| The Tax Publishers2020 TaxPub(EX) 1009 CONSTITUTION OF INDIA, 1950
Article 226
Where Authority has not exercised the powers conferred with him and seized or attached the goods for which, he had granted exemption of duty and transaction between assesses or licensee and authorities is personal between them, auction purchasers cannot be held liable for the arrears incurred by the previous licensee or industry in favour of whom the tax benefits are granted, therefore, auction purchaser was not liable to pay any arrears, or duty for the default of the previous establishment.
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Writ - Demand of Central excise arrears - Purchase of property in a public auction -
Petitioner was an auction purchaser of properties belonging to a defaulter in a public auction conducted under provision of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. A sale certificate was issued, confirmed and duly registered in favour of the petitioner. After taking over of possession and commencement of business, a demand was made by authority that in view of cancellation of concession benefits, duty foregone at the time of purchase of machineries under the EOU Scheme plus interest be recovered from the petitioner. Held: Authority has not exercised the powers conferred with him and seized or attached the goods for which, he had granted exemption of duty. Once there is no charge over the plant or machinery, or other properties, authority would fall under the unsecured creditors and they cannot prevail over the rights of secured creditor. The transaction between assesses or licensee and authorities is personal between them. It will not continue unless and otherwise there is a specific condition attached to the same. The auction purchasers cannot be held liable for the arrears incurred by the previous licensee or industry in favour of whom the tax benefits are granted. Therefore, auction purchaser was not liable to pay any arrears, or duty or statutory dues for the default of previous establishment.
Relied:Southern Power Distribution Company of Telengana Ltd. through its CMD & Ors. v. Gopal Agarwal & Ors. (2017 SCC Online SC 819) M/s. Rana Girders Ltd. v. Union of India & Others 2013 (10) SCC 746 : 2013 TaxPub(EX) 1266 (SC) Special Officer, Commerce, North Eastern Electricity Company of Orissa (NESCO) & Anr. v. M/s. Raghunath Paper Mills Private Limited & Anr. 2012 (13) SCC 479 Haryana State Electricity Board v. M/s. Hanuman Rice Mills Dhanauri & Ors. 2010 (9) SCC 145 Central Bank of India v. State of Kerala & Ors. (2009 (6) CTC 656) Union of India v. Sicom Ltd. (2009 (2) SCC 121)
REFERRED : Central Bank of India v. Siriguppa Sugars & Chemicals Ltd. & Ors. (2007) 8 SCC 353 : 2007 TaxPub(CL) 0266 (SC) State of Karnataka and another v. Shreyas Papers (P) Ltd. & Ors. 2006 (1) SC 180 Ahmedabad Electricity Co. Ltd. v. Gujarat Inns (P.) Ltd. (2004 (3) SCC 587) Macson Marbles (P) Ltd. v. Union of India (2008 (15) SCC 481) : 2003 TaxPub(EX) 1864 (SC) Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. 2001 (3) SCC 71 Dena Bank v. Bhikhabhai Prabhudas Parekh And Co. & Ors. (2000) 5 SCC 694 Allahabad Bank v. Canara Bank (2000) 4 SCC 406
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