Recovery of Excise arrears from purchaser of property of defaulter - ‘No way', says SC
THIS is how the story begins: - A unit is started with a loan from institutions like the State Finance Corporation. After some time the unit becomes sick. - Sick of everything - major reasons for the sickness would be excessive activism of a multitude of government agencies of this welfare state. In the meantime after a couple of Audit parties, preventive parties, Show Cause Notices and adjudication, arrears are born and by the time the Central Excise officer goes to serve the adjudication order, he is informed that the unit is closed, taken over by the SFC and sold. After a while the new owner comes for registration and then the department demands the dues of the old unit from him.
The Department believes that they represent the Crown (even seventy years after we got rid of the crown) and so they can recover anytime from anybody. But the Courts often tell them that unfortunately there are laws in this country, which the mighty Revenue is required to obey, even if they have only utter contempt for them.
Last Friday, the Supreme Court delivered yet another landmark judgement holding emphatically that any person who buys a property of a defaulter, which was taken over by the SFC, was not liable to pay the dues of the defaulter. He is liable only when the buyer has purchased the entire business of the defaulter.
In this case there was another interesting angle. The sale deed by the SFC stated that all statutory dues are to be paid by the buyer. The Supreme Court held that the excise duty dues of the defaulter were not statutory dues to be paid by the buyer.
We bring you this important judgement today. Please see Breaking News
Please also see:
++ Can arrears be realised from purchaser of the unit in auction?
++ First Charge for Customs, Excise and Service Tax Dues
++ Recovery of arrears - Central Excise dues cannot have precedence over claims made by Banks: AP High Court
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++ 'Precedence of Crown dues' falls flat once again - Central Excise has no priority over banks which are secured creditors : Bombay High Court