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TMI Blog1967 (5) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure for recovery under section 116 applies and not the substantive law of priority under section 104 of the Land Revenue Act. In our opinion, counsel for the appellants has not been able to make good his argument on this aspect of the case. Whether the appellants are entitled to claim priority towards payment of sales tax according to the common law doctrine of "priority of Crown debts" quite apart from the provisions of the Hyderabad Land Revenue Act? - Held that:- Unable to apply the English common law doctrine of priority of Crown debts in this case, because there is no proof that the doctrine was given judicial recognition in the territory of Hyderabad State prior to January 26, 1950, when the Constitution was brought into force. We granted time to counsel for the appellants to ascertain whether there were any reported decisions recognising such a doctrine in the Hyderabad State, but sufficient material has not been placed before us in this case to show that the doctrine was given judicial recognition in the Hyderabad State before its incorporation into the Indian Republic. - Civil Appeal No. 1128 of 1965 - - - Dated:- 2-5-1967 - SHAH J.C. AND SIKRI S.M. JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or execution of the decree under section 145 of the Civil Procedure Code. In the execution of the decree the house which was charged under the security bond was sold and one Girdhardas purchased it in auction sale which was confirmed by the Court on August 14, 1958, and the sale proceeds thereof were deposited by the said Girdhardas in the executing Court. On August 17, 1958, the Sales Tax Officer, Aurangabad Circle, wrote a letter to the District Judge, Aurangabad, pointing out that a sum of Rs. 9,672 and odd was due to the Government from the second respondent on account of arrears of sales tax for the years 1950-51 to 1955-56. On September 23, 1958, the District Judge sent a letter to the Subordinate Judge asking him not to pay the sale proceeds of the house to the decree-holder, i.e., the first respondent. Subsequently, the Collector of Aurangabad made an order on November 20, 1958, distraining the amount of Rs. 9,672 out of the sale proceeds under section 119 of the Hyderabad Land Revenue Act (Hyderabad Act 8 of 1317 F.). The order of the Collector stated as follows: "Sanction is therefore accorded under section 119 of the Hyderabad Land Revenue Act to attach the amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 13 of the Hyderabad General Sales Tax Act (Hyderabad Act No. 14 of 1950) provides as follows: "13. (1) The tax assessed under this Act shall be paid in such manner, in such instalments, if any, and within such time, not being less than fifteen days from the date of service of the notice of assessment, as may be specified in such notice. (2) In default of such payment, a penalty not exceeding the tax remaining unpaid may be imposed and the total amount due, including the penalty, if any, may be recovered as if it were an arrear of land revenue." Section 116 of the Hyderabad Land Revenue Act (Hyderabad Act 8 of 1317 F.) states: "An arrear of land revenue may be recovered by the following measures and as far as possible, the measures shall be employed in the order mentioned below: (a) by issuing a notice to the defaulter under section 118; (b) by distraint and sale of the defaulter's movable property under section 119; (c) by distraint and sale of the defaulter's immovable property under section 120; (d) by arrest and detention of the defaulter under section 122; (e) by forfeiture of the right of occupancy in respect of which the arrear is due under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be granted priority over other demands whether in respect of debts or mortgage or based on a decree or attachment of a Court. The argument of the appellants is based upon sections 104, 116, 119 and 144 of the Hyderabad Land Revenue Act. Section 104 provides as follows: "The demand on any land, for its land revenue shall have priority over other demands whether in respect of debts or mortgage or based on a decree of or attachment by a Court, and if the title to any land on which such Government demand is due is transferred, such land or its transferor shall not be discharged from such demand. If the demand for land revenue which cannot be recovered from the title to or existing produce of that land is due from a person, the liability for the payment of the land revenue shall have precedence over debt or decree of a Court also on his property other than the land on which the demand is due; provided that such property before it is forfeited for recovery of the said demand, is not sold or mortgaged or given as a gift or otherwise transferred or hypothecated or attached." Section 144 is to the following effect: "All the Government sums under the following heads may be recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same view has been taken by the Bombay High Court in a later case, Bank of India v. John Bowman A.I.R. 1955 Bom. 305., in which Chagla, C.J., pointed out that the priority given to the Crown was not on the basis of its debt being a judgment-debt or a debt arising out of statute, but the principle was that if the debts were of equal degree and the Crown and the subject were equal, the Crown's right would prevail over that of the subject. The same view has been adopted by a Full Bench of the Madras High Court in Manickam Chettiar v. Income-tax Officer, Madura [1938] 6 I.T.R. 180., in which it was held that the income-tax debt had priority over private debts and the Court had inherent power to make an order for payment of moneys due to the Crown. A similar view has been expressed by the Madras High Court in Kaka Mohamed Ghouse Sahib Co. v. United Commercial Syndicate [1963] 49 I.T.R. 824.. All these authorities have been quoted with approval by this Court in Builders Supply Corporation v. Union of India [1965] 56 I.T.R. 91., in which it was held that the Government of India was entitled to claim priority for arrears of income- tax due to it from a citizen over debts from him to unse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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