BIREN VAISHNAV, J.

1. By way of this petition under Article 226 of the Constitution of India, the petitioner has made the following prayers:

“(A) YOUR LORDSHIPS may be pleased to admit and allow this petition;

(B) YOUR LORDSHIPS may be pleased to issue a Writ of Mandamus or Writ in Nature of Mandamus or any other appropriate Writ, order or direction by quashing and setting aside the communication/order dtd.03.08.2019 passed by the City Survey Superintendent, Rajkot (Annexure-A) in the interest of justice;

(C) YOUR LORDSHIPS may be pleased to issue a Writ of Mandamus or Writ in Nature of Mandamus or any other appropriate Writ, order or direction by quashing and setting aside the two orders dated 17.06.2019 mutating Entry no.8056 and Entry no.8057 (Annexure-B1, Annexure-B2) passed by the Ld. City Survey Superintendent, Rajkot in the interest of justice;

(D) YOUR LORDSHIPS may be pleased to issue a Writ of Mandamus or Writ in Nature of Mandamus or any other appropriate Writ, order or direction by directing the respondent Authorities to allow the application dtd.13.03.2019 (Annexure-C) and further mutate the names of the petitioners in the City Survey records for land bearing survey Ward no.14, City Survey no.465 and 469 admeasuring 483-39 sq. mtrs including the construction on area admeasuring 34-04 sq. mtrs. Situated at Bhilvaas, Rajkot in the interest of justice;

(E) YOUR LORDSHIPS may be pleased to issue a Writ of Mandamus or Writ in Nature of Mandamus or any other appropriate Writ, order or direction by quashing and setting aside the order dtd. 11.06.2019 passed by the State Tax Officer, Circle 5, Unit 94, Office of the Assistant Commissioner of Commercial Tax (Gujarat-State) (AnnexureD) in the interest of justice;

(F) Pending admission, hearing and final disposal of the present petition YOUR LORDSHIPS may be pleased to stay the implementation, execution and operation of:

i. the communication/order dtd.03.08.2019 passed by the City Survey Superintendent, Rajkot (Annexure-A);

ii. the order dated 17.06.2019 mutating Entry no.8056 (Annexure-B1, Annexure-B2) passed by the Ld. City Survey Superintend, Rajkot;

iii. The order dated 11.06.2019 passed by the State Tax Officer, Circle 5, Unit 94, Office of the Assistant Commissioner of Commercial Tax (Gujarat-State) (Annexure-D);”

2. Facts in brief are as under.

3. The petitioners is the purchaser of the property being land bearing Survey Ward no.14, City Survey Number 465 and no.469 admeasuring 483-39 sq.mtrs including construction on area admeasuring 34-04 sq.mtrs situated at Bhilvaas, Rajkot.

4. The property originally belonged to Mr.Manishkumar Rasiklal Bavariya who had in turn become the owner by virtue of a will bequeathing the property to him by his father. The administrator of the Will had also obtained the letter of administration from the Civil Court.

5. The property was purchased by the petitioners after executing a Registered Sale Deed on 26.02.2019 prior to which on 13.09.2017, a Registered Agreement to Sell was executed.

6. On 13.3.2019 the petitioners field an application praying for mutation of their names for the lands in question pursuant to the execution of the sale deed. Such application was made in consonance with the provisions of Section 135C of the Bombay Land Revenue Code.

7. On 17.06.2019 the City Survey Superintendent, Rajkot passed orders whereby Entry No.8056 and 8057 is mutated in the City Survey records recording Charge on the properties owned by the petitioners on the ground that there has been default in payment of Tax under the Gujarat Value Added Tax Act, 2003 (GVAT, 2003) committed by Eagle Motors Private Limited wherein the seller was one of the Directors. This order was passed by the City Survey Superintendent on account of order dated 11.06.2019 passed by the Tax Authority directing the Superintendent to register a charge on the properties of the Directors of Eagle Motors Private Ltd.

8. By a communication dated 03.08.3019 the objections raised by the petitioners recording a charge is rejected.

9. Mr.Anshin Desai learned Senior Advocate assisted by Ms.Venu Nanavaty for the petitioners made the following submissions:

9.1. The petitioners are admittedly not the defaulters of any VAT dues and are registered Sale deed owners with possession and the sale deed is not questioned before any civil court.

9.2. The petitioners have purchased the parcels of land from Manish Rasiklal Bavariya who is undisputedly the sole owner of the properties since 04.10.2006.

9.3. The authority is mandated under the Code to mutate names of registered sale deed owners, in this case though not obliged the petitioners have also applied since 13.03.2019 for mutation of their names.

9.4. Instead of allowing the application dated 13.03.2019, unheard of and a novel approach is adapted by the respondents in straightaway mutating a hopelessly timebarred claim of Eagle Motors Pvt. Ltd. a private limited company by creating Charge on the personal properties, though at the time of registered sale deed no proceedings were initiated on these parcels of land and it was only on 11.06.2019 that for the first time (after registered sale deed and petitioners’ application) communication was sent directing the City Survey Superintendent to create charge.

9.5. It is settled legal position that personal properties of Directors of Private limited Company cannot be attached or created charge over for any default of the Company and therefore there is no question of charge being levied on personal properties of Directors.

9.6. The above mentioned Entries no.8056 and no.8057 have been ordered to be mutated on dated 11.06.2019 i.e. 3 months after the execution of the sale deed in favour of the petitioners and that the recovery proceedings have been initiated after more than 5 years from the alleged default committed by the predecessor-intitle. Therefore it seems that deliberately the application dated 13.03.2019 is not being decided by the respondent authority and the petitioners are now suffering due to alleged default of the earlier owners despite the petitioners being bona-fide purchasers with consideration.

9.7. So far as the present dispute is concerned, the so called charge created on the property is with regard to the alleged default of Eagle Motor Private Limited and therefore, as per paragraph No.11 of the affidavit-in-reply, it is clear that admittedly after 2015, there are no steps taken and there are no proceedings furthered so far as this company is concerned.

9.8. It is most humbly stated and submitted that, if the communication at Annexure-A is perused, it is stated that as per the letter dated 27.04.2018, it was directed to create a charge by the VAT Commissioner in relation to which, an oral instruction was given to create a charge qua the property in the present case. Firstly, no such letter dated 27.04.2018 has been placed on record in the affidavit in reply and all the annexures with the affidavit in reply are with regard to Eagle Auto Pearl Pvt. Ltd. and not Eagle Motors Pvt. Ltd. Also, assuming without admitting that the letter dated 27.04.2018 annexed in the reply is the letter which is being referred to, even then the said letter nowhere instructs the City Survey Superintendent to “create” a charge, it only instructs to send the details of the properties belonging to the defaulters for further process of recovery.

9.9. It seems that on the basis of some communication dated 27.04.2018 oral instructions were given which cannot be believed because all these exercises began only after the present petitioner submitted an application for mutating his sale transaction in the revenue records.

9.10. It is submitted that the rejection of the application of the petitioner is based on a probable action to be taken in future on the basis of some instructions that charge has to be created (in future). The rejection is also based on some instruction received from the tax authorities wherein attachment and the proceedings were pending. It is not only shocking to note that such approach is being adopted to prejudice the rights of the petitioner but also surprising to see how all these aspects came to the light only after the application was made by the petitioner. Till that point, the authorities did not bother to take any steps with regard to any of the proceedings as claimed by them.

9.11. That the petitioners purchased the said properties after clearing all the encumbrances and hence, the petitioners being bona-fide purchasers for consideration after due diligence can not be made to suffer on account of the tax dues running in the name of the company of the original owner. Registered sale deed is executed on dated 26.02.2019 for which the petitioners submitted an application dated 13.03.2019 to the authority for entering their names in the revenue records, the order of the Tax Authority ordered charge over the properties on dated 11.06.2019 i.e. after the sale deed was executed.

9.12. It is submitted that entering the charge on the property of the petitioners for the alleged dues under the GVAT Act of the erstwhile owner of the property is wholly without jurisdiction and illegal. The petitioners had purchased the subject property before the charge came to be entered on the property by the Value Added Tax Department and that no charge was registered in respect of the alleged value added tax dues of the previous seller prior to registration of the sale deed. Hence, the authorities cannot seek to create charge over the properties of the petitioners because of some alleged default of the erstwhile owner of the subject property.

9.13. In the decision in Chokshi Texlen Private Limited Versus State Of Gujarat reported in 2019 JX(Guj) 877: 2019 AIJEL_HC 241287 which is similar to the facts of the present case it is held that :

“Section 48 of the GVAT Act bears the heading Tax to be first charge on property and which lays down that notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer, or as the case may be, such person, would not come into play. Thus, the section envisages a first charge on the property of the dealer on account of tax, interest or penalty which he is liable to pay to the Government. In the present case, the petitioners are not liable to pay any tax, interest or penalty to the Government and therefore, would not fall within the ambit of the expression any other person as contemplated in section 48 of the GVAT Act. The subject property was transferred in favour of the petitioner, prior to the order of attachment and creation of a charge thereon. Therefore, as on the date when the subject property came to be attached and a charge came to be created thereon, it did not belong to the dealer. The provisions of section 48 of the GVAT Act, therefore, would clearly not be attracted in the facts of the present case.”

9.14. In the present case, the initiation of proceedings under the Gujarat Value Added Tax Act, 2003 is beyond the limitation period provided under Section 34 of the said act whereby the authority has the power to initiate action within 4 years from the end of the year in respect of which or part of which the tax is assessable.

9.15. In the present case the proceedings have been initiated after more than 5 years from the default on the part of the earlier owners of the properties. Therefore, proceedings initiated after an unexplained and unreasonable delay which is beyond the mandatory period provided under the statute ought not to be permitted and deserve to be quashed and set aside in the interest of justice.

9.16. The law under the Bombay Land Revenue Code, 1879 (Section 135C) is settled that when a document of registered sale deed is produced before the authority, the revenue authorities are bound to give effect to the same. There is no obligation cast on registered sale deed owners to even apply for entering the names in the revenue records and/or City Survey Records as the case may be.

9.17. It is a well settled principle of law that when registered document is produced, the authorities are bound to record the same in the revenue records. As held in Jhaverbhai Savjibhai Patel vs. Kanchanben N. Patel and others reported in 2005 (3) GLR 2233 that when a registered document is produced before a revenue authority, the authority must prima facie post an entry in the record of rights leaving if to the competent authorities to adjudicate upon the validity of the transaction.

9.18. It is submitted that as held in Janardan D.Patel Versus State Of Gujarat reported in 1997 (1) GLR 50 the revenue authorities have no jurisdiction to decide whether or not a transaction is in contravention of any statutory provision contained in any other enactment. It may be noted that revenue authorities with respect to mutation proceedings in the revenue records popularly known as RTS proceedings are invested with limited powers regarding maintenance of revenue records for fiscal purposes and making mutation entries therein on certain contingencies. Relevant provisions are found in Chapter 10A of the Code. It is not necessary to refer to the entire scheme of that Chapter. The relevant provisions contained therein are Secs. 135C, 135D, 135E, 135J and 135L. Section 135C thereof requires reporting of acquisition of rights in properties in revenue record. Sec. 135D requires maintenance of the register of mutations and the register of disputed cases.” “Its bare perusal clearly goes to show that what is to be inquired is the correctness of the entries in the record of rights and the register of mutations in accordance with the Rules framed in that regard. It thus becomes clear that revenue authorities exercising powers with respect to RTS proceedings are invested with limited powers. They cannot assume to themselves certain powers not conferred on them by law. An authority having a limited jurisdiction cannot obviously expand its jurisdiction nor can assume jurisdiction not conferred on it by law. In that view of the matter, it has no power to decide the validity of a transaction on the touchstone of a statutory provision occurring in some other enactment.

9.19. In all cases of claims for mutation based on a registered document, the competent officer has to enter the name of the claimant- owner-right holder. The designated officer in charge of the said function has no jurisdiction to disregard the legal effect of the registered document, and he cannot be permitted to do so even indirectly. Once the petitioner purchased the land in question by virtue of registered sale deed, he is entitled to have his name mutated in the revenue records.

9.20. The recording charge in revenue records under section 135B and/or section 135C is without any basis because what is to be recorded under Chapter X-A of the Bombay Land Revenue Code is legal and valid claim which can be by way of mortgage but to record a charge in the record of rights or city survey records without there being any dues of the legal owner or legal occupier of the immovable property, no ‘charge’ can be recorded.

9.21. That when an entry is to be mutated under Chapter X-A, it is not a clerical or an administrative function, there has to be application of mind and prima facie proof of recording what is submitted and factually there has to be a basis even from bare perusal of the said document or claim as it may be.

9.22. Section 135D(1)(b)(ii) is a section post section 135D(1)(b)(i) and it states that it is only upon the completion of action as per section 135D(1)(b)(i) that mutation can be made and only thereafter notice of transaction shall be served to the persons interested therein.

9.23. That the Revenue Authority/Officer has committed error of jurisdiction on the face of record in the matter of certification of the entry despite a mandate provided under the provisions of the Bombay Land Revenue Code,1879 which provides for mutation of revenue entry of a registered document.

9.24. In support of his submissions Mr.Desai would rely on the following decisions.

a. Nipun A Bhagat, Proprietor of Steel Kraft Industries versus State of Gujarat and others – Judgement dtd. 04.01.2021 in Special Civil Application no. 14931 of 2020 . He would rely on paras 15 to 17 of the decision.

b.Manharlal Hirjibhai Virdiya vs. Asst. Commissioner of Commercial Tax - Order dtd. 08.10.2021 in Special Civil Application no. 12733 of 2021. He would rely on paras 8, 8.1 and concluding para of the decision.

c. C V Cherian vs. C A Patel – Order dtd. 21.03.2012 in Special Civil Application no.1853 of 2012. He would rely on paras 1 to 4 of the decision.

d.Mr.Choksi vs. State of Gujarat – Jugdement dtd. 17.06.2004 in Special Civil Application no.243 of 1991 and allied matters. He would rely on paras 10 to 15 of the decision.

e. Different Solution Marketing Pvt.Ltd. vs. Asst.Commissioner of Commercial Tax – Order dtd. 30.06.2016 in Special Civil Application no.19949 of 2015. He would rely on paras 7 and 8 of the decision.

f. Deepak Johrichand Bhandari vs. State of Gujarat – Order dtd. 13.04.2022 in Special Civil Application no.3150 of 2022. He would rely on paras 2 to 4 of the decision.

g. Nehal A.Shah vs.State of Gujarat – Order dtd. 23.02.2022 in Special Civil Application no.3032 of 2022 (annexed). He would rely on paras 8 to 10 of the decision.

10. Mr.Pranav Trivedi learned AGP while extensively relying on the affidavit-in-reply filed on behalf of the respondent No.3 made the following submissions.

10.1. That the property in question belonged to one Shri Manishbhai Bavariya who was a common director in all the three firms, namely Eagle Motors Pvt Ltd, Eagle Auto Pearl Ltd and Eagle Auto Gems Pvt Ltd. In all these three firms the State had initiated assessment proceedings as well as recovery proceedings.

10.2. Mr.Trivedi would rely on Para 9 of the affidavit-in-reply which had the details of such proceedings. The details read as under:

“9. I say and submit that in the case of Eagle Motor Pvt. Ltd. The authority had carried out assessment proceedings qua to below the assessment years:

EAGLE MOTOR PVT. LTD. VAT NO. 24091802902
ASSESSMENT DETAIL
YEAR OF ASSESSMENT	ORDER PASSED ON DATE	DEMAND RAISED	REMARKS	A/O SERVE DATE
2008-09	25.10.2012	160340	VAT	04.04.2013
2009-10	11.03.2014	67989	VAT	19.03.2014
2010-11	24.02.2015	1768754	VAT	31.03.2015
2011-12	22.03.2016	32889659	CENTRAL	25.05.2016
2012-13	30.03.2017	47237067	VAT	13.04.2017
2013-14	13.03.2018	166653913	VAT	31.03.2008
TOTAL		249820110

"

10.3. No appeal has been preferred by the assessee against these orders and hence they had become final.

10.4. Mr.Trivedi would further submit that the Tax Authority had written a Letter on 02.07.2015 to the City Survey Superintendent seeking details of properties which belong to the Directors of the Company and after an exchange of letters the proceedings could not be carried out as the tax authority could not provide the details of the properties. He would submit that for the company Eagle Auto Pearl Limited the authorities had carried out assessments as under:

EAGLE AUTO PEARL PVT. LTD. VAT NO. 24091806339
ASSESSMENT DETAIL
YEAR OF ASSESSMENT	ASSESSMENT DATE	DEMAND NOTICE DATE	A/O SERVE DATE
2013-14	30.03.2017	47237067	13.04.2017
2014-15	13.03.2018	166653913	31.03.2008

10.5. The authorities pursuant to such assessment proceedings had carried out attachment proceedings and attached the Bank Account of the Company on 14.05.2018.

10.6. On 27.04.2018 the Tax Authority had also written a letter to the Revenue Authorities and a reminder was sent on 28.08.2018 seeking details of the properties.

10.7. The property in question was transferred by the Director Manishbhai Bavariya by way of sale to the present petitioners and the application of the petitioners for recording the mutation entry in their names was rejected as evidently the sale was made by the Director, who was fully aware of the fact that his private property would be attached as by a communication dated 09.01.2015, the State Tax Authorities had already attached certain properties of the Director.

10.8. He would submit that if one was to lift the corporate veil and see the intention of the seller it was obviously done with a view to defraud and alienate property so as to avoid tax payments and attachment and the transaction of sale in such cases had to be presumed to be a sham and a bogus transaction.

11. Having considered the submissions made on behalf of the respective parties it would be apt to set out the chronology of dates as set out in the Written Submissions filed by and on behalf of the petitioners, so as to avoid duplicity and overlapping.

CHRONOLOGY OF DATES.

SR. NO.	DATE	PARTICULARS
1.	--	The present dispute pertains to land bearing Survey Ward no.14, City Survey no. 465 an no. 469 admeasuring 483-39 sq. mtrs including the construction on area admeasuring 34-04 sq. mtrs. situated at Bhilvaas, Rajkot.
2.	06.05.2005 01.05.2006	The property in question was bequeathed to the seller Mr. Manishkumar Rasiklal Bavariya by his father Rasiklal Damjibhai Bavariya (Director of Eagle Motors Pvt. Ltd.) by way of Will. The Administrator of the Will (Dinesh Rasiklal Bavariya) obtained the Letter of Administration Certificate is also issued by the Civil Court.
3.	18.09.2006 08.11.2006	Therefore, the property in question was solely owned by the seller as his personal property. There also seems to be a family arrangement vide Stamp no. 704790 dtd.18.09.2006 for both the parcels and the Entry no.1756 is also certified on dt.08.11.2006 mutating the name of Manish Bavariya – the person from whom the petitioners purchased the properties.
4.	2009 to 2014	As per the say of the respondent the authority carried out assessment proceedings between 2012 to 2018 for Eagle Motors Pvt. Ltd.
5.	09.01.2015	The State Tax Authority made attachment of the property of Eagle Motors Pvt. Ltd. (undisputedly not of the property purchased by the petitioner).
6.	02.07.2015	For the above mentioned assessment, Tax Authority sent a communication to the City Survey Superintendent, Rajkot wherein the tax authority sought the details of the property which belonged to the Directors of the Company being Eagle Motors Pvt.Ltd. Subsequently the tax authority is not in a position to find out the survey number therefor the authority had not carried out the proceedings qua the aforesaid company.
7	2013 to 2015	The authority carried out assessment qua another Eagle Auto Pearl Pvt.Ltd.
8.	13.09.2017 26.02.2019	The owner of the property Manishkumar Rasiklal Bavariya executed registered Agreement to Sell (with possession) dtd.13.09.2017 bearing Registration no.5344 in favour of the petitioners. Due to some typographical mistake in the Agreement, a registered Rectification Deed was also executed on dt.26.02.2019.
9.	27.04.2018	In the letter dt. 27.04.2018, the Tax Authority had written a letter to the City Survey Superintendent 1 as well as 2 wherein also the tax authority sought details of the property belonging to the Directors of Eagle Auto Pearl Pvt.Ltd.
10.	14.05.2018	The Tax Authority initiated recovery proceedings qua Eagle Auto Pearl Pvt. Ltd. For assessment year 2013-2014.
11.	28.08.2018	The Joint Commissioner of Commercial Tax wrote a letter to the City Survey Superintendent, Rajkot by which a reminder has been made and the process to find out the property details of Eagle Auto Pearl Pvt. Ltd.
12.	26.02.2019	That the petitioners purchased the land in question vide registered sale deed dtd. 26.02.2019 from Manishkumar Rasiklal Bavariya.
13.	26.02.2019	All the liabilities on the property in question were cleared by the petitioners prior to the execution of the sale deed and hence, the Central Bank of India, Jaganath Plot Branch, Rajkot also issued a No-Due Certificate dtd.26.02.2019 for the same and a registered Reconveyance Deed dtd.26.02.2019 was also executed by the Bank.
14.	13.03.2019	The petitioners filed and application praying for mutation of their names for lands bearing Ward no.14, City Survey no. 465 an no. 469 admeasuring 483-39 sq. mtrs including the construction on area admeasuring 34-04 sq. mtrs. situated at Bhilvaas, Rajkot pursuant to the execution registered sale deed dtd.26.02.2019 in favour of the petitioners by Manishkumar Rasiklal Bavariya. (though not obliged to apply under Section 135C of the BLRC).
15.	16.04.2019	The State Tax Authority wrote a letter to the City Survey Superintendent, Rajkot requesting the authority to provide details of property in the city limit of Rajkot.
16.	24.04.2019	The Application dtd. 13.03.2019 is rejected.
17.	11.06.2019	The Tax Officer-respondent no.3 herein directed the City Survey Superintendent, Rajkot to make an Entry of Charge (‘Bojo’) on all the personal properties of the Directors of Eagle Motors Pvt. Ltd. for the unpaid VAT (out of all the properties, two parcels are purchased by the petitioners).
18.	17.06.2019 12.07.2019 16.07.2019	Entry no.8056 and no.8057 creating Charge (‘Bojo’) was recorded in both the properties in question (purchased by the petitioners) due to the so-called dues of Eagle Motors Pvt. Ltd. The petitioners filed objections dtd.12.07.2019/ 16.07.2019 to the mutation of Entry no.8056 and Entry no.8057.
19.	12.07.2019	Vide application/ communication dtd.12.07.2019 the petitioner requested for clarification/reasons as to why the application dtd.13.03.2019 (for mutation of their names) is neither decided nor any further communication has been addressed to the petitioner, nor any further procedure has been initiated. The petitioners also requested for recording Entry of the sale transaction in favour of the petitioners in the revenue records.
20.	03.08.2019	The City Survey Superintendent, Rajkot – respondent No. 2 rejected the objections raised by the petitioners against mutation of Revenue Entries no. 8056 and no. 8057.
21.	04.08.2020	The petitioners sent a legal notice dtd.04.08.2020 to the seller describing all the issues and to clear their dues and provide a N.O.C to the petitioners.

11.1. What emerges from such chronology is that the property in question was of the personal ownership of the Director which he had procured by virtue of a Will. It was a bequeathment by the father Rasiklal Bavariya in favour of his son Manish Bavariya and the Letters of Administration too were obtained from the Civil Court. Therefore the property was a solely owned personal property of the Director/Seller.

11.2. The details of assessment proceedings as set out in the reply and which we have reproduced herein above would indicate that they range for years from 2009-2014. Even what was the subject matter of attachment already undertaken by the Tax Authorities was the showroom and workshop of Eagle Motors Private Limited as far as on 9.1.2015.

11.3. It is also apparent that right from 2015 there was an exchange of correspondence between the Tax Authorities and the Revenue Authorities seeking details of the properties belonging to such Directors and there were no attachment proceedings which came to be passed for the property in question. The Tax authorities were still making a roving inquiry as to the details of the properties which in turn the revenue authorities could not procure.

11.4. In the meantime, the property in question was agreed to be sold by the Seller Manishbhai Bavariya to the petitioners by way of a registered agreement to sell entered into on 13.09.2017 and a registered sale deed dated 26.2.2019.

11.5. When an application was made to record the names of the petitioners, which the revenue authorities were even otherwise mandated to do without an application, in accordance with the provisions of Section 135C of the Bombay Land Revenue Code, did the revenue authorities on 17.06.2019 record a charge on such properties and rejected the objection of the petitioners on recording of such a charge, vide a communication dated 03.08.2019.

11.6. The petitioners were bona-fide purchasers of the properties in question from the seller, who though a Director of the Company, owned such a property by virtue of his personal capacity. Whether a personal property of the Director can be attached will be addressed by us in the later part of this Judgement.

11.7. What is evident from the chain of events is that only after the petitioners made an application for mutation of their names in the Revenue Records did the authorities, both, the Revenue and the Tax authorities swung into action and by exchange of communications and relying on some communication dated 27.04.2018, which is not on record did instructions go forward by the Tax Authorities to the Revenue Authorities to record a charge on the property which was already sold by the Director. Apart from it being a personal property, nothing has come on record to satisfy this Court as to what proceedings were undertaken by the authorities to attach the properties in question, when they were still in correspondence seeking details thereof.

11.8. It was incumbent upon the Revenue Authorities in exercise of powers under Section 135 C of the Bombay Land Revenue Code to record the entries. There is no obligation, as rightly submitted by the learned counsel for the petitioner, to even apply for entering the names in the revenue records. When a registered document is produced, the authorities are bound to record the same in the revenue records.

11.9. As held in the case of Jhaverbhai Savjibhai Patel (supra) when a registered document is produced the authority must prima-facie post an entry in the record of rights leaving it for the competent Court or Authorities to adjudicate on the dispute.

11.10. Paras 6 to 8 of the decision in the case of Jhaverbhai Savjibhai Patel (supra) read as under:

“6. As such the issue involved in this petition is covered by the decision of this Court in case of "Jayantilal Jethalal Soni v. State of Gujarat" dated 28.9.2004 passed in Special Civil Application No.12547/2004. The relevant observations made by this Court in the aforesaid decision at paragraphs 7, 8, and 9 are as under:

"7. It appears that if a registered sale deed is executed by the holder of the land, it confers the right pertaining to the land in question in favour of the purchaser of the land and, therefore, the rights pertaining to the land in question in normal circumstances can be said to have been acquired over the land in question for which recording is required to be made in the revenue record. It is also well settled that the revenue entries are having value only for fiscal purpose and more particularly for the purpose of recovery of revenue and it neither confers any right or title over the property, nor does it take away the right or title in the property which otherwise cannot be available under the law. However, the question which arises for the consideration is if a sale deed is executed by the holder of the land which runs prima facie counter to the other statutory provisions of other enactment or is barred under the other enactment or it alters or disturbs the rights of the persons under the other enactment then, can the revenue authority shut its eyes by ignoring such flagrant violation of such law or if it is considered, what will be the proper course to be followed In case of "Evergreen Apartment Co-op. Housing Society" (supra), this Court has expressed the view that it is not open to the revenue authority exercising power under the Code to exercise power under the other enactment and to decide in respect to the breaches which are committed under the other enactment and thereby to uncertify the entry or to cancel the entry made in the revenue record. In case of "Janardan D. Patel v. State of Gujarat" (supra) at para 11, it has been observed as under:

"11. If any such question arises, the matter should be referred to the authority empowered to deal with under the said other enactment. For example, the validity of a transaction on the basis of Sec. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948 (the Tenancy Act for brief) is sought to be challenged. That question cannot be decided by revenue authorities in RTS proceedings. In such situation, the correct procedure to be followed would be to refer the matter to the authority empowered under the Tenancy Act for his decision. The necessary mutation entry may be made only after the decision of that authority under the Tenancy Act is received. It would, however, not be open to revenue authorities in RTS proceedings to decide that question."

8. Therefore, keeping in view of the aforesaid observations made by this Court in the above referred judgement, it appears that it would not be proper to hold that even if there are breaches under other enactment or such transfer is barred under the other enactment, the revenue authorities exercising power under Code could have ignored the same for the purpose of recording the mutation. At the same time, the authorities exercising power under the Code will have to exercise the jurisdiction within the limits of the statutory provisions of the Code. Therefore, on reconciling of both the aspects, it appears that in a case where the transfer of a land is made by registered sale deed and if the revenue authority prima facie is of the view that such transfer is either barred under the other enactment or is resulting into a breach of other enactment or is to result into adversely affecting the rights under the other enactment and consequently sale is prohibited, then in that case, the appropriate course for the revenue authority would be to record the entry for registered sale deed with the express observations that the registered sale deed is prima facie in breach of the other enactment and simultaneously refer the matter to the competent authority under the other concerned enactment of which breach is committed and the entry should be made subject to the final decision which may be taken by the competent authority under the other concerned enactment. This Court is inclined to take such view, because the one, who may be a bonafide purchaser or one who is interested to purchase the property would normally rely upon the revenue entry for enquiring into the title and the possession of the property. If the entry is certified on the basis of registered sale deed as it is, without recording for aforesaid qualification or clarification, the resultant effect would be that it will not be made known to the either person interested or to the other party who may act upon the revenue entry that the present transaction may be in breach of the other enactment and consequently it may result into not giving correct picture of the title or possession of the property in question in accordance with law. If the entry, on the basis of the sale deed is not at all effected, with the aforesaid qualification or without aforesaid qualification, it may also conversely mislead the public at large and also to those persons who act upon the revenue record, because there will be no recording of such transactions of registered sale deed which has the effect of conferring the right on property unless it is prohibited by the relevant statute under the other enactment or unless such sale deed is declared as null and void by the competent authority or through the process known to law. Therefore, it cannot be said that the authority exercising power under the Land Revenue Code has absolutely no jurisdiction to even prima facie consider the matter as to whether the breach of the other enactment is committed or not. At the most, it can be said that the authority exercising power under the code has no power to conclude as to whether the breach of the other enactment by the impugned transfer or registered sale deed is made or not.

9. In view of the above, it cannot said that the orders passed by all the authorities on the basis that the Mamlatdar has not inquired into the aforesaid three aspects namely as to whether there is any breach of the provisions of the Prevention of Fragmentation Act or the provisions of Tenancy Act, are absolutely without any basis and the orders can be maintained only to the extent that in case it is found by the Mamlatdar after remand that there are prima facie breach of the other enactment by the transfer in question, the revenue authority exercising power under the Code may refer the matter to the appropriate authority under the other enactment or may relegate the affected party to resort to appropriate proceedings under the other enactment and the entry may be considered subject to the final outcome in the proceedings under the other enactment, as observed hereinabove in earlier paragraphs."

7. The very decision came to be considered by this Court even in the matter, where the validity of the registered sale deed was under challenge by preferring civil suit. This Court by relying upon the earlier decision in case of "Jayantilal Jethalal Soni v. State of Gujarat" (supra), in Special Civil Application No.14037/2004 dated 24.12.2004 in case of "Hasmukhbhai Kasturchand Shah v. Heirs of Dahiben Wd/o Shanabhai Bhulabhai & Hirabhai" has further made observations at paragraphs 4 and 5 as under:

"4. Therefore, so far as the entries which are based on registered sale deed are concerned, the same cannot be cancelled in toto and it deserves to be restored in the revenue record with the clarification that they shall be subject to the outcome of the proceedings under Section 84C of the Tenancy Act which as per the contention of Mr.Barot are pending before the Revenue Tribunal. So far as entry No.1900 dated 26.2.1972 is concerned, the same was not directly the subject matte of the proceedings under Section 84C of the Tenancy Act which were initiated in respect to three registered sale deeds on the basis of which entries No.2067, 2068 and 2248 were mutated in the revenue record. It appears that after entry No.1900 dated 26.2.1972 the very land is sold by registered sale deed by deceased Dahiben through power-of-attorney holder Hirabhai Shanabhai and the sale deed is not signed by Hirabhai Krishnakantbhai, but only a reference is made to the entry No.1900 dated 26.2.1972 in the succession of title of the property. The land is sold subsequently by the owner who is shown in the revenue record. But even if it is the case of the contesting respondents through Mr.Barot that entry No.1900 dated 26.2.1972 is in breach of provisions of Section 84C of the Tenancy Act, then it would be for the appropriate authority under the said act to initiate the proceedings. In any event, the fact remains that the entry has continued for a long period and thereafter the land is already sold by registered sale deed. Therefore, the exercise of the power for cancellation of the entry which in view of the subsequent sale of the land in question by the registered sale deed dated 21.2.1976, cannot be said as proper and justified on the part of the authority. If the contesting respondents who are represented by Mr.Barot are asserting any right in the property, it would be for them to prefer appropriate proceedings by preferring Civil Suit or they may resort to appropriate proceedings for identifying their rights, if any, in the property. It is well settled even otherwise also, the exercise of suo motu power cannot be undertaken after an unreasonable period and further revenue entries are having values for fiscal purposes and they never confer any title, nor do they alter any right in the property, which otherwise exists as per the provisions of Transfer of Properties Act or the relevant law for the time being in force.

5. Under the above circumstances, the impugned orders passed by the revenue authorities cancelling the entry No.1900 and subsequent entry No.2248 dated 16.8.1976 and entry No.2067 dated 20th September, 1975 and No.2068 dated 20th September, 1975 are restored to the revenue record with the clarification and the qualification that the same shall be subject to the outcome of the Regular Civil Suit No.4180 of 2004 and No.9275 of 2003 pending in the concerned Civil Court and also subject to the outcome of the proceedings of revision pending before the Tribunal in connection with the proceedings under Section 84C of the Tenancy Act. It is further made clear that it would be open to the aggrieved parties to pursue their rights, if any, pertaining to the property/ies in respect of which entry/ies is/are ordered to be restored by resorting to appropriate proceedings in the Civil Court, either in the pending Suit or by substantive suit as may be permissible in law."

8. In my view, the same situation would prevail in view of the aforesaid decision of this Court and as a consequence thereof, the orders passed by the Revenue Authorities for cancelling the entry No.8569 in toto deserves to be quashed and set aside with the direction that the entry No.8569 shall continue to remain in revenue record with the qualification and clarification that the same shall be subject to the outcome of the proceedings of Civil Suit No.497/2002.

9. So far as Special Civil Application No.8559 of 2005 is concerned, the same will be the situation, except that there will be change in the number of entry being Entry No.8570 and, therefore, the entry No.8570 shall continue to remain in revenue record with the qualification and clarification that the same shall be subject to the outcome of the proceedings of Civil Suit No.497/2002.

10. Both the petitions are partly allowed to the aforesaid extent. Rule made absolute accordingly. Considering the facts and circumstances, there shall be no order as to costs. Direct service is permitted.”

11.11. In accordance with the provisions of the Bombay Land Revenue Code therefore once a registered document is produced before the revenue authority, he is bound to record a revenue entry based on such a document.

11.12. The contention of the learned Assistant Government Pleader that in accordance with the provisions of Section 48 of the GVAT, 2003 the authorities are empowered to enter a charge as the sale could be a bogus one and a shield to overcome attachment of a property is also misconceived. On the date on which the petitioners had purchased the property, neither any attachment proceeding was pending nor finalised. No proceedings to record a charge were also in progress or a decision so taken. The default in question had already culminated into the attachment of the showroom and the workshop of Eagle Motors Private Limited by an order dated 09.01.2015 and akin thereto there were no proceedings vis-a-vis the property in question which was even the personal property of the Director. Even otherwise for assessment proceedings which were initiated for the years 2012 to 2014 whether attachment proceedings could be issued is an issue which begs a question, however not considered as even otherwise, we are inclined to hold that the property in question was of the personal ownership of the Director and therefore could not have been attached.

11.13. It would be relevant to consider the decision of this Court in the case of Chokshi Texlen Private Limited (supra). Paras 16-18 of the decision in the case of Chokshi Texlen Private Limited (supra) read as under:

“16. In this regard, it may be germane to refer to the decision of the Supreme Court in the case of Tax Recovery Officer II v. Gangadhar Vishwanath Ranade, (1998) 6 SCC 658, wherein the court, in the context of section 281 of the Income Tax Act, 1961, which is in pari materia with section 47 of the GVAT Act, held thus:-

“7. The question which is now required to be answered is whether in a proceeding under Rule 11 of the Second Schedule to the Income-tax Act, the Tax Recovery Officer can declare a transfer as void under Section 281. Section 281, as it stood at the relevant time provided as follows:- "Section 281: Where, during the pendency of any proceeding under this Act, any assessee creates a charge on or parts with the possession by way of sale, mortgage, 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 assessee as a result of the completion of the said proceeding; Provided that such charge or transfer shall not be void if made for valuable consideration and without notice of the pendency of the proceeding under this Act."

8. Section 281 declares as void any transfer made by the assessee during the pendency of proceedings under the Act, with the intention to defraud the Revenue. The powers of the Tax Recovery Officer, however, under Rule 11 of the Second Schedule to the Income-tax Act are somewhat different. Under Rule 11(1) where any claim is preferred to or any objection is made to the attachment or sale of any property in execution of a certificate on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection. Under Rule 11(4), (5) and (6) it is provided as follows:- Rule 11(4) : Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale. Rule 11(5) : Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim. Rule 11(6) : Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive." [emphasis ours].

9. The Tax Recovery Officer, therefore, has to examine who is in possession of the property and in what capacity. He can only attach property in possession of the assessee in his own right, or in possession of a tenant or a third party on behalf of/for the benefit of the assessee. He cannot declare any transfer made by the assessee in favour of a third party as void. If the Department finds that a property of the assessee is transferred by him to a third party with the intention to defraud the Revenue, it will have to file a suit under Rule 11(6) to have the transfer declared void under Section 281.”

“13. In the present case the Tax Recovery Officer could not have examined whether the transfer was void under Section 281 of the Income-tax Act. His adjudication of the transfer as void under Section 281 is without jurisdiction. The Tax Recovery Officer has relied upon the earlier order of the Income Tax Officer dated 9.5.1974 declaring that the transaction is void under Section 281 of the Income-tax Act. In the earlier proceedings, however, although the High Court has not set aside this order of the Income Tax Officer, the High Court has expressly held that the order amounted only to an intention of declaration on the part of the Department to treat the transaction as void under Section 281. Such a declaration cannot affect the legal rights of the parties affected under Rule 11. The High Court expressly held that the rights of the parties under Rule 11 were not affected in any way by this declaration. The Department, therefore, cannot proceed on the assumption that the transaction is void under Section 281, nor can the Tax Recovery Officer, while proceeding under Rule 11, declare a transaction of transfer as void under Section 281 by relying on the Order of 9.5.1974 or otherwise. His jurisdiction relates to examining possession, and only incidentally, any question of right to possession as claimed by the Objector. The High Court has, therefore, rightly set aside the order of the Tax Recovery Officer.

14. However, the right of the Department to have the transfer declared as void under Section 281 of the Income-tax Act, as it stood at the relevant time, is not thereby taken away. We are informed that the property continues to be under attachment by virtue of interim orders passed in this appeal. The Department may, if it so desires, take appropriate proceedings in accordance with law for having the transfer declared as void under Section 281 of the Income-tax Act.”

17. Thus, the Supreme Court, in the above decision, has held that the Tax Recovery Officer has to examine who is in possession of the property and in what capacity. He can only attach property in possession of the assessee in his own right, or in possession of a tenant or a third party on behalf of/for the benefit of the assessee. He cannot declare any transfer made by the assessee in favour of a third party as void. If the Department finds that a property of the assessee is transferred by him to a third party with the intention to defraud the revenue, it will have to file a suit under rule 11(6) to have the transfer declared void under section 281.

18. In the opinion of this court, the above decision would be squarely applicable to the facts of the present case and if it is the case of the department that the transfer in favour of the petitioner is void on the ground that Varun Filaments Private Limited has transferred the same to the petitioner with the intention of defrauding the Government revenue, then the respondents are required to approach the civil court for a declaration that the transfer is void. Moreover, this court in the case of Chetna Vijay Shah v. State of Gujarat, rendered on 25.1.2018 in Special Civil Application No.14823 of 2017, has, in the context of the provisions of section 47 of the GVAT Act, held that the only recourse available to the VAT authority under section 47 of the Act is to approach the civil court to annul the transfer on the ground that it was made with an intention to defraud the Government. It is in the light of the above factual and legal position that the impugned order of attachment dated 9.9.2011, made by the second respondent cannot be sustained. However, the right of the department to have the transfer declared as void under section 47 of the GVAT Act is not thereby taken away. If at all the respondents seek such a declaration, it is always open for them to approach the civil court by instituting appropriate proceedings.”

11.14. As held by this Court even if the case of the department is that the transfer is with the intention of defrauding the Government Revenue the only remedy for the Government is to file a Civil Suit.

11.15. That brings us to the question whether at all the personal properties of a Director of a Private Limited Company can be attached or a charge be created under the provisions of the GVAT, 2003.

11.16. Mr.Desai Learned Senior Advocate, in support of his submission that the personal properties of the Director cannot be attached or a charge be created, has relied on several decisions of this Court.

11.17. In the case of Nipun A Bhagat (supra) a Division Bench of this Court in context of the submission that the GVAT, 2003 in absence of any provisions does not empower the respondents to recover any of the liabilities from its Directors held thus:

“15. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the respondent No.2 could have exercised power under Rule 86A of the Rules, 2017 for the purpose of blocking the input tax credit available in the credit ledger account of the writ applicant for the purpose of recovering the dues of Dolphin Metals (India) Limited.

16. At the outset, we reject the first contention raised by Mr. Dave, the learned AGP, as regards Section 18 of the Act, 1956. Section 18 of the Act, 1956 specifically talks about “Private Company”. Indisputably, Dolphin Metals (India) Limited is a Public Limited Company. There is a specific averment in this regard in the memorandum of the writ application which has not been denied or disputed. The moot question to be determined is whether Rule 86A could have been invoked for blocking the input tax credit available in the electronic credit ledger of the writ applicant to recover the dues of Dolphin Metals (India) Ltd In our opinion, the answer has to be in the negative. Rule 86A can be invoked only if the conditions stipulated therein are fulfilled. In other words, it is only if the Commissioner or an Officer authorized by him has reasons to believe that the credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible for the reasons stated in Rule 86A(1)(a) to (d) that the authority would get the jurisdiction to exercise the power under Rule 86A of the Rules. We fail to understand how Rule 86A could have been invoked in the present matter. In our opinion, the issue, as such, stands squarely covered by three decisions of this High Court, i.e, (i) Mr. Choksi vs. State of Gujarat (SCA No.243 of 1991) (ii) Different Solution Marketing Private Ltd. vs. State of Gujarat (SCA No.19949 of 2015) and (iii) Paras Shantilal Savla vs. State of Gujarat (SCA No.7801 of 2019).

17. In view of the aforesaid, we are left with no other option but to allow this writ application and the same is hereby allowed. The respondent No.2 is directed to unblock the input tax credit available in the credit ledger account of the writ applicant at the earliest. We clarify that this order shall not preclude the department from recovering the dues of Dolphin Metals (India) Ltd. by any other mode of recovery permissible in law.”

11.18. Be it noted that the Division Bench of this Court has relied on the decisions of this Court in the case of Different Solutions (supra) and Paras Shantilal (supra).

11.19. In the case of Manharlal Viradiya (supra) the Court held as under:

“8. Having heard the learned advocates for the respective parties and considering the material on record, it appears that it is not the case of the State that the property in question at any point of time belonged to the company nor is it the case that. The only question that arises for determination in this petition under Article 226 of the Constitution of India is whether for the purpose of recovery of sales tax dues under The Gujarat Value Added Tax Act and Gujarat Sales Tax Act against Gujarat against a private limited company, the personal property belonging to the Managing Director of such company can be attached.

8.1. The Co-ordinate Bench while considering the similar issue, relying upon the decision of Division Bench of this Court rendered in Special Civil Application No.243 of 1991 with Special Civil Application No.3103 of 1991 and Special Civil Application No.7578 of 1991 in the case of Mr.Choksi Vs. State of Gujarat, has allowed the said petition and quashed and set aside the impugned notification by holding that the auction of the residential property in question as illegal and bad in law and restrained the respondents from attaching or selling any private property of the Managing Director of the Company for realization of the aforesaid dues. Relevant findings and observations of the aforesaid decisions are as follows:

“12. …..The section 78 specifically deal with offence by companies and the criminal liability is fastened on the Directors who were in charge of and were responsible for the conduct of the business of the Company, but does not at all provide for any personal liability of the Directors to pay the sales-tax dues of the Company nor does it empower the authorities to proceed against the personal properties of the Directors. The very fact that the same Legislature has in the same Act provided for criminal liability of the Directors without providing for any personal liability of the Directors of their personal properties for payment of sales-tax dues of the Company in question, the provisions of Section 78 lend support to the case of the petitioners rather than the case of the authorities.

13. As regards the faint plea of lifting the corporate veil, as per the settled legal position, the corporate veil is not to be lifted lightly. It is only when there is strong factual foundation for lifting the corporate veil that the question of examining the applicability of the principle of lifting such veil would be requiqred to be examined. In neither of the two petitions raising the controversy, the authorities have passed any specific order fastening the liability on the Directors personally, much less any factual foundation has been laid to invoke the doctrine of lifting the corporate veil. Hence it is not necessary to dilate on the said principle any further.”

For the reasons aforesaid, the reliance placed by the learned AGP on Section 78 is misconceived.

Resultantly, considering the observations made by the Co-ordinate Bench of this Court in the cases of C.V. Cherian (Supra) and in the case of Mr.Choksi (supra), the issue has already been decided and therefore, there is substance in the submission made by the learned advocate for the petitioner. In the result, present petition is allowed. The impugned order passed by the respondent No.1 dated 17.05.2019 and the impugned action of the respondent No.3 dated 21.05.2019 are hereby quashed and set aside. Present petition stands disposed of accordingly. In the facts and circumstances of the case, there shall be no order as to costs.”

11.20. Reading the judgement it is very obvious that the personal liability of the Director in the facts of this case when related to the personal property of the Director cannot be a matter of attachment or creation of a charge as is sought to be done in the facts of the present case.

11.21. In the case of C.V.Cherian (supra) the Court in Paras 1 to 4 held as under:

“1. The only question that arises for determination in this writ-application under Article 226 of the Constitution of India is whether for the purpose of recovery of sales tax dues under The Gujarat Value Added Tax Act and Gujarat Sales Tax Act against a private limited company, the personal property belonging to the Managing Director of such company can be attached and sold for realisation of the dues against the company.

2. After hearing the learned counsel appearing for the parties and after going through the affidavit filed by the Staterespondent, it appears that it is not the case of the State that the property in question at any point of time belonged to the company nor is it the case that the Managing Director is holding property as 'benamdar'. In that view of the matter, we find substance in the contention of the learned counsel Mr.Kazi appearing on behalf of the petitioner that the attachment and proposed auction of the residential building No.56, Near Hanuman Temple, Valinath Mahadev Road, Kalol, was on the face of it without jurisdiction (See Division Bench decision of this Court dated June 17, 2004 passed in Special Civil Application No.243 of 1991 with Special Civil Application No.3103 of 1991 and Special Civil Application No.7578 of 1991, in the case of Mr.Choksi v. State of Gujarat).

3. We, thus, find substance in this application and consequently quash the notification dated January 24, 2012 for holding the auction of the residential property No.56, Ward No.8B, City Survey No.86 and Property No.8/17/22/2/2, Near Hanuman Temple, Valinath Mahadev Road, Kalol. The respondents are restrained from attaching or selling any private property of the Managing Director of the company for realisation of the aforesaid dues. This order, however, will not stand in the way of the respondents in proceeding against the property of the company itself.

4. With above observations, the writapplication is disposed of. There shall be, however, no order as to costs.”

11.22. In the case of Different Solutions (supra) a Division Bench of this Court considering the decision in the case of Chokshi Texlen Private Limited (supra) in paras 7-8 held as under:

“7. Mr. Uchit Sheth, learned advocate for the petitioners, submitted that entering the charge and attachment on the property of the petitioners for the alleged dues under the GVAT Act of the erstwhile owner of the property is wholly without jurisdiction and illegal. It was submitted that the petitioners had purchased the subject property before the charge came to be entered on the property by the Value Added Tax Department and that no charge was registered in respect of the alleged value added tax dues of the previous seller prior to registration of the sale deed. It was submitted that the assessment order, on the basis of which the attachment was made, was passed on 31.3.2011; however, such order came to be set aside in appeal and the matter was remanded to the adjudicating authority and that the order in respect of the said year as well as subsequent years were all made long after the subject property came to be transferred to the petitioners. It was contended that in the absence of any charge having been registered over the property, the petitioner had no means of knowing about the dues and that the petitioners are bona fide purchasers for consideration.

7.1 It was submitted that in any case, the dues of the erstwhile owners have arisen after the subject property was purchased by the petitioners and hence, it is not permissible for the respondents to attach the subject property and create any charge over it. It was pointed out that the respondents have placed reliance upon section 47 of the GVAT Act to contend that the transfer is a fraudulent transfer, to submit that if that be so, the respondents are required to approach the civil court to get the transfer set aside, if the transfer is void. However, they cannot seek to recover the dues of the erstwhile owner of the subject property, from the petitioners. It was, accordingly, urged that the petition deserves to be allowed by granting the reliefs noted hereinabove.

8. Opposing the petition, learned Assistant Government Pleader Ms. Maithili Mehta, placed reliance on the averments made in the affidavit-in-reply filed on behalf of the respondent No.2, wherein it has been stated that the dues of Varun Filaments Private Limited, namely the erstwhile owner, are to the tune of Rs.1,99,98,219/- and that the company has been assessed for assessment years 2006-07, 2009-10 and 2011-12. It was submitted that the assessment notice for assessment year 2006-07 was issued on 19.12.2008 and pursuant thereto, assessment order was made on 31.3.2011 whereby Varun Filaments Private Limited was also liable to pay dues of Rs.1,70,67,925/- under the GVAT Act. It was submitted that Varun Filaments Private Limited challenged the said assessment order before the Gujarat Value Added Tax Tribunal (hereinafter referred to as “the Tribunal”) which, by its order dated 7.5.2012 remanded the matter to the Assessing Officer for reconsideration. It was submitted that the Assessing Officer issued notices for assessment under section 34 of the GVAT Act for assessment years 2006-07, 2009-10, 2011-12. It was submitted that thereafter, vide order dated 3.5.2014, Varun Filaments Private Limited was held liable to pay tax of Rs.1,48,35,312/- for assessment year 2006-07; vide order dated 31.3.2014, it was held liable to pay tax of Rs.28,47,276/- for assessment year 2009-10; whereas by an order dated 28.3.2016, Varun Filaments Private Limited was held liable to pay tax of Rs.23,15,631/- for assessment year 2011-12.

8.1 It was submitted that in the light of the provisions of section 44 of the GVAT Act, the respondent authorities had created a charge over the property in question on 12.9.2011, which came to be certified on 16.6.2012. It was submitted that Varun Filaments Private Limited was well aware of its liability under the GVAT Act as it had participated in all the assessment proceedings and was fully conversant with the fact that the assessment proceedings were initiated way back in the year 2008, despite which, Varun Filaments Private Limited sold the subject property to the present petitioners on 14.7.2011. It was submitted that Varun Filaments Private Limited has sold its property with a view to defraud the Government revenue and hence, the transaction between Varun Filaments Private Limited and the petitioners is void as the transaction is with a view to defraud the Government exchequer.

8.2 The attention of the court was invited to the provisions of section 47 of the GVAT Act, to submit that in view thereof, the transaction between Varun Filaments Private Limited and the petitioners can be termed as a void transfer as the same was made with a specific intention at the end of Varun Filaments Private Limited to defraud the Government. It was, accordingly, urged that there being no infirmity in the action taken by the respondent authority, there is no warrant for interference by this court and that the petition being devoid of merits, deserves to be dismissed.”

11.23. Since the case of Choksi (supra) appears to be the leading judgement which has been followed in the subsequent decisions apt it should be to consider the relevant paras of the said decision which read as under:

“10. Before dealing with the rival submissions, we would like to point out that in neither of the two petitions i.e. Special Civil Application No.243 of 1991 and 7578 of 1991, the authorities have passed any specific order fastening the liability on the Directors for payment of sales-tax dues of the respective Companies. For instance, in the letter dated 31.8.1989, the Assistant Sales-tax Commissioner (Appeals) Baroda has informed the concerned Salestax Officer at Godhra that the appeal filed by Choksi Plastics Pvt. Ltd. was being dismissed on account of noncompliance with the order for deposit of the sales-tax dues of the said Company, but it appeared that the financial position of the Directors of the said Company was good and it was possible to recover the dues from the said Directors. Hence, appropriate action may be taken for recovery of sales-tax dues of the said Company in accordance with law. It appears that it is on the basis of the aforesaid communication that the Sales-tax Officer, Godhra and the Recovery Officer proceeded against the personal properties of the Directors of Choksi Plastic Pvt. Ltd.. Similarly, in Special Civil Application No. 7578 of 1991 nothing is brought to our notice to indicate that the concerned authority had taken any conscious decision to fasten the Company's liability on the Directors of the Company personally or on their properties.

11. In view of the above factual position, it is not necessary to examine the controversy at length. Suffice it to state that the respondents are not in a position to point out any statutory provision empowering the sales-tax authorities to fasten the liability of Company on its Directors in the matter of payment of sales-tax dues. There appears to be substance in the submission made on behalf of the petitioners that Section 26 containing the said provision regarding liability to pay tax in certain cases covers several contingencies such as the liability in respect of the business carried on by an individual dealer after his death, the liability in respect of the dues where the dealer was an HUF and there is partition amongst various members or group of members; there is dissolution of a partnership firm and also in case of transfer of business in whole or in part. Unlike Section 179 of the Income tax Act, 1961, there is no provision in the Sales-tax Act fastening the liability of the Company to pay its sales-tax dues on its Directors.

12. Reliance placed by the learned AGP on the provisions of Section 78 is misconceived. The section specifically deals with offences by companies and the criminal liability is fastened on the Directors who were in charge of and were responsible for the conduct of the business of the Company, but does not at all provide for any personal liability of the Directors to pay the sales-tax dues of the Company nor does it empower the authorities to proceed against the personal properties of the Directors. The very fact that the same Legislature has in the same Act provided for criminal liability of the Directors without providing for any personal liability of the Directors or their personal properties for payment of sales-tax dues of the Company in question, the provisions of Section 78 lend support to the case of the petitioners rather than the case of the authorities.

13. As regards the faint plea of lifting the corporate veil, as per the settled legal position, the corporate veil is not to be lifted lightly. It is only when there is strong factual foundation for lifting the corporate veil that the question of examining the applicability of the principle of lifting such veil would be required to be examined. In neither of the two petitions raising the controversy, the authorities have passed any specific order fastening the liability on the Directors personally, much less any factual foundation has been laid to invoke the doctrine of lifting the corporate veil. Hence it is not necessary to dilate on the said principle any further.

14. In view of the above discussion, Special Civil Application No.3103 of 1991 is rejected since the constitutional validity of sub-section (4A) of Section 47 of the Gujarat Sales-tax Act, 1969 is already upheld in the case of Ashapura Mineral Company vs. State of Gujarat & Ors., (1993) 89 STC 289. Rule is discharged. Similar prayer made in Special Civil Application No.243 of 1991 is also rejected.

15. However, Special Civil Application No.243 of 1991 and 7578 of 1991 are allowed to the extent that the respondents are restrained from proceeding against the petitioners or their personal properties for recovery of the sales-tax dues of the respective Companies in which they are Directors. Rule is made absolute to the aforesaid extent only in the said two petitions. There shall be no order as to costs.”

11.24. Even in the case of Deepak Johrichand (supra) and Nehal Shah (supra) this Court has had the occasion to deal with the aforesaid issue.

11.25. Paras 2 to 4 of Deepak Johrichand (supra) read as under:

“2. By-now, this Court must have passed not less than ten orders on the question whether any private properties or individual bank accounts of a Director of a Company can be attached for the purpose of recovering the dues of the Company. We quote the judgments as under:-

(1) Special Civil Application No.19949 of 2015; Different Solution Marketing Private Ltd. Vs. Assistant Commissioner of Commercial Taxes; decided on 30.06.2016.

(2) 2019 (7) TMI 350 (Gujarat) Paras Shantilal Savla Vs. State of Gujarat.

(3) Special Civil Application No.3032 of 2022 Nehal Ashwinkumar Shah Vs. State of Gujarat. In the following decisions, this Court has taken the view that the authority under the Value Added Tax Act, 2003 [for short ‘The Act, 2003’] has no power to attach any private movable or immovable property of a Director of a Company including the bank account of the Director for the purpose of recovering the dues payable by the Company under the Act, 2003.

3. This Court has made it very abundantly clear that Section-86 of the Act pertains to the offence by companies and contains certain provisions where for the offence of the company, every person who at the time the offence was committed was incharge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence. In essence, this provision makes the person in-charge of the company responsible for the offence vicariously liable for the criminal action, for which, the company may have been charged. However, when it comes to recovering the dues from the company towards liability incurred under the Act, the Department cannot proceed against the individual Director of the Company. It is not in dispute that the bank account is the personal account of the Director.

4. In view of the aforesaid, this writapplication succeeds and is hereby allowed. The attachment so far as the Current Account bearing No.0372102000022385 maintained with IDBI Bank, Durga Das Nagar, Pali, Rajasthan stands hereby lifted.”

11.26. Paras 8 to 10 Nehal A Shah (supra) read as under:

“8 Mr. Sharma, the learned A.G.P. appearing for the State, with his usual fairness, submits that the issue is no longer res integra in view of two orders passed by this Court in the case of : (i) Paras Shantilal Savla vs. State of Gujarat [Special Civil Application No.7801 of 2019 decided on 27th June 2019] and (ii) Sunita Ramesh Bansal vs. Assistant Commissioner of State Tax [Special Civil Application No.229 of 2022 decided on 13th January 2022]. We quote the relevant observations made by this Court as contained in para 6 of the order passed in the case of Paras Shantilal Savla (supra) as under:

“6. We may quote the relevant observations rendered in Special Civil Application Nos. 243, 3103 and 7578 of 1991 decided on June 17, 2004. The judgment reads thus:

“1. Special Civil Application No.243 of 1991 challenges the constitutional validity of sub-section (4A) of Section 47 of the Gujarat Sales-tax Act, 1969 on the ground that the said provisions are violative of Articles 14, 19(1)(g) and 300A of the Constitution of India. The said petition also challenges the order dated 5.8.1989 passed by the Assistant Sales-tax Commissioner (Appeals), Baroda on the basis of which the Deputy Collector, Revenue Recovery, Bombay had initiated the proceedings for recovery of arrears of sales-tax dues of M/s. Choksi Plastics Pvt. Ltd. from the present petitioners who are the Directors of the said Company. The said proceedings are challenged on the ground that the Company and its Directors being separate legal entities, the liability of the Company to pay sales-tax cannot be fastened on the Directors personally or on the personal properties of the Directors, in absence of any provision to that effect under the Gujarat Sales-tax Act, 1969. Consequential reliefs are also prayed for in the petition.

2. Special Civil Application No.3103 of 1991 also challenges the constitutional validity of the provisions of sub-section (4A) of Section 47 of the Gujarat Sales-tax Act, 1969 (for brevity, "the Act") and consequential reliefs are prayed for.

3. Special Civil Application No.7578 of 1991 is filed by the two Directors of the Kutch Agro Industries Pvt. Ltd. and similar proceedings initiated by the Salestax Officer, Bhuj and the Recovery Officer, respondents No.1 and 3 herein, for recovery of salestax dues of the said Company from the petitioners. In this petition also the proceedings are challenged on the same ground as in Special Civil Application No.243 of 1991.

4. Since these petitions raise common question about constitutional validity of sub-section (4A) of Section 47 and/or about personal liability of Directors for the sales-tax dues of their respective Companies, we have heard Mr Hasurkar and Mr YS Mankad learned counsel for the petitioners and also heard Mr Gori, learned AGP for the respondent-authorities.

5. At the relevant time, sub-section (4A) of Section 47 of the Act as under:- “(4-A) If a dealer does not pay any amount of tax within the time prescribed for its payment under subsection (1), (2) or (3) or on or before the date specified in a notice issued under sub-section (4) in respect of the amount of tax falling under sub-clause (ii) of clause (a) thereof, there shall be paid by such dealer for the period commencing on the date of expiry of the aforesaid prescribed time or the specified date and ending on the date of payment of the amount of tax, simple interest at the rate of twenty four per cent per annum on the amount of tax not so paid or on any less amount thereof remaining unpaid during such period; Provided that where a penalty is levied under subsection (6) of section 45 in respect of the difference and the period referred to in that subsection, no interest shall be payable under this subsection on such difference for such period.” However, by Amendment Act No. Guj.20 of 2001, S.6, the rate of interest is reduced from 24 per cent to 18 per cent w.e.f. 1.9.2001.

6. As regards challenge to the constitutional validity of subsection (4A) of Section 47 of the Act, our attention is invited to the decision of another Division Bench of this Court in Ashapura Mineral Company vs. State of Gujarat & Ors., (1993) 89 STC 289 wherein the same challenge was raised before this Court. After examining the provisions under challenge and the relevant authorities and after examining various submissions, this Court turned down the challenge and held as under:- “Section 47(4-A) of the Gujarat Sales Tax Act, 1969, which provides for payment of interest at the rate of 24 per cent per annum on amounts of tax not paid within the prescribed time or within the time specified in notices issued under Section 47(4) or on any amounts remaining unpaid, is a provision for payment of interest by a dealer who does not pay tax within the time prescribed for its payment, or on or before the date specified in the notice issued under sub-section (4). The liability to pay interest arises when tax becomes due, either as a result of furnishing of declaration or return by the dealer or on assessment or reassessment as the case may be. Interest is made payable on that amount of tax which ought to have been paid earlier, i.e. within the prescribed time or the specified period and which has not been paid. Interest is made payable because Government to that extent is deprive of the use of money which otherwise it could have got at an earlier point of time. The liability arising under section 47(4-A) is absolute in nature. The rate of interest payable is fixed by the Legislature itself and no discretion in that behalf is left with the sales tax authorities. Once it is found that the dealer has not paid tax within the prescribed time the liability to pay interest arises under the Act and it is not open to the sales tax authorities to waive it for any reason. Separate provision has been made by the Legislature for levy of penalty. The rate of interest under section 47(4-A) is also not so high as to render it penal in nature. Considering the purpose for which the withheld amount can be utilised by the State Government, the prevailing rate of interest in the market, the rate of 24 per cent per annum cannot be regarded as too high to retain its compensatory character. Section 47(4-A) is in reality and substance not a provision for imposition of levy of penalty and, therefore, it was not necessary for the Legislature to lay down guidelines and to provide for an inquiry. Provision for payment of interest being a method of collecting or recovering revenue, it is for the State to decide what is most efficacious for this purpose, and the defaulter has no moral right to make any grievance in this behalf. If the rate of interest fixed for non-payment of tax within time is not unreasonably high, then it cannot be said to be arbitrary or unreasonable.”

The Court also considered the contention that the State which had to refund the amount of excess tax paid either voluntarily by the dealer or as a result of an assessment order had to pay lower rate of interest under Section 54 of the Act. The Court negatived the contention about discriminatory treatment and held that the dues of the Government of a State being the dues of the entire people of the State, there is a valid basis for differentiation between dues of the Government of a State and dues of an individual. Whereas the State Government utilises its funds for public welfare, an individual ordinarily uses money for his private purposes. Hence, the Legislature was justified in treating the State Government as a separate class and providing for a higher rate of interest on the dues of the Government of the State.

7. In view of the aforesaid pronouncement of this Court, the prayers challenging the constitutional validity of the provisions of sub-section (4A) of Section 47 of the Gujarat Sales-tax Act, 1969 are hereby rejected.

8. Coming to the second controversy involved in Special Civil Application No.243 of 1991 and also in Special Civil Application No.7578 of 1991, Mr Hasurkar and Mr Mankad, learned counsel for the petitioners have submitted that since the Company and its Directors are separate legal entities, the liability of the Company to pay sales-tax on sale of goods effected by the Company cannot be fastened on the Directors personally or on the personal properties of the Directors. Referring to the provisions of Section 26, it is submitted that there are special provisions regarding liability to pay tax in certain cases like on the death of the dealer, partition of a Hindu undivided family, dissolution of a firm and transfer of business, termination of the guardianship or termination of the trust, but there is no provision fastening liability of a private Company on its Directors. Reliance is placed on the decisions in Desirajur Vennkatakrishna Sarma, In re, (1955) 25 Company Cases 32, Kundan Singh vs. Moga Transport Co.(P.) Ltd. & Ors., (1987) 62 Comp. Cases 600 and in Tikam Chand Jain vs. State Government of Haryana & Anr., (1987) 62 Comp. Cases 601.

9. On the other hand, Mr Gori, learned AGP for the respondents has vehemently submitted that since the arrears of sales-tax could not be recovered from the respective Companies, the respondentauthorities are justified in taking recourse to the properties of the Directors. Mr Gori has referred to the provisions of Section 78 of the Gujarat Sales-tax Act and has submitted that the analogy is required to be drawn from the said provisions which lay down that where an offence has been committed by a Company, every person who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of the business of the Company as well as Company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. In the alternative, Mr Gori has submitted that even if the Company a nd its Directors are separate legal entities, it is open to the authorities to lift the corporate veil and to proceed against the personal properties of the Company.

10. Before dealing with the rival submissions, we would like to point out that in neither of the two petitions i.e. Special Civil Application No.243 of 1991 and 7578 of 1991, the authorities have passed any specific order fastening the liability on the Directors for payment of salestax dues of the respective Companies. For instance, in the letter dated 31.8.1989, the Assistant Salestax Commissioner (Appeals) Baroda has informed the concerned Salestax Officer at Godhra that the appeal filed by Choksi Plastics Pvt. Ltd. was being dismissed on account of noncompliance with the order for deposit of the sales-tax dues of the said Company, but it appeared that the financial position of the Directors of the said Company was good and it was possible to recover the dues from the said Directors. Hence, appropriate action may be taken for recovery of sales-tax dues of the said Company in accordance with law. It appears that it is on the basis of the aforesaid communication that the Sales-tax Officer, Godhra and the Recovery Officer proceeded against the personal properties of the Directors of Choksi Plastic Pvt. Ltd.. Similarly, in Special Civil Application No. 7578 of 1991 nothing is brought to our notice to indicate that the concerned authority had taken any conscious decision to fasten the Company's liability on the Directors of the Company personally or on their properties.

11. In view of the above factual position, it is not necessary to examine the controversy at length. Suffice it to state that the respondents are not in a position to point out any statutory provision empowering the sales-tax authorities to fasten the liability of Company on its Directors in the matter of payment of sales-tax dues. There appears to be substance in the submission made on behalf of the petitioners that Section 26 containing the said provision regarding liability to pay tax in certain cases covers several contingencies such as the liability in respect of the business carried on by an individual dealer after his death, the liability in respect of the dues where the dealer was an HUF and there is partition amongst various members or group of members; there is dissolution of a partnership firm and also in case of transfer of business in whole or in part. Unlike Section 179 of the Income-tax Act, 1961, there is no provision in the Sales-tax Act fastening the liability of the Company to pay its sales-tax dues on its Directors.

12. Reliance placed by the learned AGP on the provisions of Section 78 is misconceived. The section specifically deals with offences by companies and the criminal liability is fastened on the Directors who were in charge of and were responsible for the conduct of the business of the Company, but does not at all provide for any personal liability of the Directors to pay the sales-tax dues of the Company nor does it empower the authorities to proceed against the personal properties of the Directors. The very fact that the same Legislature has in the same Act provided for criminal liability of the Directors without providing for any personal liability of the Directors or their personal properties for payment of sales-tax dues of the Company in question, the provisions of Section 78 lend support to the case of the petitioners rather than the case of the authorities.

13. As regards the faint plea of lifting the corporate veil, as per the settled legal position, the corporate veil is not to be lifted lightly. It is only when there is strong factual foundation for lifting the corporate veil that the question of examining the applicability of the principle of lifting such veil would be required to be examined. In neither of the two petitions raising the controversy, the authorities have passed any specific order fastening the liability on the Directors personally, much less any factual foundation has been laid to invoke the doctrine of lifting the corporate veil. Hence it is not necessary to dilate on the said principle any further.

14. In view of the above discussion, Special Civil Application No.3103 of 1991 is rejected since the constitutional validity of sub-section (4A) of Section 47 of the Gujarat Sales-tax Act, 1969 is already upheld in the case of Ashapura Mineral Company vs. State of Gujarat & Ors., (1993) 89 STC 289. Rule is discharged. Similar prayer made in Special Civil Application No.243 of 1991 is also rejected.

15. However, Special Civil Application No.243 of 1991 and 7578 of 1991 are allowed to the extent that the respondents are restrained from proceeding against the petitioners or their personal properties for recovery of the sales-tax dues of the respective Companies in which they are Directors. Rule is made absolute to the aforesaid extent only in the said two petitions. There shall be no order as to costs.”

9. Thus, unlike Section 179 of the Income Tax Act, 1961, there is no provision in the Sales Tax Act fastening the liability of the company to pay its sales tax dues on its Director.

10. In the result, this writ application succeeds and is hereby allowed. The attachment on the bank account of the writ applicant is hereby ordered to be lifted. The bank shall permit the writ applicant to operate the bank account. It is needless to clarify that the dues which are payable by the company shall remain pending and it shall be open for the department to take appropriate steps against the company in accordance with law for the purpose of recovering its dues.”

11.27. What is therefore evident is that personal properties of Directors of a Private Limited Company cannot be attached or a charge be created over any default of the Company and therefore the attachment of properties in question of the petitioners is without authority of law.

11.28. What therefore is culled out from the facts of the case is that apart from the fact that the attachment of the properties is beyond the reach of the taxation authorities in light of being the personal properties of the Director and the fact that they have been sold by a registered sale deed prior to the exercise of undertaking any proceedings of attachment or creation of a charge,the only option open,if the authorities were of the opinion that the sale was with a view to defraud the government, is to file a civil suit.

12. Accordingly the prayers made by the petitioners are answered in their favor. The communication dated 03.08.2019 passed by the City Survey Superintendent of Rajkot is quashed and set aside. The communications and directions/orders dated 17.06.2019 mutating the entry no.8056 and 8057 recording the charge of the Tax authorities is also quashed and set aside.

13. The communication dated 11.06.2019 passed by the State Tax Officer, Circle-5, Unit 94, Office of the Assistant Commissioner of Commercial Tax (Gujarat State) is quashed and set aside.

14. The Application dated 13.3.2019 is allowed. The respondents are directed to further mutate the names of the petitioners in the City Survey records for land bearing Survey Ward no.14, City Survey No.465 and 469 admeasuring 483-39 sq.mtrs including the construction area admeasuring 34-04 sq.mtrs situated at Bhilavas, Rajkot, within four weeks from the date of receipt of the certified copy of this Judgement and order.

15. Petition is allowed accordingly with no order as to costs.