9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (11) TMI 115 - HC - VAT / Sales TaxPriority of charge under SARFAESI Act over VAT Act charge - seeking declaration that the Petitioner Bank has first charge over the promo mortgaged by the Respondent no. 3 u/s 26E of the SARFAESI Act, which would override the charge of the Respondent No. 2 under Section 48 of the VAT Act - HELD THAT - In case of PARTNERS OF SIDDHESHWAR TAX FAB ORS. VERSUS STATE OF GUJARAT ORS. 2024 (7) TMI 1547 - GUJARAT HIGH COURT , this Court held that ' the charge in respect of the property in question created for sales tax dues or VAT dues is of no availand has no efficacy in law in view of the provisions of SARFAESI Act and the RDB Act. The property in question was sold by respondent no.6-Bank under the provisions of SARFAESI Act and the petitioners were successful purchasers and the sale certificate is issued and sale deed is also executed by which the petitioners have become absolute owners of the property and therefore considering the existing position of law, the charge created by the respondent State over the property in question in the year 2018, cannot be sustained and is accordingly quashed and set aside.' In view of the above, the respondent No. 2 is directed to remove the charge over the property (in question) as it is not in dispute that the petitioner-Bank has created the charge prior in point of time and hence, as per the settled legal position, the charge created by the respondent No. 2 in the year 2019 would not survive and accordingly, the mutation entry in Revenue Record stands deleted. Petition disposed off.
Issues:
Priority of charge under SARFAESI Act over VAT Act charge. Analysis: The petitioner, a bank, advanced a loan to a company and registered a charge over its properties. When the company defaulted, the bank initiated SARFAESI proceedings and took possession of one of the mortgaged properties. Subsequently, the bank discovered a charge in favor of the State Tax Officer on the same property. The bank sought a writ to establish its priority over the State Tax Officer's charge. The petitioner argued that as per Section 26E of the SARFAESI Act, its charge should take precedence. The petitioner relied on previous court decisions to support its claim. The respondent, represented by the Assistant Government Pleader, acknowledged the sequence of charges but did not contest the petitioner's priority claim. In a related case, the court discussed the precedence of charges under different acts. It concluded that VAT and sales tax dues do not have priority over the dues of a secured creditor under the SARFAESI Act. Referring to legal principles and precedents, the court emphasized that the state's debt does not supersede the rights of secured creditors. The court highlighted that the bank had sold the property under SARFAESI proceedings, becoming the absolute owner. Consequently, the charge created by the state over the property was deemed invalid and was set aside. The court directed the removal of the state's charge and deletion of related entries in revenue records. Based on the legal analysis and precedents cited, the court ruled in favor of the petitioner, declaring its charge as having priority over the state's charge under the VAT Act. The court emphasized the established legal position that VAT and sales tax dues do not take precedence over the rights of secured creditors under the SARFAESI Act. Consequently, the state's charge was deemed ineffective, and the petitioner's claim was upheld. The court ordered the removal of the state's charge and the deletion of related entries in revenue records, thereby resolving the issue of charge priority in favor of the petitioner.
|
