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TMI Blog2021 (6) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned communication dated 21.4.2020 issued by the respondent No.4 is hereby quashed and set aside and consequently, it is held that since the petitioner bank is having a clear charge over the property by virtue of the aforesaid circumstance, it has got first priority over the secured assets and not the State Government by virtue of the provisions of the VAT Act, 2003. The petition stands allowed. - HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI MR SANDEEP N BHATT(190) for the Petitioner(s) No. 1 NOTICE SERVED BY DS(5) for the Respondent(s) No. 1,2,3,4 MR SAHIL TRIVEDI, AGP for the RESPONDENT- STATE ORAL ORDER 1. By way of the present petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:- (A) To admit this Special Civil Application. (B) To allow this Special Civil Application by exercising power under article 226 of the Constitution of India by issuing appropriate writ of certiorari or any appropriate writ order or direction by quashing the impugned communication dated 21.04.2020 by respondent no.4 Assistant Commissioner and by directing respondent no.2 Talati to remove first charge of Government also by declaring the prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... District Collector on 6.3.2019. 3. At this juncture, surprisingly, the respondent No.4 herein, i.e. Assistant Commissioner, Commercial Tax wrote a letter on 21.4.2020 to the bank that they have to recover an amount of Rs.16,87,997/- as a VAT dues from the borrower and therefore, since the said amount is the Government dues, as first charge over the properties of the firm and the letter was received from the office of the Assistant Commissioner, Commercial Tax, Rajkot and in response thereto, the petitioner replied to the same and reiterated that Mr. Kishor Patel had created a charge over the movable and immovable properties and reiterated the said stand by series of communications dated 16.6.2020, 19.9.2020 and 3.10.2020 and indicated in specific terms that the bank has got first charge over such properties, but surprisingly, thereafter, the respondent Nos.2 to 4 have not responded in any manner. Resultantly, the entire recovery of public money is stalled and the interest of the bank is at jeopardy. It is the case of the petitioner that the stand of the authority, i.e. respondent no.4, is ill-founded in view of the fact that by now, there is a settled position of law that secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions of this Court, one by learned Single Judge as well as another by the Division Bench of this Court, copies whereof have been attached to the petition compilation on page 55 and 82 respectively. Mr. Bhatt has submitted that these decisions have been specifically brought to the notice of the respondent authorities, but a conspicuous silence is made by the respondent authorities, which ultimately constrained the petitioner to approach this Court. In any case, there cannot be first charge of the respondent authority over the properties which are mortgaged first in point of time with the petitioner bank. That being the position, the issue, according to Mr. Bhatt, is squarely covered by the proposition of law laid down by the aforesaid decisions, hence requested to grant the reliefs as prayed for in the petition. In addition thereto, Mr. Bhatt has further relied upon few decisions which are narrated in the averments contained in the petition and thereby requested to grant the reliefs, as prayed for in the petition. 6. In response to the aforesaid submissions, learned Assistant Government Pleader Mr. Sahil Trivedi appearing on behalf of the authority has though initially tried to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant observations contained in the said decisions deserve to be quoted hereunder, since the same are exactly on the similar controversy involved in the present proceedings:- (a) Para 51 and 52 of the decision dated 16.9.2019 in Special Civil Application No.12995 of 2018 reads as under:- 51. In view of the aforesaid discussion, I have no hesitation in coming to the conclusion that the first priority over the secured assets shall be of the Bank and not of the State Government by virtue of Section 48 of the VAT Act, 2003. 52. In the result, this writ-application succeeds and is hereby allowed. It is hereby declared that the writ-applicant Bank is entitled to put the secured assets to auction and recover the dues payable by the respondent no.4 to the Bank. It is further declared that the State will have no precedence in this regard on the strength of Section 48 of the VAT Act, more particularly, in view of the provisions of Section 26E of the SARFAESI Act, 2002. Para (12) of the order dated 23.8.2018 passed by the Coordinate Bench of this Court, which is incorporated in the decision dated 16.9.2019 (supra), reads as follows : 12. All the issues with regard to entitlement of the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat Ors., Special Civil Application No.12995 of 2018, decided on 16.09.2019. We may quote the relevant observations made in the said judgment. It is preposterous to suggest in the case on hand that as the assessment year was 2012-13, Section 48 could be said to apply from 2012-13 itself. Even in the absence of Section 26E of the SARFAESI Act or Section 31B of the RDB Act, Section 48 of the VAT Act would come into play only after the determination of the tax, interest or penalty liable to be paid to the Government. Only thereafter it could be said that the Government shall have the first charge on the property of the dealer. 54. In view of the aforesaid discussion, We have no hesitation in coming to the conclusion that the first priority over the secured assets shall be of the Bank and not of the State Government by virtue of Section 48 of the VAT Act, 2003. 55. In the result, this writ application succeeds and is hereby allowed. The impugned attachment notice dated 22.01.2018 (Annexure-A) and the impugned communication dated 19.04.2018 (Annexure-B) issued by the respondent No.2 is hereby quashed and set aside. It is hereby declared that the Bank has the first charge over the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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