Restrictions on transfer of property

38.    No person against whom any recovery proceedings under the provisions of this Act are pending, shall create a charge on or part with the possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever, of any of his assets, with the intention to avoid or evade payment of any tax, penalty, interest or any other sum due or likely to become due. In case, any charge or transfer is made in violation of the provisions of this section, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the taxable person, registered person or any other person, till the completion of the said proceedings:

Provided that such charge or transfer shall not be void, if it is made with the previous permission of the designated officer or the tax or any other amount due from such a person, has been fully secured for payment by furnishing a bank guarantee. In case of outstanding arrears, the designated officer shall inform the appropriate Registering Authority about the liabilities under this Act.

Explanation.-           In this section ‘assets’ means land, building, machinery, plant, shares, securities and fixed assets, charged to the banks to the extent, to which any of the assets, do not form part of the stock in trade of the business of the person.