Statutory tax charge prevails over secured creditor enforcement when revenue attachment and priority exist under the sales tax law.

A statutory first charge for sales tax arrears under the Tamil Nadu General Sales Tax Act prevails over a bank's security interest enforced under SARFAESI, because the tax statute expressly gives priority to revenue claims and operates in a different field from the later recovery regime. The bank's subsequent auction sale could not defeat the State's charge where attachment had already been published before completion of the sale. Publication of the attachment and sale in the Gazette also constituted constructive notice, defeating any plea of bona fide purchase. The result is that the arrears may be recovered from the property or its sale proceeds despite the secured creditor's enforcement action.

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Issues: Whether the statutory charge for sales tax arrears under the Tamil Nadu General Sales Tax Act, 1959 prevails over the bank's security interest enforced under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and whether the auction sale effected by the bank was valid against the revenue authorities.

Analysis: Section 24(1) of the Tamil Nadu General Sales Tax Act, 1959 creates a charge on the dealer's property on default, and section 24(2) gives the tax dues priority over all other claims against the property. The Court held that this statutory priority is not displaced by section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, because the two enactments operate in different fields and there is no real inconsistency requiring the later Act to override the sales tax charge. Applying the principle that a statutory first charge prevails over an earlier mortgage or secured interest, and noting that the revenue authorities had already attached the property and published the attachment before the bank completed its SARFAESI sale, the Court held that the bank's subsequent measures could not defeat the State's charge. The Court also rejected the auction purchaser's plea of bona fide purchase, holding that publication of attachment and sale in the Gazette amounted to constructive notice.

Conclusion: The sales tax statutory charge had priority over the bank's secured interest, and the bank's auction sale could not override the revenue authorities' claim to recover the arrears from the property or sale proceeds.

Ratio Decidendi: Where a statute creates a charge and expressly gives tax dues priority over all other claims, that statutory charge prevails over a secured creditor's mortgage or enforcement action, and a general non obstante clause in a later recovery statute does not displace it absent a direct inconsistency.

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