9911796707
TMI Blog2008 (1) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... would override the inconsistent provisions of section 16B of the Tax Act and as such, these provisions of the Sales Tax Act section 16B as they are inconsistent with section 35 of the Act are declared ultra vires of the Constitution. The writ petition filed by the petitioner-bank is accordingly allowed in terms of the above and they are entitled to sell the property of respondent No. 4 in accordance with law. Parties are left to bear their own costs. - C.W.P. No. 239 of 2001 - - - Dated:- 2-1-2008 - DEEPAK GUPTA AND AHUJA V.K. , JJ. The judgment of the court was delivered by V.K. AHUJA J. This is a writ petition filed by the petitioner for issuance of directions restraining respondents from effecting sale of the immovable property of respondent No. 4 for recovery of alleged arrears of sales tax as well as for quashing section 16B of the Himachal Pradesh General Sales Tax Act, 1968 (referred to as, the Sales Tax Act ), being ultra vires of the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (referred to as, the Banking Act ). Briefly stated the facts of the case are that in August, 1984, respondent No. 4 company was sanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner-bank before the Recovery Officer, Debt Recovery Tribunal, Chandigarh for stay of the sale by respondent No. 2. It was further alleged that the Recovery Officer has come to the conclusion that in view of the judgment of the honourable Supreme Court in State Bank of Bikaner Jaipur v. National Iron Steel Rolling Corporation [1995] 96 STC 612, the claim of the petitioner-bank against the mortgaged property has become secondary in view of the recovery of sales tax by the H.P. Government. It was alleged by the petitioner-bank that the loan was advanced to respondent No. 4 by the petitioner in 1984-85 and the property was equitably mortgaged in favour of the bank in 1984 for recovery of its dues. Thus, it was pleaded that the decision of the Recovery Officer was illegal, null and void and contrary to the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The debt of the petitioner-bank is secured and is prior in time as against the alleged liability of sales tax which is even not disputed by the party and therefore, the bank has the prior right to recover its debt. It was also pleaded that section 16B of the Sales Tax Act is also repugnant to and u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f respondent No. 4. On the other hand, learned Advocate-General for respondent Nos. 1 and 2 submitted that crown debt had a priority over the loan of private party like petitioner-bank and under the provisions of section 16B of the Sales Tax Act, the amount could be recovered by the State Government in priority over the loan of the petitioner-bank and as such, the petitionerbank is not entitled to the relief claimed by it. Coming to the decision in Dena Bank case [2000] 120 STC 610 (SC); [2000] 5 SCC 694 relied upon by the petitioner as well as even by the respondents it is reported as Dena Bank v. Bhikhabhai Prabhudas Parekh Co. [2000] 120 STC 610 (SC); [2000] 5 SCC 694. The issue raised in that case pertained to the doctrine of priority of tax due on account of arrears of tax in favour of the State over the secured debt of other creditor. The question was considered by their Lordships in detail as to whether the Crown or State's right to recover arrears of tax due to it is to be given priority over the right of private persons to recover private debts from an assessee. It was observed that the doctrine of priority or precedence of State debts is based on rule of necessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les of equity and good conscience (as applicable to India) do not accord the Crown a preferential right for recovery of its debts over a mortgagee or pledgee of goods or a secured creditor. It is only in cases where the Crown's right and that of the subject meet at one and the same time that the Crown is in general preferred. Where the right of the subject is complete and perfect before that of the King commences, the rule does not apply, for there is no point of time at which the two rights are at conflict, nor can there be a question which of the two ought to prevail in a case where one, that of the subject, has prevailed already . . . The provisions of section 16B of the Sales Tax Act were also considered in the above Division Bench case. Section 16B of the Himachal Pradesh General Sales Tax Act, 1968 reads as under: 16B. Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax and penalty including interest, if any, payable by a dealer or any other person under this Act shall be a first charge on the property of the dealer or such other persons. The Division Bench had observed at page 356, para 20, as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rears of land revenue as provided for under section 16, which, however, in view of non obstante clause contained in section 16A comes into operation only after the dealer fails to pay the amount due when a notice in writing is issued to him . . . Thus, it was held by the Division Bench that since the bank has already exercised its right and taken possession of the property much prior to the assessment order dated January 18, 2005 passed by the assessing authority, the provisions of section 35 of the Act would override the inconsistent provisions of section 16B of the Tax Act leading to the only conclusion and that there is no prior charge on the property except for that of the bank with whom the property was mortgaged. In the present case, the mortgage was created in the year 1984 and the consent decree was passed on November 12, 1998 in favour of the petitioner-bank and against respondent Nos. 4 to 6. There is nothing on record to show that any notice of demand was firstly issued under sections 14 and 16A before action under section 16 of the Sales Tax Act was taken. The copies of the notice of demand issued and when it was issued have not been placed on record by the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
