Velagala Lakshmi Vs State of Andhra Pradesh (Andhra Pradesh High Court)
Date: October 3, 2024
Court: High Court
Bench: Andhra Pradesh
Type: Writ Petition
Subject Matter
No machinery available in GST law for determination of the question as to whether the transactions in question are sham transactions falling within the ambit of Section 81
Summary
The case involves a petition filed under Article 226 of the Constitution of India, seeking to challenge the actions of the 4th Respondent, which included issuing a Notice of Attachment on June 26, 2024, and a subsequent Notice for Auction dated September 9, 2024, related to the petitioners' immovable property located in Kommara Village. The petitioners argue that these actions are illegal and violate their rights under Articles 14 and 300-A of the Constitution, as well as the provisions of the GST Act. Specifically, they contend that the property was lawfully purchased and should not be subject to auction for taxes owed by the previous owner (vendor). - The initial response from the Government Pleader for Commercial Tax cites Section 81 of the CGST Act, alleging that the transactions involving the property are sham and thus void, which would negate the petitioners' title to the property. However, the Court notes that there is no existing procedure or machinery within the Act to determine whether the transactions are indeed sham without a competent authority's finding. - The Court has decided to stay the proceedings regarding the attachment and auction of the property pending the hearing of the case, while also restricting the petitioners from alienating the land during this period. The petition highlights the need for proper legal processing before any such action can be taken against the petitioners regarding their owned property.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
Petition under Article 226 of the Constitution of India is filed praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ, Order or direction, more particularly one in the nature of Writ of Mandamus declaring the action of the 4th Respondent in issuing the Notice dated 26.06.2024 attaching the Immovable Property belonging to the petitioners in S.No 298/1, situated at Kommara Village, Attili Mandal, West Godavari District and subsequent action in issuing Notice for Auction dated 09.09.2024 proposing to conduct the sale of the petitioner’s properties on 10.10.2024 as wholly illegal, arbitrary, irrational, unjust, without jurisdiction, contrary to the provisions of Goods and Service Act, 2017 and Rules made therein, principles of natural justice besides being violative of Articles 14 and 300-A of the Constitution of India and consequently set aside the Notice of Attachment dated 26.06.2024 and Notice of Auction dated 09.09.2024 issued by the 4th Respondent.
IA NO: 1 OF 2024
Petition under Section 151 CPC is filed praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased to stay all further proceedings pursuant to the Notice of Attachment dated 26.06.2024 and Notice of Auction dated 09.09.2024 issued by the 4th Respondent, pending disposal of WP 22596 of 2024, on the file of the High Court.
The petition coming on for hearing, upon perusing the Petition and the affidavit filed in support thereof and upon hearing the arguments of SRI.S.V.S.S.SIVA RAM Advocate for the Petitioners and GP for Commercial Tax for Respondent Nos.1 to 4, the Court made the following.
ORDER:
“Learned counsel for the petitioners is permitted to take out personal notice on the respondents by RPAD and file proof of service by the next date of hearing.
The Learned Government Pleader for Commercial Tax seeks time to obtain instructions and file counter affidavit.
The complaint of the petitioners, in the present case, is that the property purchased by them is being auctioned by the Deputy Assistant Commissioner (ST) — II/ 4th respondent, for recovery of taxes due from their vendor.
The learned counsel for the petitioners contends that the property in question had been purchased, by way of registered deeds of sale and that the said property cannot be auctioned for recovery of the dues of the vendor.
The Learned Government Pleader for Commercial Taxes relies upon Section 81 of the Central Goods and Services Tax Act, 2017, (for short “CGST Act”) to contend that the transactions relied upon by the petitioners are sham transactions done for the purposes of evading payment of taxes and consequently such transactions would have to be treated as void transactions which do not give title to the petitioners.
Section 81 of the Act merely provides for declaration of certain transactions to be void transactions with certain safeguards embedded in the proviso. However, there is no machinery available for determination of the question as to whether the transactions in question are sham transactions falling within the ambit of Section 81 of the Act.
Prima facie, this Court, subject to the contentions that may be raised by the learned counsel for the respondents, is of the opinion that the provisions of Section 81 of the Act cannot be pressed into service unless there is a finding as to the nature of the transactions in question by a competent authority, authorized under the Act or the Rules.
Accordingly, there shall be stay of all further proceedings, in pursuance to the notice, dated 26.06.2024, attaching immovable properties belonging to the petitioners.
However, the petitioners shall not alienate such lands during the pendency of this order.
Post on 23.10.2024.”