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TMI Blog1982 (9) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... aler before 15th March, 1976. 2.. Section 33-C reads as follows: "33-C. Tax to be first charge.-Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax and/or penalty, if any, payable by a dealer or other person under this Act shall be a first charge on the property of the dealer or such person." 3.. The petitioner in both these petitions is the State Bank of Indore which is a statutory corporation constituted and incorporated under the State Bank of India (Subsidiary Banks) Act, 1959. M/s. Gayatri Tiles, respondent No. 3, in Misc. Petition No. 545 of 1980 obtained a medium term loan of Rs. 73,000 on 14th May, 1975, from the petitioner-bank for construction of factory buildings and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 1971, and on 28th November, 1977, for the period from 1st April, 1971, to 31st March, 1972. On 10th March, 1976, the respondent's land and factory buildings were attached for recovery of arrears of tax. 5.. The learned counsel for the petitioner raised before us three contentions: (1) section 33-C violates the petitioner's fundamental rights under article 19(1)(f) and 19(1)(g) of the Constitution and is invalid and void; (2) the words "shall be a first charge on the property of the dealer" as used in section 33-C will not affect any pledge or mortgage created before the tax which is sought to be recovered became due; and (3) in any case, it will not affect any pledge or mortgage created before 15th March, 1976, when the section cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a first charge on the property of the dealer ". Now if the dealer sold his property before 15th March, 1976, it is obvious that the property sold would not be affected by section 33-C for the reason that after sale it ceased to be the property of the dealer. Similarly, if the dealer made a mortgage or pledge of his property before 15th March, 1976, the interest so transferred in favour of the mortgagee or pawnee, which is itself property, would not be affected by section 33-C as it ceased to be the property of the dealer before the charge under section 33-C started operating. Even if the tax due is for any period prior to 15th March, 1976, it becomes a first charge on the property of the dealer as available on that date. It is to be noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was answered in favour of the State and it was held that the State dues in respect of taxes have priority over unsecured debts of other creditors. We are here dealing not with any unsecured debt but with the secured debts of the petitioner, to which the decision has no application. The learned Government Advocate also submitted that sales tax becomes due immediately on the making of sale by the dealer, and therefore, section 33-C will be applicable for sales tax dues for any period earlier to 15th March, 1976, even though the assessment was made subsequent to that date. This submission also cannot be accepted. In respect of sales tax dues for any period prior to 15th March, 1976, the charge was created by section 33-C over the property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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