Interest charge

Gujarat: Hc explains the distinction between seizure and encumbrance on property | Ahmedabad News

Ahmedabad: The High Court of Gujarat has distinguished between the effects of seizure of property or creation of a charge thereon upon failure to pay tax under the Gujarat value added tax.
The Bench of Judge JB Pardiwala and Judge Nisha Thakore quoted numerous authorities to state that seizure only prevents the alienation of a tax defaulter’s property and does not confer title on the government or the creditor. On the other hand, a charge under Section 48 of the GVAT “does not create any interest in or to any specific immovable property, but is only a security for the payment of a sum of money” . The court said that the concept of accusation emanates from Article 100 of the Transfer of Property Law.
The case in question involved Shree Radhakrushna Ginning and Pressing Pvt Ltd, which incurred a VAT liability of Rs 1.68 crore. Its owner’s factory building and land are in Gondal taluka. The tax authority asked the village talati to create a charge on the properties. The tax official has mutated an entry in the records indicating that the owner has incurred a tax liability. In such circumstances, to recover the money, the first charge on the property belonging to the company will be that of the government.
While the company filed an appeal against the VAT official’s assessment and tax claim, the appeal authority suspended collection on the condition of a pre-deposit of Rs 7 lakh. The company’s attorney argued that since collection proceedings have been suspended, the charge should not remain in effect. The attorney argued that the tax officer’s action amounted to a garnishment with the appeal pending.
The bench noted the confusion between seizure and charge on property and clarified. He said Section 48 of the GVAT Act clarifies the creation of a first charge on the property in the event of default or tax penalty. A charge is a right to receive a certain amount of money. If section 46 provides for seizure, section 48 provides for the creation of a charge to inform people by making an entry in the revenue books. It is not attachment and the mutant talati the entrance is not attachment.