Top Stories S.81 CGST Act Not Invokable to Declare Transfer Of Property Void Without Determining ‘Nature Of Transaction’: Andhra Pradesh HC [Read Order] The Court was of the opinion that Section 81 cannot be pressed into service unless there is a finding as to the nature of the transactions in question by a competent authority, authorized under the Act or the Rules By Yogitha S. Yogesh – On October 14, 2024 12:30 pm – 2 mins read The Andhra Pradesh High Court has held that section 81 of the central goods and service tax ( CGST ) Act , 2017 is not  invokable to declare transfer of property void without determining ‘nature of transaction’.

Section 81 provides that where a person parts with his/her property after any amount has become due from him under the Act, with the intention of defrauding the Government revenue, such transfer shall be void. Velagala Lakshmi and Others, the Petitioner was purchaser of the disputed property and was aggrieved by Department’s decision to auction the same to recover dues from the vendor. Petitioner claimed the property was purchased by way of registered deeds. It contended that the Department’s action is arbitrary and a violation of his right to property protected under Article 300-A of the Constitution. Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here The Department relied upon Section 81 of CGST Act to contend that the transactions relied upon by the petitioner are sham, done for the purposes of evading payment of taxes by the vendor.

It contended that such transactions would have to be treated as void transactions, which do not give title to the petitioners. At the outset, the High Court bench of Justices R Raghunandan Rao and Harinath N noted that the provision merely provides for declaration of certain transactions to be void. The Court also noted that the proviso to Section 81 contains certain safeguards. It states that the transfer shall not be void if it is made for adequate consideration, in good faith and without notice of tax dues.

The Court was of the opinion that Section 81 cannot be pressed into service unless there is a finding as to the nature of the transactions in question by a competent authority, authorized under the Act or the Rules. Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here Accordingly, it stayed the provisional attachment order issued against the Petitioner and posted the matter to October 23. Meanwhile, the Petitioners are also restrained from alienating the property.