S. Geetha Vs State Tax Officer (Madras High Court)
The Hon’ble Madras High Court in the case S. Geetha v. State Tax Officer, Madurai Rural (West) [W.P. (MD) NO. 16916/ 2024 dated July 25, 2024] held that a Bonafide purchaser of property bought without knowledge of tax arrears can challenge an order under section 81. However, the bonafide nature must be proved.
Facts:
Ms. S. Geeta (“the Petitioner”) purchased two parcels of lands through two different sale deeds, both dated August 3, 2022, for consideration of Rs.2,41,600/- and Rs. 1,55,000/- each, measuring a total extent of 1.25 acres. The properties were bought from a partnership firm. At the time of the purchase of the land the encumbrance certificate of the land was verified by the Petitioner, which did not have any prior claims or liabilities on the said property.
It was later revealed that the partnership firm and its partners were in arrears of Rs. 9,81,867 under the CGST Act. A demand Order dated August 23, 2021 was served and a subsequent recovery notice dated December 3, 2021 for the arrears of tax for the period immediately after the implementation of the CGST Act was served on them.
Lastly, communication letter dated May 27, 2024 (“the Impugned Letter”) issued under Section 81 of the CGST Act, which prevents the disposal of properties of a defaulting assesses to protect the government’s revenue, the said properties were attached.
