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
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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)
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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
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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
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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,
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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
4.R.Balasubramanian v. Additional Deputy Commercial Tax Officer-III, Office of the Deputy Commercial Tax Officer-III, Thoothukudi5
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 54 12/35 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
5.Tax Recovery Officer II, Sadar, Nagpur v. Gangadhar Vishwanath Ranade (Dead) Through Shobha Ravindra Nemiwant (smt)16
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
8.Nawal Kishore v. The Municipal Board, Agra19
9.B.Suresh Chand v. State of Tamil Nadu rep. by the Secretary Revenue Department, Fort St. George, Madras-9 and another20
10.Showtech Stone International Private Limited v. Deputy Commercial Tax Officer-I, Saroornagar Circle, Hyderabad and Others21
11.Deputy Commercial Tax Officer, Thudiyalur Assessment Circle, Coimbatore and another v. R.K.Steels22
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. batch A.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 the 15/35 https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am ) W.A.Nos.1019 of 2020 etc. batch 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 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 the 16/35 https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am ) W.A.Nos.1019 of 2020 etc. batch said 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 a 18/35 https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am ) W.A.Nos.1019 of 2020 etc. batch concession. '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. batch apply 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. batch of 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 161 25/35 https://www.mhc.tn.gov.in/judis ( Uploaded on: 20/08/2025 11:48:26 am ) W.A.Nos.1019 of 2020 etc. batch N.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 – 16.05.2008 Form 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 – 22.02.2002 Letter to Registration Office – 09.04.2002 Auction 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
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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. batch sales 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 )