HC Directed Purchaser to File Suit to Prove Bona Fide Purchase of Property from GST Defaulters

Case Details: S. Geetha v. State Tax Officer, Madurai Rural (West) - [2024] 165 taxmann.com 321 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• N.S. Karthikeyan for the Petitioner.
• R. Suresh Kumar Addl. Govt. Pleader for the Respondent.

Facts of the Case

The petitioner had purchased a property from a partnership firm and the department attached property on ground that seller was liable to pay arrears of tax. The petitioner filed writ petition against the attachment order and contended that order of attachment and notices were in gross violation of principles of natural justice as no notice was issued to the petitioner before the attachment was made.

High Court Held

The Honorable High Court noted that as per Section 81 of the GST Act, there is an embargo on the assessee, who is in default from transferring or alienating the assets with a view to defeat the interest of the Government Revenue. The petitioner has to establish the bona fide in the manner known to law and mere reliance to encumbrance certificate is not sufficient. In the present case, the petitioner must file a suit to prove bona fide purchase and therefore, the Court dismissed the petition but directed the petitioner to file suit within 30 days.