S. J. Natural Minerals Vs State Tax Officer (Madras High Court)
The Madras High Court has addressed the rights of the Commercial Tax Department to act against a property sale where the original owner was in sales tax arrears. The court, in the case of S.J. Natural Minerals Vs. State Tax Officer, ruled that the department has the authority to declare a sale void.
The petitioner, S.J. Natural Minerals, had purchased a property in October 2016 from a seller whose predecessor was the proprietress of M/S. Bravo Enterprises. It was later discovered that M/S. Bravo Enterprises had significant tax arrears from the assessment years 1991-92 and 1992-93, totaling over ₹91 lakh under the Tamil Nadu General Sales Tax Act. The Commercial Tax Department attempted to create an encumbrance on the property to recover these arrears. The petitioner challenged this action, claiming to be a bona fide purchaser.
The court examined the matter by referencing Section 53 of the Transfer of Property Act, 1882. This section states that any property transfer made with the intent to defeat or delay creditors can be considered voidable at the creditor’s option. The court, citing judicial precedents from Division Benches of the Madras High Court, including D.K. Sadasivam Vs. Commercial Tax Officer and Palanisamy Vs. Commercial Tax Officer, affirmed that the Commercial Tax Department is a creditor in such scenarios.
