9911796707
TMI Blog2025 (4) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of extension of packing credit facility, the petitioner had marked a lien in respect of the fixed deposits offered as collateral. 3. While so, it appears that R3 defaulted in payment of sales tax demands in respect of the periods 1996-97 to 2001-02. Thus, the Commercial Taxes Department ('R1'/'Department') had issued communication dated 13.09.2024 accompanied by a statutory notice in Form B-6 of the Tamil Nadu General Sales Tax Act, 1959 ('Act'/'TNGST Act') seeking recovery of the arrears. 4. The bank, in its capacity as a garnishee, had responded to the notice and furnished the details of the fixed deposits held by it with lien. The bank also complied in part, in that, while retaining a sum of Rs.67,91,953/- towards packing credit, it paid over a sum of Rs.15,76,630/- to the Department, ensuring that the lien exercised by it stood achieved to the extent of packing credit facilities granted to R3. 5. The department continued to pursue the B-6 notice in respect of the balance of the demand, paving the way for the bank to approach this Court by way of the present writ petition. The stand of the bank is that it is the bank that holds priority of charge in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it is the learned AAG who has furnished the date of the sales tax assessments to the Court. On a comparison of the dates of creation of lien (19.07.2002 and 01.08.2002) and the orders of assessment (30.05.2003 and 10.05.2004), it is clear that it is the lien that is anterior. It hence the lien that that would take precedence. 13. Section 24 of the TNGST Act reads as follows: 'Section 24. Payment and recovery of tax:- (1) Save as otherwise provided for in sub-section (2) of section 13, the tax assessed or has become payable under this Act from a dealer or person and any other amount due from him under this Act shall be paid in such manner and in such installments, if any and within such time as may be specified in the notice of assessment, not being less than twenty one days from the date of service of the notice. The tax under sub-section (2) of section 13 shall be paid without any notice of demand. In default of such payment the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or interest under this Act. Sec. 24(2) Any tax assessed on or has becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales tax dues from the borrower. The sales tax officer argued that by virtue of the prior charge that the Commercial Taxes Department held, it was entitled to realize the sales tax arrears by sale of the mortgaged property. 18. The claim of the Commercial Taxes Officer rested on the provisions of Section 11AAAA of the Rajasthan Sales Tax Act, 1954, in terms of which, notwithstanding anything to the contrary contained in any law for the time being in force, in respect of the outstandings of tax, penalty, interest or any other sum, such outstandings, constituted a first charge on the property of the defaulting assessee. 19. The Court considered the interplay of Section 11AAAA of the Rajasthan Sales Tax Act on an existing mortage and the discussion runs as follows: It is, therefore, necessary to consider the effect of Section 11- AAAA of the Rajasthan Sales Tax Act, 1954 on an existing mortgage in respect of the property of the dealer or the person liable to pay sales tax or other sums under the Rajasthan Sales Tax Act, 1954. Section 100 of the Transfer of Property Act deals with Charges on an immovable property which can be created either by an act of parties or by operation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of the English Court of Appeals in Westminister City Council v. Haymarket Publishing Ltd. ((981) 2 All ER 555), the Court concluded that the statutory first charge created by operation of the Rajasthan Sales Tax Act would operate on the entirety of the property including the interest of the mortgagee. 23. In Dattatreya Shanker Mote V. Anand Chintaman Datar ((1974) 2 SCC 799), the Supreme Court observed while comparing a charge and a mortgage, that a charge is wider as it also includes a mortgage. Put differently, every mortgage is a charge but every charge is not a mortgage. The Supreme Court thus concluded that where a first charge is created by operation of law over a property, such charge would have precedence over an existing mortgage. 24. In TamilNad Mercantile Bank Ltd. (supra), the judgment in State Bank of Bikaner and Jaipur (supra) was cited by the Commercial Taxes Department but to no avail as the Court concluded adverse to the Department on a comparison of the provisions of Section 11AAAA of the Rajasthan Sales Tax Act and Section 24 of the TNGST Act. The distinction made by the Court flows from the absence of the word 'first' in Section 24(2) of the TNGST ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
