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2020 (3) TMI 1045 - HC - VAT and Sales TaxAttachment of property - CIRP proceedings - first charge over all the properties and assets in view of Section 48 of the Gujarat VAT Act, 2003 - lifting of attachment sought so that they can be put to sale by the liquidator and thereupon the sale proceedings be distributed under Section 53 of the I B Code in order of priority prescribed - Section 48 of the Gujarat Value Added Tax Act, 2003 - HELD THAT - Issue Notice to the respondents returnable on 16.01.2020. In the meantime, pending the hearing and final disposal of the petition, the operation, implementation and execution of the impugned order dated 18.11.2019 passed in Misc. Application No. 2357 of 2019 in Company Petition (IB) No. 1514 (MB)/2017 is stayed.
Issues involved:
Challenge to order lifting attachment of properties by National Company Law Tribunal, interpretation of Section 48 of Gujarat VAT Act, applicability of Insolvency & Bankruptcy Code, priority of dues under Section 53 of I&B Code, distinction between secured creditors and attachment simplicitor. Analysis: 1. The State challenged the order of the National Company Law Tribunal directing the lifting of attachment on properties for sale by the liquidator. The State contended that it had the first charge over the properties under Section 48 of the Gujarat VAT Act, and the Tribunal erred in lifting the attachment. 2. The Advocate General highlighted previous orders and submissions to support the State's position. The Tribunal was aware that the State's attachment predated the Insolvency & Bankruptcy Code (I&B Code), making interference impermissible. The Tribunal's order for lifting the attachment was against the State's interest. 3. The Tribunal had earlier ordered the liquidation of the company and directed cooperation with authorities for the liquidation process. The State filed applications seeking directions for payment of dues as secured creditors under the I&B Code, which were pending before the Tribunal. 4. The State argued that the Tribunal erred in relying on a judgment of the Andhra Pradesh High Court regarding attachment under the Income Tax Act. The State asserted its position as a secured creditor under the I&B Code, emphasizing the distinction between attachment and statutory charge under Section 48 of the VAT Act. 5. The State pointed out that the Tribunal's decision was influenced by the Andhra Pradesh judgment, which was not directly applicable to the Gujarat VAT Act. The State's status as a secured creditor was supported by relevant provisions of the I&B Code, indicating a charge over the property. 6. The Advocate General referenced specific sections of the I&B Code to establish the State's status as a secured creditor with a security interest. The State's position under Section 53(1)(b)(ii) was distinct from the judgment's context, as the State enjoyed secured creditor status under the statutory scheme. 7. Additionally, the State's challenge regarding Section 48 of the VAT Act was already pending before the Court, with interim arrangements in place. The State's contention as a secured creditor was reinforced by ongoing legal proceedings related to the Act. 8. Considering the arguments presented, the Court issued notices to respondents for further proceedings and stayed the implementation of the Tribunal's order lifting the attachment pending the final disposal of the petition. Service of notice was permitted to proceed accordingly.
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