2017 (3) TMI 755 - HC - VAT and Sales Tax

Whether the sales tax dues constitute a first charge over the property? - Held that - this Court held that the sales tax dues constitute a first charge over the property by virtue of the provisions of Section 38(C) of the Bombay Sales Tax Act. The question involved in this writ petition stands answered against the petitioner - petition dismissed - decided against petitioner.

Summary

Issues:
1. Prior claim and statutory charge on immovable property.
2. Interpretation of provisions of Maharashtra Cooperative Societies Act.
3. Priority of sales tax dues as a first charge over property.

Analysis:
Issue 1: The petitioner sought a declaration for a prior claim and statutory charge on the immovable property of a debtor over the claim of the Assistant Commissioner of Sales Tax. The petitioner, a cooperative bank, had provided a loan to the debtor's family members. Due to loan default, a certificate under Section 101 of the Maharashtra Cooperative Societies Act was issued in favor of the petitioner. However, the Assistant Commissioner of Sales Tax had attached the property claiming a first charge. The petitioner argued that they should have the first charge based on the provisions of the Maharashtra Cooperative Societies Act. The court noted the petitioner's claim but relied on previous judgments to dismiss the petition, stating that sales tax dues constitute a first charge over the property.

Issue 2: The court considered the interpretation of the Maharashtra Cooperative Societies Act in determining the priority of charges on the property. The petitioner's counsel did not dispute the legal position established by previous court judgments. The court, after analyzing the relevant legal provisions and precedents, concluded that the sales tax dues hold precedence as a first charge over the property, as per Section 38(C) of the Bombay Sales Tax Act.

Issue 3: The main issue revolved around the priority of sales tax dues as a first charge over the property in question. The court referenced a previous judgment by the Hon'ble Supreme Court and its own judgment to affirm that sales tax dues indeed constitute a first charge over the property, as per the statutory provisions. Consequently, the relief sought by the petitioner for a prior claim and statutory charge could not be granted. The court, based on the legal precedents and reasons stated in previous judgments, dismissed the writ petition without any order as to costs.