Statutory tax charge prevails over earlier mortgage where tax recovery law creates priority and no repugnancy is found.

Amendments to section 24(2) and section 26(6) of the Tamil Nadu General Sales Tax Act, 1959 were analysed as provisions giving the State's tax dues priority and creating a statutory charge on dealer property. The challenge based on conflict with an earlier mortgage, the Transfer of Property Act, 1882, and absence of presidential assent under Article 254(2) failed because tax recovery legislation was treated as distinct from transfer of property law and no unconstitutional repugnancy was found. The distinction between a mortgage and a charge was applied, and a charge arising by operation of law was held capable of prevailing over an existing mortgage. Section 26(6) was also sustained as a garnishee-type recovery mechanism.

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Issues: Whether the amendments to section 24(2) and section 26(6) of the Tamil Nadu General Sales Tax Act, 1959, which confer priority on the State's tax dues and create a statutory charge, are unconstitutional or invalid as against an earlier mortgage and the rights of a secured creditor.

Analysis: The statutory scheme gave the State tax dues priority over other claims against the dealer's property and created a charge on unpaid sums. The Court relied on the settled principle that tax claims may receive priority over private debts and on the distinction between a mortgage and a charge. A charge created by operation of law can operate on the entire property and take precedence over an existing mortgage. The legislative challenge based on inconsistency with the Transfer of Property Act, 1882, and lack of presidential assent under Article 254(2) of the Constitution of India was rejected, since legislation relating to recovery of taxes is distinct from the law of transfer of property and there was no unconstitutional repugnancy. The challenge to section 26(6) also failed, as that provision was treated as a garnishee-type recovery mechanism and the same reasoning applied.

Conclusion: The amended provisions were held valid, and the State's statutory charge and priority over the claimed security interest were upheld.

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