Statutory first charge for tax arrears prevails over a prior mortgage, defeating the secured creditor's priority claim.

Section 26-B of the Kerala General Sales Tax Act, 1963 creates a statutory first charge over a dealer's property for tax, penalty, interest and related dues, and that charge operates notwithstanding anything to the contrary in any other law or private arrangement. On that basis, the State's claim for sales tax arrears takes priority over a bank's prior mortgage as a secured creditor. The earlier mortgage does not displace the statutory priority, and the public revenue claim prevails over competing private security interests.

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Issues: Whether the State's statutory first charge for sales tax arrears under Section 26-B of the Kerala General Sales Tax Act, 1963 prevails over the bank's claim as a secured creditor under a prior mortgage.

Analysis: Section 26-B declares that tax, penalty, interest and other amounts payable under the Act shall be the first charge on the property of the dealer or other person, and this statutory charge operates notwithstanding anything to the contrary in any other law or private arrangement. The earlier mortgage in favour of the bank did not displace the statutory priority. The decision was consistent with the principle that public dues have precedence over other claims, as recognised in the authorities referred to by the Court.

Conclusion: The statutory first charge in favour of the State prevails over the bank's mortgage claim; the contention of the appellant failed.

Ratio Decidendi: Where a taxing statute creates a first charge on the debtor's property and gives the State priority notwithstanding other laws, that statutory priority overrides a prior secured creditor's mortgage claim.

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