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If dues are paid before auction sale Recovery Officer of Bank cannot continue Auction Sale

Fact and Issue of the case

The present petition has been filed, invoking extra-ordinary jurisdiction of this Court under Article 226 of the Constitution of India for quashing of the order dated 12.05.2005 passed by the Debts Recovery Tribunal, Lucknow (for short “the Tribunal”) whereby the Recovery Officer has ordered for taking forcible possession from the petitioner of the mortgaged property, being building constructed over land measuring 5000.00 sq. ft. of Khasra No.797/01, Bhillawan, Ward Geetapalli, Alambagh, Lucknow. The petitioner had taken a loan of Rs. 12 lakhs for business purposes from the BOB on 06.11.2004 and mortgaged the property, being building constructed over land measuring 5000.00 sq. ft. of Khasra No.797/01, Bhillawan, Ward Geetapalli, Alambagh, Lucknow. The BOB had filed Original Application No. 154 of 2010 before the Tribunal for recovery of a sum of Rs. 14,34,234=00 against the petitioner.

The Original Application No. 154 of 2010 was decided ex-parte vide order dated 17.09.2010. The petitioner came to know about the said order dated 17.09.2010 in the year 2011 and, he filed Appeal No.96 of 2011, which was dismissed vide order dated 18.01.2012. In the meantime, the BOB had proposed to auction the mortgaged property and, the mortgaged property was auctioned in favour of respondent no. 3- on 31.01.2013. The respondent no. 3 had deposited some token amount with the BOB. The petitioner filed statutory objection against the auction proceedings on 28.02.2013. Ms. Shreya Chaudhaya, learned counsel for the petitioner, has submitted that before the confirmation of the sale, the petitioner had deposited the entire amount with up-to date interest with the BOB i.e. Rs. 19,50,000=00 through Bank Draft No.119413 dated 03.05.2003 issued by the Corporation Bank, Gomti Nagar, Lucknow and, the said bank draft was accepted by the BOB towards the full and final settlement of the loan amount. The BOB had issued ‘no dues certificate’ to the petitioner and, also written letter dated 07.05.2013 to the Recovery Officer of the Tribunal to the said effect.

An affidavit dated 10.05.2013 was also filed by the BOB before the Recovery Officer. The BOB had requested the Recovery Officer that prior to confirmation of the sale, the petitioner had deposited the entire amount with up-to date interest amount to Rs. 19,50,000=00 and, no other loan amount remained unpaid. In view of above, the BOB had requested the Recovery Officer to drop the proceedings pursuant to auction sale. However, the Recovery Officer, who heard the matter on 17.05.2013, vide order dated 28.06.2013 passed in DRC No. 556 of 2010 rejected the request of the BOB for dropping the proceedings and ordered the BOB to refund Rs.19,50,000=00 to the petitioner. The Recovery Officer, thereafter, on the same day, confirmed the sale in favour of respondent no. The petitioner had filed Writ Petition No. 4407 (M/S) of 2013 against the order dated 28.06.2013, which was dismissed by this Court on 11.07.2013 with liberty to the petitioner for filing appeal under Section-30 of The Recovery of Debts Due to Bank and Financial Institutions Act, 1993 (for short “the Act, 1993”). The petitioner, thereafter, had filed an appeal before the Tribunal, which was numbered as Appeal No.05 of 2013. During the pendency of the said appeal, the respondent no. 3 had moved an application in Case No. DRC 556 of 2010 before the Recovery Officer and the Recovery Officer passed the order dated 24.03.2014 for providing police protection to the respondent no. 3 for taking over possession of the mortgaged property. The petitioner had filed an application for recalling the order dated 24.03.2014 before the Recovery Officer inasmuch as against the order dated 28.06.2013 Appeal No.05 of 2013 was pending. The Recovery Officer, thereafter, passed order dated 25.05.2014 and recalled the earlier order dated 24.03.2014. Though Appeal No.05 of 2013 remained pending before the Tribunal, the Recovery Officer had passed another order on 12.05.2015, directed the Senior Superintendent of Police, Lucknow for providing police protection to the respondent no.3 for taking forcible possession of the mortgaged property. Though earlier the Recovery Officer had passed the order dated 25.04.2014, recalling the order dated 24.03.2014 passed for taking over forcible posses ion of the property in question on the ground that till the pendency of the appeal before the Presiding Officer of the Tribunal, it was not proper to take possession of the property in question.

Observation of the Court

The Recovery Officer was required to act in accordance with law to recover the dues of the BOB and, when the BOB had written to the Recovery Officer that he should not proceed further with the auction-sale, the Recovery Officer had no right to reject such request of the BOB and, proceed for confirmation of the sale. Rule-60 of the 2nd Scheduled of the Income Tax Act, 1961, relied on by respondent no. 2, would mean that before 30 days, from the date of the auction-sale, the sale should not be confirmed and, if the debtor deposits the dues as provided under the Rules, then sale would not be confirmed and property would be released in favour of the debtor. However, even after 30 days before confirmation, if the defaulter/debtor pays the entire dues, and the Bank issues no dues certificate and writes to the Recovery Officer not to proceed further with the auction to confirm the sale in favour of such purchaser, the Recovery Officer would be required to cancel the auction proceedings inasmuch as the Recovery Officer acts only for realizing the dues of the Bank/financial institution. In case Bank/financial institution is satisfied that its dues are paid before auction sale is confirmed, then the Recovery Officer would be required to cancel the auction sale, otherwise it would be travesty of justice to complete the sale of property of the borrower despite payment of entire dues and having been issued no dues certificate by Bank/financial institution.

In the present case, the BOB itself had written to the Recovery Officer not to proceed with the confirmation of sale as its entire dues were paid by the petitioner. The Recovery Officer had no right to ignore such a request of the BOB. It is also well settled that the auction purchaser has no right, title or interest over the immovable property till confirmation of sale of the said immovable property in his favour. The title of property passes to the auction purchaser with effect from the date of confirmation and not before confirmation of sale. In the present case, the borrower had paid the entire amount of Rs. 19,50,000=00 to the BOB before the sale was confirmed and, the BOB had issued ‘no dues certificate’ to the borrower and, filed an application before the Recovery Officer for cancelling the auction process, but the Recovery Officer had gone ahead to confirm the sale and rejected the application. The auction purchaser could claim refund of his money from the BOB with interest, but he did not have any right over the property before the sale was confirmed inasmuch as Recovery Officer had no right to confirm the sale after BOB wrote to him for cancelling the auction. The BOB had already received the entire amount and, written an application to the Recovery Officer for cancellation of the sale process, but despite that the Recovery Officer had proceeded to confirm the sale wholly illegally and unauthorizedly. In view thereof, the present petition is disposed of with a direction to the Tribunal to decide the appeal filed by the petitioner expeditiously in accordance with law, preferably within a period of one month and, till the appeal is decided by the Tribunal, the interim order passed by this Court on 19.05.2015 shall remain in operation.

Conclusion

The court has disposed off the petition and ruled in favour of the petitioner

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Allahabad HC imposes Penalty on GST Dept. for Unnecessary Harassment for Copy of Electricity Bill for granting GST Registration

Fact and Issue of the case

The brief facts of the case are that the petitioner is engaged in the business of providing employment through consultancy, which fall within the purview of U.P. Goods & Service Tax Act (hereinafter referred to as, ‘the Act‘). On 17.08.2021, the petitioner applied for grant of registration under the Act through online mode. On submission of the application, an inspection was made at the business premises of the petitioner on 15.09.2021 and thereafter, notice was issued for providing certain information and documents in support thereof. On submission of reply, by means of the impugned order dated 23.09.2021, the application of the petitioner was rejected, against which the petitioner preferred an appeal before the respondent no. 3, which too has been dismissed vide order dated 28.10.2021. Hence, this petition.

Observation of the Court

After hearing the learned counsel for the parties, the Court has perused the record. For deciding the controversy involved in the present writ petition, section 25 and rules 8 & 9 will be relevant. A perusal of the sub-section (6) of section 25 of the Act clearly reveals that for registration, only PAN card and Adhar card are required to be furnished. Section 25 provides detailed procedure to be followed by every person applying for registration. It further requires by the person to provide PAN and Aadhar details. Rule 8 and 9 provides how the application for registration has to be dealt with. Further Rule 9 suggests the manner in which verification has to be done. If on examination of the application accompanying the documents all found to be in order then approval should be granted within seven working days. In the event the officer is not satisfied with the documents annexed then inspection is provided and further clarification can be sought.

A perusal of the notice shows that the petitioner was required to submit recent electricity bill or house tax receipt. The petitioner submitted replyalong with requisite document but the application of the petitioner for grant of registration certificate was rejected vide order dated 23.9.2021.

On perusal of the show cause notice, rejection order and the appellate order, it appears that firstly clarification with regard to the possession of business premisses was required to be specified and secondly submission of electricity bill / house tax receipt was required. The petitioner has submitted the explanation with regard to the nature or possession of the business premisses as the owner and also submitted the house tax receipt in compliance with the show cause notice. But the authorities below without whispering any word or assigning any reason had rejected the application for non-specifying possession of the business premisses and insisted for submission of electricity bill. The authorities below have further erred in law in not pointing out any defect in submission of house tax receipt and insisted for submission of electricity bill whereas the notice dated 15.9.2021 gave an option for submission of recent electricity bill or house tax receipt. Further the petitioner has explained that the property, in which the business is being undertaken, is under the ownership of the petitioner. So the other grounds also falls for non specifying the nature or possession of the property. Further in the grounds of appeal, it has specifically been mentioned that the petitioner’s place of business is under ownership of the sole proprietor. Once the fact which has not only been mentioned in the in the reply to the show cause notice given in the application filed for grant of registration but also in the grounds of appeal, it was bounded duty of the authorities to look into the same and then pass the order in accordance with law instead of their own whims and fancies. Once the petitioner has satisfied the requirement of the law for providing PAN, Aadhar and also house tax receipt / property receipt then the authority should not have insisted for submission of receipt of electricity bill. In the absence of any short comings or defect being pointed out in the reply submitted along with documents, the petitioner has every right to carry on her business lawfully and her right to do business cannot be confiscated in illegal and arbitrary manner.

It is clear from the records that all the documents as required under the Act and law as well as in compliance to the show cause notice were furnished by the petitioner and without pointing out any defect or short coming therein, the application should not have been rejected.

Before parting with the judgement, the Court is constraint to observe that the two authorities of the State have acted only with a view to harass the petitioner which cannot be accepted at any cost. This attitude of the respondents in this petition cannot be tolerated as the officers are being State functionary has to act fairly and their action must be in consonance with the provisions of the Acts as well as Rules.

In view of the foregoing discussions, the impugned orders dated 23.09.2021 and 28.10.2021 cannot be sustained in the eyes of law. The impugned orders dated 23.09.2021 and 28.10.2021 are hereby quashed. The respondents are directed to pass an appropriate order on the material available on record within a period of seven working days from the date of receipt of a copy of this order

Conclusion

The court ruled in afvour of the petitioner and imposed a penalty of Rs. 15,000 on the GST department /-, which shall be deposited before the High Court State Legal Services Committee, Allahabad within a period of 20 days from today.

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January, 12
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Allahabad HC orders to File fresh representation before GST authorities to rectify GSTR1 mistakes

Fact of the case

The petitioner is that certain mistakes have crept in at the time of filing the GSTR-1 in Form B2B, due to which the invoice had been reflected in column B2Chf though the petitioner had paid all taxes as and when they were due. Submission, thus, is that the correction in the form uploaded by the petitioner while filing return in GSTR-1 can be corrected at the ends of the respondents. A representation in this regard had been made on 16.9.2020 but no action has been taken as yet.

Observation of the Court

Sri Dhananjay Awasthi learned counsel for the respondent nos.2 and 3, on the other hand, submits that the representation moved by the petitioner is addressed to the Nodal Officer, State GST authorities who is not competent to make any correction. As far as the State authorities are concerned, they can only forward the return filed by the petitioner to the Central Authority.

It is further submitted that the grievances of the petitioner, if any, can be met by the Commissioner, CGST & Central Excise Jhansi Division, Jhansi who has not been approached so far.

Learned counsel for the petitioner, at this stage, states that the petitioner may file a fresh representation before the Commissioner, CGST and Central Excise Jhansi Division Jhansi with the appropriate prayer.

In view of the above submissions, without entering into the merits of the claim of the petitioner, the present petition is being disposed of with a direction that the petitioner may file a fresh representation raising all his grievances before the competent authority which according to Sri Dhananjay Awasthi learned Advocate is Commissioner, CGST & Central Excise Jhansi Division, Jhansi.

It is provided that, in case, the petitioner approaches the competent authority along with a copy of this order within a period two weeks from today, the competent authority shall be under obligation to do the needful in accordance with law within a further period of four weeks. Intimation with regard to the decision on such application moved by the petitioner shall duly be given by the said authority.

Conclusion

The court hence disposed the petition in favour of the applicant and directed that in case, the petitioner approaches the competent authority along with a copy of this order within a period two weeks from today, the competent authority shall be under obligation to do the needful in accordance with law within a further period of four weeks, the court-order

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Allahabad-HC-orders-to-File-fresh-representation-before-GST-authorities-to-rectify-GSTR1-mistakes

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