
of sale by the present purchasers/respondents.
37. The details of purchasers, periods of assessment, date of
36 (1967) 19 STC 456
26/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
assessment order, dates of sale deed and dates of encumbrances have
usefully been provided by the revenue in each case, and are tabulated
below:
S.No. Writ Petition Assessment Date of Sale Deed Encumbrance
Year Assessment Certificate
Order
1. WA.1019/2020 2009-10 to 30.03.2015 27.08.2012 01.09.2015
(I.Jeyarajhan v. 2012-13 (01.01.1987
State) 25.08.2015)
2. WA.162/2022 2003-04 to 2003-04 – 05.01.2004 06.05.2009
(State v. 2004-05 19.01.2007 (Revenue Recovery
Sivabagyam) Proceedings)
2004-05 –
12.10.2007 Form 1 – 16.05.2008Form 4 – 16.05.2008
3. W.A.1761/2022 1999-2000 30.11.2001 15.07.2004 (Revenue Recovery
(State v. P.Mohan) Proceedings)Form 1 – 05.03.2002
Form 4 – 09.05.2002
Attachment –
22.02.2002Letter to Registration
Office – 09.04.2002Auction sale
conducted on
11.07.2002 to
25.07.2007
4. WA.2903/2021 2003-04 27.07.2005 30.3.2012 29.03.2012
State v.
V.Ramyalakshmi (Revenue Recovery
Proceedings)
Form 4 – 22.09.2015
5. WA.727/2022 1993-94 30.03.2000 31.03.2004 21.04.2004
State v. K.Amudha
Revenue Recovery
27/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
S.No. Writ Petition Assessment Date of Sale Deed Encumbrance
Year Assessment Certificate
Order
Proceedings
Form 1 – 10.11.2004
Form 4 – 31.01.2005
Gazette Publication
for auction sale –
11.09.2006
6. WA.2912/2021 2004-05 15.03.2006 27.11.2006 28.04.2008
State v. R.Rajesh
Revenue Recovery
Proceedings
Form 4 - 18.10.2006
7. WA.293/2022 1997-98 to TNGST Order: 08.09.2007 21.11.2005
State v. Tvl.Shyam 2000-01 28.09.2005
Fintrade Pvt. Ltd. Notice issued to
CST Order: dealer 26.11.2008
17.01.2006
Revenue Recovery
proceedings Form 4
8. WA.2965/2021 2005-06 to 17.11.2008 02.11.2011 15.02.2012
State v. R.Bhagawat 2007-08
Krishna Revenue Recovery
Form 4 – 29.04.2016
9. WA.708/2022 1991-92 to 19.05.1997 19.01.2007 Charge created on
State v. Karnataka 1994-95 19.05.1997
Electrical and Revised
Mechanical Systems assessment
order-
27.08.2008
10. WA.726/2022 1993-94 to 31.03.2001 – 02.08.2006 26.03.2008
2002-03 (1998-99)
Letter to Dealer
19.11.2004
Revenue Recovery
Proceedings
Form 4 – 19.11.2004
11. WP.18840/2020 2003-04 to 31.03.2009 17.06.2010 05.09.2011
2005-06
38. In both W.A.No.1019 of 2020 and W.A.No.162 of 2022, the
28/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batchsales are prior to passing of the assessment orders, i.e., the dates of sale
are 27.08.2012 and 05.01.2004 and the orders of assessments are dated
30.03.2015 and 19.01.2007/12.10.2007 respectively. It appears, in the
latter case, that the property had only been given as security during
registration. Since the sales had transpired prior to the passing of
assessment orders, the protection under Section 24A is fully available to
the respondents.
39. In W.A.No.1761 of 2022, the purchaser had taken a loan from
the LIC Housing Finance and the consideration has been paid by the
respondent/purchaser to LIC Housing Finance and the property released
only thereafter. Hence, there was a thorough examination, both by LIC
Housing Finance and the Respondent of the encumbrances, prior to grant
of the housing loan. Admittedly, the encumbrance certificate at the
relevant point in time did not reveal creation of charge by the Sales Tax
Department.
40. Again, in W.A.No.727 of 2022, no charge has admittedly been
registered, and Form 4 has been issued only on 31.01.2005. The date of
sale is 31.03.2004, even prior to issuance of Form 4.
41. In W.A.No.2912 of 2021, Form 4 has been issued on
29/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
18.10.2006, and encumbrance has, admittedly, been created by the Sales
Tax Department only on 30.10.2009 as reflected by the encumbrance
certificate placed on record, whereas, the date of sale is 27.11.2006 even
prior thereto.
42. In W.A.No. 727 of 2022 Form 4 has been issued on 31.01.2005,
whereas the date of sale is 31.03.2004 prior to the attachment. In any
event, no charge has admittedly been registered with the Sub-Registrar.
43. In W.A.No. 2912 of 2021, Form 4 has been issued on
18.10.2006 and encumbrance has admittedly been created by the sales tax
department only on 13.10.2009, as reflected by the encumbrance
certificate placed on record. The date of sale is 27.11.2006 even prior
thereto.
44. In W.A.No.293 of 2022, the property was mortgaged with the
Tamil Industrial Investment Corporation (TIIC) which issued a no-due
certificate only on 20.02.2007. The assessee was before the Board of
Industrial and Financial Reconstruction and had been de-registered only on
05.04.2007 having been declared sick on 23.09.2003. The property had
been sold on 08.09.2007 and the encumbrance certificate dated
21.11.2005 does not reflect any charge having been created by the
30/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
Commercial Taxes Department. Form 4 has been issued only on
28.01.2009, long after the sale.
45. In W.A.No.2965 of 2021, the order of assessment was passed
for the period 2005-06 on 16.05.2008 and for the period 2006-07 on
17.11.2008. The property was purchased by the Respondent on
02.11.2011 and it was only on 15.02.2012 that the Sales Tax Department
has corresponded with the jurisdictional Sub-Registrar for creation of
charge. Hence, and admittedly, there was no charge created as on the date
of sale.
46. In W.A.No.708 of 2022, the assessment order was passed
initially on 19.05.1997, and taken in appeal to the Appellate Assistant
Commissioner, who, by order dated 20.03.2007 remanded the matter. A
revised assessment order was passed on 27.08.2008. The sale had taken
place on 19.01.2007 and admittedly, no encumbrance has been
created/registered by the department.
47. In W.A.No.726 of 2022, an order of assessment has been
passed on 31.03.2001 for the period 1998 – 99 and a charge created on
26.03.2008, per the say of learned revenue counsel. No document is
however produced. However, the sale has been effected on 02.08.2006,
31/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
even prior thereto.
48. In W.A.No.1019 of 2020, the learned Judge has, in impugned
order dated 10.02.2020, rendered a categoric finding at paragraph 8 to the
effect that ‘the respondent Commercial Tax Department had not taken
the trouble of registering the charge as was required under law’. The
State has not filed any appeal as against this factual finding, that has hence
become final. The appellant is hence a bonafide purchaser and hence the
detailed discussion and conclusions as in the paragraphs supra would
equally apply to the appellant in this writ appeal, as well. In such
circumstances, we see no necessity to relegate the appellant in
W.A.No.1019 of 2020 to a Civil Court.
49. In W.P.No.18840 of 2020, the order of assessment has itself
been quashed by an order of this Court dated 06.11.2019 in
W.P.Nos.5306 of 2009. Hence, with the quashing of the assessment order
in the hands of the assessee Pollachi Sarvodhaya Sangh, the demand
stands nullified and as a consequence the attachment itself goes. The first
respondent in W.P.No.18840 of 2020 is directed to lift the attachment
created on the petitioners’ property at Ward D Block 3, Survey No.71,
Door No.20B, Kabini Chetty Street, Arisipalayam, Salem, forthwith.
32/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
50. In Sailesh K.Bothra and others V. State of Maharashtra and
Others37, the Bombay High Court has held that even if the defaulters’
property was auctioned by a secured creditor, the attachment would
continue as a charge upon the property. The only relevance of this
judgment as far as present case is concerned is to enable the Revenue to
continue their recovery proceedings as against the assessee.
51. In that case, there are categoric findings of the fact that both the
purchaser and seller of the property were fully aware that there was a
statutory charge created upon the property created by the sales tax
department. In such cases, evidently the proviso to section 24A/43 would
not come to the rescue of the purchasers.
52. Not so in the present cases, where the facts as we have culled
above speak categorically to the effect that no charge had been created by
the Department and the clear title to the properties, had been ascertained
by the Respondents prior to the sales.
53. In light of the discussion as aforesaid, we are of the considered
view that there is no merit in these Writ Appeals filed by the State and the
same are dismissed. W.A.No.1019 of 2020 and W.P.No.18840 of 2020
filed by the purchasers are allowed. No costs. Connected Miscellaneous
37 2023 SCC Online Bom 1394
33/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
Petitions are closed.
[A.S.M., J] [N.S., J]
12.08.2025
Index: Yes
Speaking Order
Neutral Citation: Yes
Sl
To
The Commercial Tax Officer
Tondiarpet Assessment Circle
Office of the Assistant Commissioner (C.T)
No.19 & 20, Kummalamman Koil Street
Tondiarpet, Chennai-600 081.
34/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
W.A.Nos.1019 of 2020 etc. batch
DR. ANITA SUMANTH.,J.
and
N.SENTHILKUMAR.,J.
sl
W.A.Nos.1019 of 2020 etc. batch
12.08.2025
35/35
https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am )
[ad_1]
Source link