Tax recovery cannot override a secured mortgage where statutes reach only the defaulter's property and equity of redemption.

Arrears of sales tax recoverable as arrears of land revenue did not create priority over an existing mortgage, because the recovery provisions authorised attachment and sale only of the defaulter's property. Under an English mortgage, the mortgagor retains only the equity of redemption, while the mortgagee's interest is vested in the secured creditor. The revenue authorities could therefore proceed only against the equity of redemption remaining with the company, and could not defeat the mortgagee's secured rights by attaching the mortgaged property. The general priority rule for tax dues did not apply to a contest between the State and a secured creditor.

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Issues: Whether arrears of sales tax recoverable as arrears of land revenue could be enforced against mortgaged property so as to override the mortgagee's rights, or whether recovery was confined to the defaulter's equity of redemption.

Analysis: An English mortgage transfers the mortgaged property to the mortgagee subject to redemption, so the mortgagor retains only the equity of redemption. The recovery provisions under the sales tax law and the land revenue law authorize attachment and sale only of the property of the defaulter. They do not create any statutory priority in favour of sales tax arrears over the rights of a secured creditor. Since the mortgagee's interest had vested in the corporation, the revenue authorities could proceed only against the equity of redemption remaining with the company. The cited priority rule in respect of tax dues did not govern a contest between the State and a secured creditor.

Conclusion: The sales tax authorities had no priority over the mortgage debt, and the attachment and distraint could not defeat the corporation's secured rights.

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