Priority of statutory tax arrears over decree-holder claim confirmed where sales tax was recoverable as land revenue.

Arrears of sales tax recoverable as arrears of land revenue were treated as having priority over a decree-holder's claim against the sale proceeds of the debtor's property. Because the tax demand related to earlier assessment years and recovery proceedings had already begun before the private decree was passed, the State's charge attached first to the property. Section 11-B of the Punjab General Sales Tax Act, 1948 was applied to give the Revenue precedence in appropriation of the sale proceeds, and payment out was allowed in favour of the State.

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Issues: Whether the State had priority to recover arrears of sales tax from the sale proceeds of the judgment-debtors' property in preference to the decree-holder.

Analysis: The demand for sales tax related to earlier assessment years and proceedings for recovery had already been initiated before the decree in favour of the private creditor was passed. Section 11-B of the Punjab General Sales Tax Act, 1948 provided that unpaid tax and penalty were recoverable as arrears of land revenue. On that basis, the liability of the property of the judgment-debtors to satisfy the State's tax demand had to be met before appropriation of the sale proceeds towards the decree-holder's claim.

Conclusion: The State's claim was held to have priority, and the application for payment out of the sale proceeds was allowed in favour of the Revenue.

Ratio Decidendi: Statutory arrears of sales tax recoverable as arrears of land revenue take priority over the claim of a decree-holder against the sale proceeds of the debtor's property.

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