(1) Where, during the pendency of any proceeding under this Act or after the completion thereof, any dealer liable to pay tax or any other sum payable under this Act, the total amount of which exceeds rupees twenty five thousand, creates a charge on, or parts with the possession by any mode of transfer whatsoever including sale, mortgage, gift or exchange of any of the assets of his business valued at rupees ten thousand or more in favour of any other person, then, notwithstanding anything contained in any Act or contract to the contrary such charge or transfer shall be void as against any claim in respect of any tax or other sum payable by the dealer as a result of the completion of such proceeding or otherwise:
Provided that, such charge or transfer shall not be void if made for adequate consideration and without notice of the pendency of the proceeding.
(2) Where any person liable to pay tax or other sum payable under this Act has, during the pendency of any proceeding under this Act or after completion thereof, created a charge on or parted with possession by any mode of transfer including sale, mortgage, gift or exchange of any of his assets in favour of any other person and the Commissioner is of the opinion that such charge or transfer becomes void under sub-section (1), then the Commissioner shall issue a notice and hold enquiry and decide whether the charge or transfer became void under sub-section (1).
(3) If, after holding such enquiry the Commissioner comes to a conclusion that the charge or transfer is void, he shall make an order declaring such charge or transfer to be void for the purposes of this Act.
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Explanation:— In this section, “assets” includes land, building, machinery, plant, shares, securities and fixed deposits in banks, to the extent to which any of the assets aforesaid does not form part of the stock-in-trade of the business of the assessee.
CHAPTER IX